Q1 2021 Plains All American Pipeline LP and Plains GP Holdings LP Earnings Call

May 4, 2021

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Ladies and gentlemen, the just the operator today's conference is scheduled to begin shortly please continue the standby and thank you for your patience.

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Yeah.

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Good day, and thank you for standing by and welcome to the PAA and PAGP first quarter 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session and for the participants to lots of good question you will need to press star one on your tongue.

The phone keypad, if you require for the system in the press Star zero over the lifetime of the Congress of the true.

For your speaker today, where the lumber. Please go ahead. Thank.

Thank you Joseph Good afternoon, and welcome to Plains, All American at the first quarter of 2021 earnings call. Today's slide presentation is posted on the Investor Relations website under the news and events section of Plains, All American Dot Com, where audio replay will also be available following today's call.

Later this evening, we plan to post our earnings package to the Investor Kit section of our IR website, which will include today's transcript and other reference materials important disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide two of today's presentation of condensed consult consolidating balance sheet for PAGP and other reference materials are located in the appendix.

Yes.

Today's call will be hosted by Willie Chiang Chairman and CEO and Al Swanson Executive Vice President and CFO. Additionally, other members of our executive team are available for the Q&A portion of today's call, including Harry performance of our President, Chris Chandler Executive Vice President and Chief operating Officer, and Jeremy Goebel, Executive Vice President and Chief commercial officer as of.

Well, it's Chris herbal senior Vice President and Chief Accounting Officer with that I will now turn the call over to Willie.

Thanks, Ryan and thanks to each of you for joining US. This evening, we plan to keep our prepared comments brief and.

And we continue to make solid progress on our plants reporting first quarter results that exceeded our implied expectations by roughly 50 million and generating strong free cash flow maintaining full year 2021, adjusted EBITDA guidance at plus or minus $2, one 5 billion and advancing a number of key objectives on.

Note that our full year guidance incorporates an estimated 25 million net benefit from winter storm Winter storm Yuri Al will provide more detail on our results and outlook in his section of the call all plan to focus my comments today on our longer term positioning.

We are increasingly constructive and our outlook for global energy demand recovery COVID-19 vaccination.

Nations are progressing he world economies of reopening and global inventory levels have drawn down meaningfully.

On the supply side, the combination of opec's discipline, and recent increases and Permian activity levels, and our ongoing dialog with producers reinforces our confidence from the Permian to resume growth in the back half of 2021, and importantly building momentum into 2022 and beyond as global supply and <unk>.

Demand balance improves.

We expect the Permian to exit 2021 at four 4% to $4 5 million barrels a day, which is an increase of 200 of 300000 barrels a day from year end 2022 year and 2021 now.

And notwithstanding our constructive bias, we chose to maintain our 2021 adjusted EBITDA guidance of $2. One 5 billion at this time due to the combination of the timing matters that al will cover and the fact that our constructive view of the fundamentals is weighted towards the end of the year.

For PAA, we believe 2021 represents meaningful cash flow injection point.

As illustrated on slide four we've increased our free cash flow estimate by $100 million and now expect to generate plus or minus $400 million after distributions and excluding asset sales were.

We remain confident and our ability to achieve our 2021 asset sales target of.

The 750 million, having continued to progress formal sales processes with strong levels of interest and engagement.

Including targeted asset sales are projected free cash flow after distribution growth to 1.15 billion.

Beyond 2021, maximizing free cash flow will continue to be our focus we expect to generate sizable levels of free cash flow after distributions over a multiyear period.

And any further asset sales proceeds would be additive.

We plan to continue allocating free cash flow after distributions and a balanced manner with the near term focus on debt reduction and a larger percentage of shifting over time to equity holders through a combination of share repurchases and our distribution increases. We believe this balanced approach of strengthening our balance sheet, while also increasing.

<unk> cash return to our equity holders offer meaningful value for our current and prospective investors.

Our long term cash flow visibility is bolstered by the substantial completion of our multiyear system build out resulting in a significantly lower capex profile going forward, which is illustrated on slide five.

We continue to exercise discipline limiting our investment capital to must do no regrets opportunities and relative to our prior estimates we have further reduced our 2021 investment and maintenance capital expectations by $65 million of roughly 10% of <unk>.

High level overview and the status update for our two key remaining projects Wink to Webster and the Diamond expansion cap line reversal are located within the appendix of today's presentation with that I will turn the call over to al.

Thanks Willie.

Shown on slide six our first quarter fee based adjusted EBITDA of $559 million exceeded expectations and.

And was in line with fourth quarter of 2020.

First quarter results benefited from lower power costs, including gains on power hedges and stronger results and our natural gas storage business as well as some lower operating expenses that are timing related and we expect to incur later in the year. These.

These benefits more than offset the revenue impacts of the storm related downtime across our Texas and mid Con pipeline systems as well as lower realized revenue at certain non hub crude terminals and Canadian NGL facilities.

Before I get into the performance relative to our guidance and to level set everyone. Our first quarter supply and logistics was expected to be weaker than normal because NGL margins for the quarter were locked in during the second half of 2020 and did not reflect the rising prices during the first quarter.

Looking forward, our NGL margins for the balance of the year are a little lower than the current market.

And are in line with historical margins.

Focusing on the first quarter adjusted EBITDA of a negative $13 million was below our guidance for the quarter the <unk>.

Primary drivers for the underperformance, where a combination of the negative impact of winter storm, Yuri and less favorable of crude oil differentials and both the U S and Canada.

The impacts of winter storm early extends into the second quarter as inventory build and the Gulf coast compressed crude differentials and the U S.

Additionally, despite proration levels and Canada being in line with our expectations. We continue to see differentials that are less favorable than we originally anticipated.

As Willie noted earlier, we generated strong free cash flow after distributions, which total $511 million for the first quarter.

Free cash flow fluctuates based on the changes in and the timing of short term working capital requirements. While the first quarter benefited from these items, even after adjusting for them, we were able to increase our forecast for the year by $100 million.

Our capitalization and liquidity the metrics are provided on slide seven as of March 31, our long term debt to adjusted EBITDA ratio was four <unk> times, which is above our target range of three to three five times and re of reinforces our focus on further debt reduction.

Additionally, we exited the quarter with $2 8 billion of committed liquidity.

As outlined on slide eight we increased our fee based 2021, adjusted EBITDA guidance by a net $25 million and decreased our ethanol segment guidance by a similar amount, resulting in our overall 2021, adjusted EBITDA guidance remaining unchanged at plus or minus two points.

One 5 billion.

The slide summarizes some of the drivers of the changes for each segment.

I would note that the change and inner segment NGL fees was approximately $40 million for the full year, which reduces our facilities segment adjusted EBITDA with a corresponding increase to SNL.

Before returning the call of the Willy Slide nine summarizes the equity repurchase program that we initiated in November although we did not make equity repurchases and the first quarter.

Our capital allocation plans remain consistent with allocating up to 25% of our 2021 free cash flow after distributions to equity repurchases of.

The ultimate total allocation pace and timing will continue to be balanced as described on slide nine.

With that I will turn the call back over to Willie.

Thank you al.

And we've turned the meaningful corner with respect of free cash flow generation.

And we expect to enhance unitholder value by generating significant levels of free cash flow of our multi year period, and we will continue to allocate free cash flow to the benefit of our unitholders.

We are increasingly constructive on the long term outlook of North American energy, including our business as global demand continues to recover.

Meanwhile, our focus continues to be maximizing our free cash flow through optimizing and rationalizing our systems.

Working with customers partners and peers to align the interests and streamline and rationale rationalize excess capacity.

Our cost of operations Advair.

Advancing our sustainability program and above all the delivering safe reliable and responsible operations.

Recap of our 2021 goals are outlined on slide 10, followed by a summary of key takeaways from today's call provided on slide 11.

We appreciate your investment and and support of Plains, and we look forward to providing you with additional updates on our continued progress with that I will turn the call over to Roy for leaders and the Q&A. Thanks. Louis as we enter the Q&A session. Please limit yourself to one question and one follow up question and then return of the Q. If you of additional follow ups. This will allow us to address the top questions from as many participants.

The practical and aren't available time this afternoon.

Additionally, our investor relations team plans be available throughout the week to address additional questions. Joseph we're now ready to open the call for questions.

Thank you for your centers once again further participants you May press star one on your telephone keypad.

And then we have all our first question from junior.

Your line is open.

Hi, good afternoon, everyone.

And maybe to start off I was wondering if you can sort of reconcile the guy.

<unk> for me a little bit here.

Overall, the strong quarter.

Certainly better than you had guided from a fee based perspective.

Our commentary on the call today definitely more constructive and it was last time, you talked about building momentum it.

It sounds like your production forecast for the Permian back half weighted, but but it's certainly better and so kind of on the math.

And you kind of beat expectations by $60 million each of fee based guidance is the only up about $25 million.

It is having the election of conservatism about thinking you had mentioned the word election before.

Or is there a degradation and the base business.

Is something happening in the back half of the year I was wondering if you can just sort of.

And on on that for us for.

You can.

Thanks, Shneur I'll start off and then I'll, let Jeremy and and Harry kind of fell on the blanks and when you think if your question is around the full year of just the first quarter was the focus on just the first quarter.

It's around the full year I mean at the end of the day, you beat expectations, but you maintained guide, which it seems to imply even on the fee based basis seems to imply that youre expecting of works back half of the year, but you talked about momentum.

And positive commentary. So I was just trying to figure out if you can square that if that's conservatism or if that or if there's something that we need to be thinking about.

Yes, Shneur, let me start and then the other two can jump in here.

And made a comment in my prepared comments, if you think about the benefits of the and we got based on the storm.

Really $25 million across the whole year is $25 million for the year and.

And that's related to some of the shifting in the impacts of the storm shifting into the SNL and I think that'll be a good starting point, maybe for Jeremy to comment a bit more.

And engineer.

And so it's a bit of and acceleration we saw some benefit and the first quarter that $50 million that you mentioned is driven by the transportation segment seeing additional are lower operating costs somewhat offset by lower volumes and our facilities segment benefiting from.

On some opportunistic around our NGL facilities part of that involves some operating expenses close to $5 million to $10 million that was deferred to later in the year, just because of timing and interruptions and in Q1. So that is part of the net 50 going down the 25 and the other component.

All of that is driven by ethanol and there were some impacts of.

The Yuri and were pushed into the second quarter and even further based on market spreads and timing and so you'd see some some of that erosion and it's just all lumpiness associated with the euro. So if you say of the net impact of $25 50, and the other part is just wait and see on the rest of the opportunity we see completions, we see efficiencies.

But we really haven't seen the rigs the accelerate faster and so we're looking to see for production growth backend weighted and we're also seeing all mentioned this as well is we're not seeing Canadian differentials widened to historical levels based on the level of proration part of Thats built into our plan and we're looking to see but as far as core.

The Permian assets and other assets the performing in line with expectation Theres no degradation to that core business.

Okay.

That makes sense really do appreciate and so the way.

And see aspect of it.

Maybe it's all a follow up question I was wondering if we can talk about the asset sale process.

If you can remind us in terms of the timing and EBITDA that you've baked into the guidance for this year and.

And does this process block you out from doing any share repurchases.

Yes.

Sure Hi, this is Jeremy Goebel again.

And as Alan Willy both state and.

We are very confident and our ability to execute the processes all began and the first quarter of this year, we don't want to speculate on the timing more impact.

And the transactions just for sake of confidentiality, but I feel very strongly and our ability to execute with regard to our targets.

Richard want to comment on the blackout periods.

I don't think the.

Asset sales.

The timing of that will have any impact on repurchases.

We've predicted our.

As part of our guidance and so.

No impact on the ability to.

The effect repurchases.

Okay.

Perfect. Thank you very much really appreciate the color on the clarification today.

Generic.

We have all our next question from Christine Cho from Barclays. Your line is open.

Thank you.

Yes, Jeremy you usually provide.

And the sort of like expectations for what exit rate for the year is on Permian volumes.

Curious, if we could kind of get that and.

And maybe sort of what that means for 2022 for you guys.

And in that context, how should we think about earnings growth tied to the volume to the headwind that we're going to the one year closer to some contract expirations.

And at what point do you guys think about blend and extend to keep the volumes on your system for longer.

Jeremy Christine.

Good questions. So I will start and if I get them right and I heard there is an exit rate what does that mean for momentum into 'twenty. Two and then what does that mean for our ability of the contract longer term on our pipes.

The first question.

I would say that we're seeing a positive bias on drilling and completion efficiency manifesting themselves and shorter cycle times and higher EUR and Thats driven by spacing. We're seeing of February was a bit of a speed bump.

The Texas production of New Mexico production were down just because of timing, but March and April came back stronger.

And we're seeing is and acceleration of some completions into the commodity environment of the rigs aren't they're pacing our original projections. So we're seeing some acceleration of production, but nothing that materially changes our outlook. So if we entered the year and $4 2 million barrels a day, our view is for four to $4 5 million barrels.

Exit.

Rigs really need to step in and for acceleration, but this goes to your 'twenty two expectations were.

And we're increasingly optimistic about north American production, but it ultimately comes down the supply and demand, we're not going to see that material of rig ramp until you see OPEC production come out.

From behind the height, and you see demand and fill that so I think there is a wait and see approach there and that's why we're cautiously optimistic, but we need to see demand respond and we need to see the OPEC barrels hit the market before and Youll really see and expectation. So it's really too early to call 2022, because you need to see that backfill of additional rigs.

Take to enter material production growth I know I didn't directly answer your question, but that's how we're thinking about at this time.

With regard to blend and extend the work constantly in dialogue with our customers right now with 50% to 66, Midland and the MGH differentials that doesn't bode well for for re contracting at the level that we think set so what we're doing is we're staying close of our customers. We continue to add dedications of the law.

<unk> and <unk>.

We're now well over $2 5 million acres with term debt continues to extend our customers are very happy with us and for when those customers come back to re contract part of the big problem with the long haul pipes right now as people securing supply. We first purchased over 900000 barrels a day on a very strong position when it comes to either filling the pipes ourselves of re.

And so volume is not going to be of concern and filling our price we want to do it at the right time. So I think we have levers that most don't and so we'll be patient, but we're in constant dialogue, there and we will constantly look for opportunities to rationalize across the space to wear.

While you say, we don't have time 2025 is a long time from now before we have any material reductions on our commitments. So we do have time to let some of this evolved because the the industry understands the overcapacity and they're constantly looking for options to rationalize and we will be right and the center of those discussions.

And sales team the I'm sorry go ahead no go ahead. Please.

I was just going to add this is Willie the key point on the system momentum that built with our expectations and the end of 2021.

It happens at the end of 2021, but clearly if you don't build the momentum there is a longer lag time before you see the benefits and that's what we're we're optimistic about it and we see the recovery kind of driving.

The quicker growth trajectory and the this year if everything continues the way we expect it to.

Okay and then.

Because you did sort of on the comments on pipeline alright rationalization.

As we think about that it would seem that a conversion to cash and maybe make the most sense.

And so you have sufficient takeaway on the NGL side.

And from what I understand it doesn't sound like it's that simple to convert all liquids to gas it sounds like it requires the meaningful capex to change out the pump stations and all.

I've also heard that the diameter of needs to be at least 30 inches is that right or are there other things that these types of transport that like require less non game just trying to get a sense of what the options are here.

Well, Jeremy and Christopher and work and this Jeremy once you start off.

And Christine Thanks, Ken on the rationalization piece.

The natural home for takeaway as you look for forecasting and the markets is the.

The question of valuation and capital and the scope. So those does get reviewed from time to time and then there's the question of how do you deal with existing contracts and the existing structures on on pipe. So I think it's one of many options.

And.

I mean, we.

We're looking at anything and it all options across the system and so all our peers and so I'd say just being patient and we don't have details for you on now some of the comments you made around gas for true just because of the compression.

The breadth of all nature of the gas and fuel consumption, increasing with the smaller diameter pipes that does makes sense. So all of that gets looked at but I just need you to be patient as we as the industry works through the best options, but we're all working on it Christy, Germany and you want to add yes. This is Chris Chandler I guess I would just confirm kind of the.

The points you made and your initial question natural gas price are typically larger.

And the of course require compression and instead of pumps like you'd have on liquids pipes. So.

It can be done and it's certainly specific to the asset and question, but it's been done a number of times sometimes.

Liquid the gas and back to the liquid and the history of our industry. So.

There is certainly opportunity to do it out there, but in general you have to replace the pumps with the compressors and you do taken the efficiency of our capacity impact by having a relatively smaller pipeline you might install if you are building it from scratch and <unk>.

Christine This is Willie one of the one of the other benefits I think thats important is and all.

It seems as if it's getting harder and harder to build build assets now one of the things that we've got is a lot of operating leverage and our system, which gives us the capability to be able to evaluate some of these things perhaps more of than others.

And the challenge really is if you think about capital efficiency across the industry, while it may not be perfect and if you were designing it from from scratch and you'd go with the.

Our new line of a certain size in many cases when you factor all of these other things in it.

It does make a lot of sense and and that's what that's what the industry is really needs to start working through.

So really helpful and maybe if I could just tack on from a follow on all your major long haul pipes out of the Permian over.

30 inches of RMR.

This is Chris Jana they vary in size from 20 up to 36 inches.

Great. Thank you for them.

Permian.

Thanks Christine.

We have all our next question from Jeremy Tonet from Jpmorgan. Your line is open.

Hi, good afternoon.

Hi, Jeremy.

I just wanted to kind of dive in a little bit more on your producer conversations and what's giving you I guess the sense of confidence and cash into 2022.

It seems like the privates are a bit more active and the publics and just wondering what that means for plains. If you agree with that and you kind of see different.

The activity trends, there and what that means for you guys.

Jeremy or Jeremy Jeremy.

Jeremy Thanks for the question.

It is consistent and so the public company operators are largely holding the line and maximizing free cash flow and waiting for supply and demand the Bal.

And that's.

The investors are demanding it and free cash flow going back to equity holders and paying down leverage.

The large private producers with little to no leverage.

And they just see the returns and they are investing and that there.

And is investing heavily in it so there is there's I.

And I wouldn't generally say, it's private versus public I'd say of very select group of very large privates that are very well capitalized that's the group that's hitting the accelerator and so.

They'll have some impact, but that's not all of that is driving this I think $65 of oil with slight backwardation of our steep backwardation of allows producers to hedge and so.

And it's more free cash flow for them to allocate and so I think market structure aggregate of flat price.

But there is cautious optimism on that side and there is a few select operators that are stepping out in front of it of the generalizations made with all of the privates first of all of the public side I'd say that there's a gray area and there is of a select few of that are really hitting the accelerator.

Got it that's helpful. Thank you for that and.

I just wanted to pivot towards the energy transition, obviously, a very topical and getting more topical and I'm wondering if you had on your thoughts on on that subject. These days and specifically thinking about carbon capture and wondering if you see the 45 Q.

The written right now it was kind of sufficient to move forward with projects. If you have existing assets that can be kind of redeployed in that direction, just any thoughts in general would be helpful.

Jeremy This is willie on on Seo to sequestration I would tell you and transport we have not been as active.

As far as looking at that.

Others can make a comment on it the point I would make on energy transition.

As you know our company doesn't produce of resource and we don't manufacturer of product.

We of commercial agreements to move products from point, a to b and and find solutions and so while it may have not been advancing some of the day.

And some of the advancing discussions on on specific sequestration projects, we do stay very in tune with.

Our upstream and downstream.

And as well as our peers, we see a lot of activity and really it's our role to figure out how can we generate.

Solutions to moving things around at this point and time again back on the <unk>, we Havent Theres nothing that we have really moved forward on but we stay there's really no news I can share with your other and then we stay tuned on on different things, we can do on energy transition.

Got it and I'll leave it there thank you.

Thank you.

We have all our next question from Tristan Richardson from true.

Securities Your line is open.

Hi, good afternoon, guys Hi.

Hi.

Clarification question with respect to the.

Upper bound of potential repurchases.

Should we think of that is inclusive.

All of asset sales to the.

The extent the materialized throughout the year is that purely just of the the.

The free cash flow after distributions guidance.

And once you take that.

Yes.

I would think of the up to 25% B and the maximum but what we've articulated specifically around asset sales are that we would have to take.

Take into account and.

And consider the EBITDA that we're selling as well and so as you.

Youre selling and asset part of those proceeds and need to go to reduce debt just to keep leverage flat. So you got to think of it after that and again, we provided the up to 25% to give mathematical maximum but practically with asset sales it would be less of it.

And then a couple of with a midpoint of two the other points on.

On our slide nine just theres other considerations that will factored in.

And we view this as the tool that will be part of our capital allocation going forward.

But the there'll be a number of considerations that will come into play.

That's helpful and then.

I appreciate the earlier comments on on the cadence of the year.

I'm curious.

Is there any delta around the timing of.

Of asset sales debt.

Factoring in just the follow up on the previous question sort of.

And the timing change within the year and in terms of general assumptions for asset sales.

Contributing to sort of debt.

Fourth quarter weighted outlook.

Interest and it's Jeremy I'd say, one we don't want to speak to the timing of the asset sales as we talked about earlier, but we have assumptions in there and they haven't materially changed since the beginning of the year.

Something does change we will update once we've made the announcement of the.

The divestiture.

Thank you guys very much.

Thanks Tristan.

We have over the next question from Keith Stanley from Wolfe Research. Your line is open.

Thanks. Good evening, just two quick follow ups first sorry, if I missed this did you comment on the amount of asset sales completed now year to date.

Keith This is Jeremy Goebel, we've completed $20 million of asset sales to date and so.

And that's consistent with what we had.

I guess, we did that in January of this year. So that's the.

And the total amount of completed to date and the rest is in progress.

Okay great.

And then the other ones I, just want to understand sort of the lower NGL intersegment fees item.

Assume that's just your youre lowering rates on some of the facilities assets that are that the ethanol business users.

And I just want to clarify I think you said facilities EBITDA misheard 40 million by this and it helps us and all by 40 for the year.

Keith that's correct. This is Jeremy.

Effectively think of it as we just.

The charge are.

Marketing and affiliate market rates and we look at that we make assumptions for the beginning of the year impacted by market structure and competitive rates around the area and so we made that adjustment and so it's a net neutral and it's just an allocation of from facilities that for now.

Great. Thank you.

We have our next question from Gabe Moreen from Mizuho. Your line is open.

I guess my question is sort of hey, good afternoon, everyone. Most of my questions have been asked or answered, but maybe I was just kind of talk about how and how I guess low you think you can sort of whittle down you're on.

Ongoing maintenance Capex, and just all capex outside of where.

And what are you kind of finding those savings so far and how we might be able to pick those numbers on an annual basis.

Sure Gabe I'll, let Chris Chandler address that I gave as Chris Chandler I'll start with maintenance capital.

Said previously that we think a long term run rate for maintenance capital is less than or equal to $200 million. We still believe that to be the case, we did update our guidance for 2000 $21 million to $180 million of $15 million reduction there is a number of factors driving that including.

Asset sales that of uncompleted and ones that are forecasted later and the year.

We're also completing a number of multiyear improvement programs related to the integrity and reliability that we won't have to spend on going forward.

The regulatory requirements continue to evolve as new best practices around the inspection methodology tools and analysis. So it's a number of factors.

By all means not a.

Lack of investment or a lack of commitment maintenance or integrity.

But when the best practices are found internally or within the industry and we certainly look to apply those.

For your question on investment capital.

We've lowered our guidance there by $50 million from $425 million of $375 million.

Likewise, there is a number of factors involved and we're always looking to optimize our maintenance capital spend so some of thats cost improvements scope reductions timing optimization.

We'll talk with our customers and if we can delay a part of the scope of a particular project without.

Our financial impact or with with.

<unk> support of the customer we will do that we've.

We are also of pushed back the startup of construction for the buy earlier project. That's the piece of the diamond expansion of the very and the 40 miles that goes for the Memphis refinery to the.

Cap line facility of outside by Haley and Mississippi, we've done that to take some time to evaluate some alternatives and response to our stakeholder engagement activities that we have.

And then doing for almost two years now.

We're still planning on a startup by year end, but if the alternatives cause that the change we will certainly provide and update.

On the appropriate.

Hey, Gabe.

One thing I want you to takeaway from what Chris talked about is back to the maximizing free cash flow.

And we all do I mean, it's part of our dialogue every day as we think about it.

<unk> capex maintenance Capex operating costs on <unk>.

How do we maximize free cash flow right and so it is a much broader discussion and it's really taking hold and the.

And the business and that's why we think we will continue to have success and that area.

Yes.

Thanks, Chris Thanks for the maybe I could just ask a quick follow up on I guess the behaviour of extension.

If your timeline slips there for whatever reason because you have for look at alternatives for the topline contracts still kick in as expected or of those tied together somehow.

So this is Chris all.

And I'll answer that on the cap line reversal of the mainline that originates and Protocone ends at St. James that project is moving ahead as schedule of it as an independent project and its independent of anything on the Diamond expansion and the Diamond extension. So things are unchanged there and that is still on schedule for a <unk>.

Startup by year end.

Thanks, Chris.

We have our next question from Michael on the PB from Goldman Sachs. Your line is open Yeah, Hey, guys. Thanks for taking my question real quick just on a follow up on Diamond and cap line can you remind us when when do you expect cap.

Line to be fully in service kind of so both legs and do you expect it to be at full run rate EBITDA and that first year or will it take a couple of years to kind of ramp in the of that.

Aaron Thanks for the question as Chris mentioned there is the.

We're evaluating some alternatives associated with the diamond piece, but to reiterate with Chris Davis you'd be at full run rate on the committed capacity.

For cap line from north to South.

And some uncommitted space and we look to continue to fill that and will.

And based on current commitments that will go to a full run rate and the first quarter of 'twenty two from the.

North to South East and we will look to add additional commitments over time on the diamond piece, we're evaluating alternatives and go up.

And you guys as soon as possible.

Got it and then on time and.

And it's gotten messy, obviously at the city Council and with the litigation underway as well both state and federal just curious.

Is there an opportunity to use your partners pipeline Theres, a second pipeline that kind of runs not too far from by hail yes.

Of that opportunity to utilize that as a work around or is that of full pipe right now.

Michael This is Willie I would tell you we are evaluating all options and leave it at that.

Got it okay. Thanks, guys much appreciate it.

Thank you.

We have our next question from Jean Ann Salisbury from Bernstein.

Your line is open.

The committed tariff that was posted for Wink to Webster recently for F&D teeth, and and then 45 cents per barrel, which I think has caused some investor confusion and and for being on this and confusion for me and so.

Is the right way to think about it.

And interim rate for large customers and the true committed long term range hasnt been posted or disclosed yet.

Jean Ann This is Jeremy you're absolutely correct. This is just the interim service with limited on capacity is limited origination capacity and it's effectively matching the arb from Midland.

Houston during a period of the prior to the fourth quarter when the and.

<unk> kick in for that and that has no reflection on the long term committed terror and limited adjusted.

Alternatives and eventually when the pipeline is up and running that long term framework.

That's correct.

Okay. Thank you and the.

And as a follow up on any update on the range land expansion it seems like with Keystone and getting that might be garnering more interest.

And this is Jeremy we are in constant dialogue with our customers we are.

We have interest and that expansion, but at this point, we're shipping and our capacities for going South from Canada to the U S and multiple destinations.

Okay. Thanks, that's all for me.

Thanks, Jean Ann.

We have all our last question from Harry Mateer from Barclays. Your line is open.

Hi, good afternoon guys.

All you you highlighted the the large drop and short term debt and the first quarter and I think historically, you've tended to guide for that number to sort of fluctuate and the 400 $800 million range is that so that's all good guide to use and how should we think about the short term debt line trending for the rest of 2020 one.

Yes.

We would say is it's obviously a number of variables.

We will impact kind of of the long term trend that thats probably still.

The reasonable long term number.

What I would say is we do expect some of the benefit we saw and <unk> to be temporal.

But we do expect again on our free cash flow after the after distributions to be in that 400 million number clearly <unk> was 500 millions of that kind of tells you and we expect.

Some of that benefit we've seen and <unk> to be temporary.

Okay. Thanks, and then.

Related to that just when it comes to debt reduction and think about.

And on getting these asset sales proceeds and the door.

How are you planning to prioritize that net debt reduction is there something pre payable you have or is it going to be about lengthening and runway or might you target some high coupon debt sort of better better Bruce metrics like free cash flow and and coverage.

Most of our.

Coupon debt has a lot of maturity left too.

Obviously harder to get out and <unk>.

Take out of there.

The upfront costs associated with debt.

We do have.

The $1 billion 150 maturing and within the next couple of years.

And a few other issues shortly after so we will likely target.

Some of the near term senior note maturities.

Look the retire some on the front end.

With that said, we will we will take a look at if there is an economic benefit to some of the longer dated stuff but.

It's out there of ways.

And we think we'd be better suited to try to maintain and manage the near term exposure.

Okay got it thanks very much.

Thanks Harry.

Hey wanted to thank everybody again for joining our call and we look forward to having follow up conversations with many of you.

And the coming days. So thanks, again, and we look forward to updating you again in August.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating in May of this.

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Good day, and thank you for standing by and welcome to the PAA and PAGP first quarter 'twenty. Thank you on the earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session and for the part that's supposed to ask the question you will need the press star one.

On the telephone keypad it for you.

For quite a for the system in the press Star zero, all over the lifetime of the kinds of yourself if.

For your speakers today, one of the lumber. Please go ahead. Thank.

Thank you Joseph Good afternoon, and welcome to Plains, All American as the first quarter of 2021 earnings call. Today's slide presentation is posted on the Investor Relations website under the news and events section of Plains, All American Dot Com, where audio replay will also be available following today's call.

Later this evening, we plan to post our earnings package to the Investor Kit section of our IR website, which will include today's transcript and other reference materials and important disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide two of today's presentation of condensed consult consolidated balance sheet for PAGP and other reference materials are located in the appendix.

Yes.

Today's call will be hosted by Willie Chiang Chairman and CEO and Al Swanson Executive Vice President and CFO. Additionally, other members of our executive team are available for the Q&A portion of today's call, including Harry <unk>, Our President and Chris Chandler Executive Vice President and Chief operating Officer, and Jeremy Goebel, Executive Vice President and Chief Commercial Officer.

Well, it's Chris Herbold, Senior Vice President and Chief Accounting Officer with that I will now turn the call over to William Thanks.

Thanks, Ryan and thanks to each of you for joining US. This evening, we plan to keep our prepared comments brief and.

Of note that our full year guidance incorporates an estimated 25 million net benefit from winter storm, where storm Yuri al will provide more detail on our results and outlook in his section of the call all plan to focus my comments today on our longer term positioning.

We are increasingly constructive and our outlook for global energy demand recovery.

And vaccinations are progressing key world economies of reopening and global inventory levels had drawn down meaningfully.

On the supply side and the combination of opec's discipline, and recent increases and Permian activity levels, and our ongoing dialog with producers reinforces our confidence and the Permian to resume growth in the back half of 2021, and importantly building momentum into 2022 and beyond as global supply and <unk>.

Demand balance improves.

We expect the Permian to exit 2021 at four 4% and $4 5 million barrels a day, which is an increase of 200 of 300000 barrels a day from year end 2022 year and 2021 now.

Notwithstanding our constructive bias and we chose to maintain our 2021 adjusted EBITDA guidance of $2. One 5 billion at this time due to the combination of the timing matters and al will cover and the fact that our constructive view of the fundamentals is weighted towards the end of the year.

For PAA, we believe 2021 represents meaningful cash flow injection point.

As illustrated on slide four we've increased our free cash flow estimate by $100 million and now expect to generate plus or minus $400 million after distributions and excluding asset sales were.

We remain confident and our ability to achieve our 2021 asset sales target of $750 million, having continued to progress formal sales processes with strong levels of interest and engagement.

Including targeted asset sales are projected free cash flow after distribution growth to 1.15 billion.

Beyond 2021, maximizing free cash flow will continue to be our focus we expect to generate sizable levels of free cash flow after distributions over a multiyear period.

And any further asset sales proceeds would be additive.

<unk> cash return of our equity holders offer meaningful value for our current and prospective investors.

Our long term cash flow visibility is bolstered by the substantial completion of our multi year system build out resulting in a significantly lower capex profile going forward, which is illustrated on slide five.

High level overview of the status update for our two key remaining projects Wink to Webster and the Diamond expansion cap line reversal are located within the appendix of today's presentation and with that I'll turn the call over to al.

Thanks Willie.

And on slide six our first quarter fee based adjusted EBITDA of $559 million exceeded expectations and was in line with fourth quarter 2020.

These benefits more than offset the revenue impact of the storm related downtime across our Texas and mid Con pipeline systems as well as lower realized revenue at certain non hub crude terminal and Canadian NGL facilities.

Looking forward, our NGL margins for the balance of the year are a little lower than the current market.

But are in line with historical margins.

Focusing on the first quarter adjusted EBITDA of a negative $13 million was below our guidance for the quarter the.

Primary drivers for the underperformance, where a combination of the negative impact of winter storm, Yuri and less favorable of crude oil differentials and both the U S and Canada the.

The impacts of winter storm early extends into the second quarter as inventory build and the Gulf coast compressed crude differentials and the U S.

Additionally, despite proration levels and Canada being in line with our expectations. We continue to see differentials that are less favorable than we originally anticipated.

As Willie noted earlier, we generated strong free cash flow after distributions, which totaled $511 million for the first quarter.

Our capitalization and liquidity metrics are provided on slide seven as of March 31 of our long term debt to adjusted EBITDA ratio was four <unk> times, which is above our target range of three to three five times and re and reinforces our focus on further debt reduction.

Additionally, we exited the quarter with $2 8 billion of committed liquidity.

One 5 billion.

The slide summarizes some of the drivers of the changes for each segment.

I would note that the change and inner segment NGL fees was approximately $40 million for the full year, which reduces our facilities segment adjusted EBITDA with a corresponding increase to SNL.

Before returning the call of the whaler slide nine summarizes the equity repurchase program that we initiated in November although we did not make equity repurchases and the first quarter.

And our capital allocation plans remain consistent with allocating up to 25% of our 2021 free cash flow after distributions to equity repurchases of.

The ultimate total allocation pace and timing will continue to be balanced as described on slide nine.

With that I will turn the call back over to Willie.

Thank you al.

And we've turned a meaningful corner with respect of free cash flow generation.

We are increasingly constructive on the long term outlook of North American energy, including our business as global demand continues to recover.

Meanwhile, our focus continues to be maximizing our free cash flow through optimizing and rationalizing our systems.

Working with customers partners and peers to align the interests and streamline and rationale rationalize excess capacity.

Wearing our cost of operations Advair.

Advancing our sustainability program and above all of the delivering safe reliable and responsible operations.

Recap of our 2021 goals are outlined on slide 10, followed by a summary of key takeaways from today's call provided on slide 11.

We appreciate your investment and and support of planes and we look forward and providing you with additional updates on our continued progress with that I'll turn the call over to Roy and the leaders in the Q&A. Thanks, Louis as we enter the Q&A session. Please limit yourself to one question and one follow up question and then return to the queue. If you have additional follow ups. This will allow us to address the top questions from as many participants.

As practical and aren't available time this afternoon.

Additionally, our Investor relations team plans the available throughout the week to address additional questions. Joseph We're now ready to open the call for questions.

Thank you for your centers once again further participants you May press star one on your telephone keypad.

And then we have all our first question from junior.

Jamie Your line is open.

Hi, good afternoon, everyone.

Maybe to start off I was wondering if you can sort of reconcile the guy.

<unk> for me a little bit here.

Overall, the strong quarter.

Certainly better than and you had guided from a fee based perspective.

Your commentary on the call today definitely more constructive and it was last time, you talked about building momentum.

It sounds like your production forecast for the Permian back half weighted, but but it's certainly better and so we're kind of on the math you can kind of do your expectations by $60 million since your fee based guidance as the only up about 25.

It is that and the election of conservatism I think and you had mentioned the word election before.

Or is there a degradation and the base business.

Is something happening in the back half of the year I was wondering if you can just sort of.

And on on that for us for.

You can.

Thanks, Joe and Eric I'll start off and then I'll, let Jeremy and area of kind of fell on the blanks and when you think if your question is around the full year. Our adjusted first quarter was the focus on just first quarter.

It's around the full year I mean at the end of the day, you beat expectations, but you maintained guide, which seems to imply even on the fee based basis seems to imply that you're expecting a worse back half of the year, yeah, but you've talked about momentum and.

And positive commentary. So I was just trying to figure out if you can square that if that's conservatism or its that or if there's something that we need to be thinking about.

Yes, Shneur, let me start and then and the other two can jump in here.

I made the comment in my prepared comments, if you think about the benefits of the <unk> and we got based on the storm.

Really $25 million across the whole year is $25 million for the year and.

And that's related to some of the shifting in the impacts of the storm shifting and the SNL and I think that'll be a good starting point, maybe for Jeremy to comment a bit more.

And engineer.

And so it's a bit of and acceleration we saw some benefit and the.

The first quarter that $50 million that you mentioned is driven by the transportation segment seeing additional are lower operating costs somewhat offset by lower volume and our facilities segment benefiting from.

From opportunistic around our NGL facilities part of that involves some operating expenses close to five and $10 million that was deferred to later in the year, just because of timing and interruptions and and.

And Q1, so that is part of the net 50 going down the 25. The other component of this driven by ethanol there was some impact of <unk>.

And were pushed into the second quarter and even further based on market spreads and timing and so you'd see some of that erosion is just baked all of lumpiness associated with euro and so if you say of the net impact of $25 50, and the other part is just wait and see on the rest of the opportunity we see completions, we see efficiencies.

But we really haven't seen the rigs and accelerate faster and so we're looking to see for production growth backend weighted and we're also seeing al mentioned this as well as we're not seeing Canadian differentials widened to historical levels based on the level of proration part of Thats built into our plan and we're looking to see but as far as core Perm.

And the assets and other assets the performing in line with expectation, there's no degradation to that core business.

Okay.

That makes sense really do appreciate and so.

Wait and see aspect of it.

Maybe it's all a follow up question I was wondering if we can talk about the asset sale process.

If you can remind us in terms of the timing and EBITDA that you've baked into the guidance for this year and.

And does this process block you out from doing any share repurchases.

Sure Hi, this is Jeremy Goebel again.

And as Alan Willy both stated.

We are very confident and our ability to execute the processes all began and the first quarter of this year, we don't want to speculate on the timing more impact the.

And the transactions just for sake of confidentiality.

But I feel very strongly and our ability to execute with regard to our targets.

You want to comment on the blackout periods, and so I don't think of the.

Handset sales.

The timing of that will have any impact on repurchases.

We've predicted are included as part of our guidance and so.

No impact on the ability to the.

Effect repurchases.

Okay.

Perfect. Thank you very much really appreciate the color on the clarification today.

Thanks Shneur.

We have all right next question from Christine Cho from Barclays. Your line is open.

Thank you.

And.

Yes, Jeremy you usually provide.

And the sort of like expectations for what exit rate for the year is on Permian volumes.

Curious, if we could kind of get that and.

Maybe sort of what that means for 2022 for you guys.

And in that context, how should we think about earnings growth tied to the volume to the headwind that we're going to the one year closer to some contract expirations.

At what point do you guys think about blend and extend the volumes on your system for longer.

Christine.

Good questions. So I will start and if I get them right and I heard there is the exit rate what does that mean for momentum into 'twenty. Two and then what does that mean for our ability to contract longer term on our pipes.

The first question.

I would say that we're seeing a positive bias on drilling and rig completion efficiency manifesting themselves and shorter cycle times and higher EUR and Thats driven by spacing. We're seeing of February was a bit of of FIFA.

The Texas production, New Mexico production were down just because of timing of March and April came back stronger what we're seeing is and acceleration of some completions into this commodity environment of the rigs are there they're pacing our original projections and we're seeing some acceleration of production, but nothing that materially.

And our outlook. So if we entered the year and $4 2 million barrels a day. Our view is for four to $4 5 million barrels a day of exit.

Rigs really need to step in and for acceleration, but this goes to your 'twenty two expectations, we're increasingly optimistic about north American production, but it ultimately comes down the supply and demand, we're not going to see that material of rig ramp until you see OPEC production come out at.

And from behind the height.

And you see demand and fill that so I think there is a wait and see approach there and that's why we're cautiously optimistic, but we need to see demand respond and we need to see the OPEC barrels hit the market before and Youll really see and expectation. So it's really too early to call 2022, because you need to see that backfill of additional rigs of take to.

And our material production growth and no I didn't directly answer your question, but that's how we're thinking about at this time.

With regard to blend and extend the work constantly in dialogue with our customers right now with 50% of 66, Midland and the EMEA.

<unk> that doesn't bode well for for re contracting of level that we think set so what we're doing is we're staying close of our customers. We continue to add dedications of the lease and we are.

Now well over $2 5 million acres with term debt continues to extend our customers are very happy with us and for when the customers come back to re contract part of the big problem of the long haul pipes right now as people securing supply. We first purchased over 900000 barrels a day on a very strong position when it comes to either filling and the pipes ourselves our rig contract.

And so volume is not going to be of concern and filling our price we want to do it at the right time. So I think we have levers that most don't and so we'll be patient over and constant dialogue, there and we will constantly look for opportunities to rationalize across the space to wear.

And so the team did.

Im sorry go ahead no go ahead please.

I was just going to add this is willie.

Key point on the system momentum that built with our expectations and the end of 2021.

And it happens at the end of 2020, one, but clearly if you don't build the momentum there is a longer lag time before you see the benefits and Thats what were on.

We're optimistic about it and we see the recovery of kind of driving a car.

Quicker growth trajectory in the this year if everything continues the way we expect the too.

Okay and then.

Just because you did sort of on the comments on pipeline alright rationalization.

And as we think about that.

<unk> got a conversion to cash and maybe make the most sense.

Essentially you have sufficient takeaway on the NGL side.

From what I understand it doesn't sound like it's that simple to convert all liquids piped gas it sounds like it requires the meaningful capex to change out the pump stations and I've also heard that the diameter of needs to be at least 30 inches is that right or are there other things that the pipes the transport that require less and just try.

And you get a sense of what the options are here.

Well, Jeremy and Christopher and work and this Jeremy why don't you start off.

Christine and thanks again on the rationalization piece.

GAAP the natural home for takeaway as you look for forecasting and the markets.

The question of valuation and capital and Scopes of those does get reviewed from time to time and then is the question of how do you deal with existing contracts and the existing structures on on pipe. So I think it's one of many options.

<unk>.

I mean, we're looking at any of that all options across the system and some of our peers and so I'd say just the patient and we don't have details for you on now some of the comments you made around gas are true just because of the compressor.

And congrats of all nature of the gas and fuel consumption, increasing with the smaller diameter of highest that does makes sense. So all of that gets looked at but I just needed to be patient as we as the industry works through the best options, but we're all working on it.

Christopher driven and you want to add yes. This is Chris Chandler I guess I would just confirm kind of the points you made and your initial question natural gas price for typically larger.

And the of course require compression and instead of pumps like you'd have on liquids pipes. So.

It can be done and it's.

And it certainly specific to the asset and question, but it's been done a number of times sometimes.

Liquid the gas and back to liquid and the history of our industry. So.

There is certainly opportunity to do it out there, but in general you have to replace the pumps with the compressors and you do taken of efficiency all of our capacity impact by having a relatively smaller pipe and you might and.

All of you are building it from scratch and.

Christine This is Willie one of the one of the other benefits I think thats important to us.

It seems as if it's getting harder and harder to build assets now one of the things that we've got is a lot of operating leverage and our system.

Which gives us the capability to be able to evaluate some of these things, perhaps more of than others and.

And the challenge really is if you think about capital efficiency across the industry, while it may not be perfect and if you were designing it for from scratch you would go with the.

Our new line of a certain size and many cases when you factor all of these other things in it.

It does make a lot of sense and and that's what that's what the industry is really needs to start working through.

So really helpful and maybe if I could just tack on from a follow on on all your major of long haul pipes out of the Permian and over.

30 inches of RMR.

This is Chris Chandler they vary in size from 20 up to 36 inches.

Great.

Permian.

Thanks Christine.

We have all our next question from Jeremy Tonet from JP Morgan Your line is open.

Hi, good afternoon.

Hi, Jeremy.

I just wanted to kind of dive in a little bit more on your producer conversations and what's giving you I guess the sense of confidence of cash into 2022.

It seems like the privates are a bit more active and the publics and just wondering what that means for plains. If you agree with that and you kind of see different.

The activity trends, there and what that means for you guys.

Jeremy or Jeremy Jeremy.

Jeremy and thanks again for the question.

It is consistent and so the public company operators are largely holding the line and maximizing free cash flow and waiting for supply and demand at the back.

And once.

The investors are demanding it and free cash flow going back to equity holders and paying down leverage.

The large private producers with little to no leverage.

They just see the returns and they are investing and that.

And investing heavily and it so there is there's.

And I wouldn't generally say is private versus public I'd say of very select group of very large privates that are very well capitalized that's the group of hitting the accelerator and so.

They all have some impact and thats not all of that is driving this I think $65 of oil with slight backwardation of our steep backwardation of allows producers to hedge and so thats more free cash flow for them to allocate and so I think market structure aggregate flat price.

But there is cautious optimism on that side and there is a few select operators that are stepping out in front of it and the generalizations may of all of the private and first of all of the public side I'd say, there's a gray area and there is of a select few of that are really hitting the accelerator.

Got it that's helpful. Thank you for that and.

Just wanted to pivot towards the energy transition, obviously, a very topical and getting more topical and I'm wondering if you had on your thoughts on on that subject. These days and specifically thinking about carbon capture and wondering if you see the 45 Q.

Credit since the written right now it was kind of sufficient to move forward with projects. If you have existing assets that could be kind of redeployed in that direction, just any thoughts in general would be helpful.

Jeremy This is willie on on <unk>.

Code to sequestration I would tell you and transport we have not been as active.

As far as looking at that.

Others can make a comment on it the point I would make on energy transition.

As you know our company doesn't produce of resource and we don't manufacturer of product.

We of commercial agreements to move products from point, a to b and and find solutions and so while it may have not been advancing some of the discussion.

And some of the advancing discussions on on specific sequestration projects, we do stay very in tune with our upstream and downstream peers and is.

As well as our peers, we see a lot of activity and really it's our role to figure out how can we generate.

Solutions to moving things around at this point and time again and back on the <unk>, We Havent Theres nothing that we have really moved forward on but we stay there's really no news I can share with your other and then we stay tuned on on different things, we can do on energy transition.

Got it and I'll leave it there thank you.

Thank you.

We have all our next question from Tristan Richardson from true.

Securities Your line is open.

Hi, good afternoon, guys Hi.

Hi.

Clarification question with respect to the all.

Per bound of potential repurchases.

Should we think of that is inclusive.

All of asset sales to the extent they materialize throughout the year is that purely just of the debt.

The free cash flow after distributions guidance.

And I want to take that.

Yes.

I would think of the up to 25% being the maximum but what we've articulated specifically around asset sales are that we would have to.

Take into account.

And consider the EBITDA that we're selling as well and so.

You are selling and asset part of those proceeds and need to go to reduce debt just to keep leverage flat. So you got to think of it after that again, we provided the up to 25% to give a mathematical.

Maximum but practically with asset sales it would be less of that.

And then a couple of the mid point you to.

The other points on on our slide nine just theres other considerations that will factor in.

We view this as a tool that will be part of our capital allocation going forward.

But the there'll be a number of considerations that will come into play.

That's helpful.

I appreciate the earlier comments on on the cadence of the year.

Curious.

Is there any delta around the timing of asset sales.

Factored in just the follow up on a previous question sort of.

And the timing change within the year and in terms of general assumptions for asset sales debt.

And is contributing to sort of debt.

Fourth quarter weighted outlook.

Interest and it's Jeremy I'd say, one we don't want to speak to timing and the asset sales as we talked about earlier, but we have assumptions in there and they haven't materially changed since the beginning of the year, if something does change and we'll update once we've made the announcement of the divestiture.

And thank you guys very much.

Thanks Tristan.

We have over the next question from Keith Stanley from Wolfe Research. Your line is open.

Thanks. Good evening, just two quick follow ups first sorry, if I missed this did you comment on the amount of asset sales completed now year to date.

Keith This is Jeremy Goebel, we've completed $20 million of asset sales today and so thats.

And consistent with what we have.

Yes, we did that in January of this year. So that's the the.

And the total amount of completed to date the rest is in progress.

Okay great.

And then the other one I just want to understand so the lower NGL intersegment fees item.

Assume thats just your youre lowering rates on some of the facilities assets that are that the ethanol business users.

And I just want to clarify and I think you said facilities EBITDA is hurt 40 million by this and it helps us and all of my 40 for the year.

Keith that's correct. This is Jeremy.

Effectively think about it is we just.

Charge or.

Marketing and affiliate market rates and we look at that we make assumptions for the beginning of the year impacted by market structure and competitive rates around the area and so we made that adjustment and so it's a net neutral is just an allocation from the facilities that for now.

Great. Thank you.

We have our next question from Gabe Moreen from Mizuho. Your line is open.

I guess my question and sort of Hey, good afternoon, everyone. Most of my questions have been asked or answered, but maybe I was just kind of talk about how and how I guess low you think you can sort of whittle down you're on.

Ongoing maintenance Capex, and just all capex outside of where.

And what are you kind of finding those savings so far and how we might be able to pick those numbers on an annual basis.

Sure Gabe I'll, let Chris Chandler address that if I gave as Chris Chandler All star.

And with maintenance capital.

<unk> said previously that we think a long term run rate for maintenance capital is less than or equal to $200 million. We still believe that to be the case, we did update our guidance for 2000 $21 million to $180 million of $15 million reduction Theres, a number of factors driving that including.

Asset sales that have been completed and ones that are forecasted later and the year.

We're also completing a number of multiyear improvement programs related to the integrity and reliability that we won't have to spend on going forward.

Regulatory requirements continue to evolve as new best practices around the inspection methodology tools and analysis. So it's a number of factors.

By all means not a.

Lack of investment or a lack of commitment maintenance or integrity.

But when the best practices are found internally or within the industry, we certainly look to apply those.

For your question on investment capital.

We've lowered our guidance there by $50 million from $425 million of $375 million.

Likewise, there is a number of factors involved and we're always looking to optimize our maintenance capital spend so some of thats cost improvements scope reductions timing optimization.

We will talk with our customers and if we can delay a part of the scope of a particular project without.

Our financial impact or with with.

Support of the customer we will do that we've.

We've also pushed back the start of construction for the buy earlier project. That's the piece of the Diamond expansion at the very end of the 40 miles that goes for the Memphis refinery to the.

The <unk> facility of outside by Haley and Mississippi, we've done that to take some time to evaluate some alternatives and response to our stakeholder engagement activities that we have.

And then doing for almost two years now.

And we're still planning on a start up by year end, but if the alternatives cause that to change, we'll certainly provide and update.

When appropriate.

Hey, Gabe.

One thing I want you to take away from what Chris talked about is back to the maximizing free cash flow.

All that we all do I mean, it's part of our dialogue every day as we think about it.

<unk> capex maintenance Capex operating costs on <unk>.

How do we maximize free cash flow right and so it is a much broader discussion and it's really taking hold and the and.

And the business and that's why we think we will continue to have success and that area.

Thanks, Chris Thanks, Louis and maybe I could just ask a quick follow up on I guess by earlier the extension.

If the timeline slips there for whatever reason because that's the liquid alternatives.

Of the cap line contracts still kick in and as expected or of those tied together somehow.

So this is Chris all.

I'll answer that on the cap line reversal of the mainline that originates and Protocone ends at St. James that project is moving ahead as schedule of it as an independent project and its independent of anything on the Diamond expansion and the Diamond extension. So things are unchanged, there and thats still on schedule for a <unk>.

By year end.

Thanks, Chris.

We have our next question from Michael on the PD from Goldman Sachs.

Your line is open hey, guys. Thanks for taking my question real quick just on a follow up on Diamond and cap line can you remind us when.

And when do you expect top line to be fully in service kind of so both legs and do you expect it to be at full run rate EBITDA and that first year or will it take a couple of years to kind of ramp in the of that.

Jeremy Thanks for the question as Chris mentioned there is the.

And we're evaluating some alternatives associated with the diamond piece, but to reiterate what Chris Davis you'd be at full run rate on committed capacity for.

The cap line from north to South of uncommitted space, and we look to continue to fill that and will.

Based on current commitments that will go the full run rate and the first quarter of 'twenty two from the north of the southeast and we'll look to add additional commitments over time on the diamond piece for evaluating alternatives and we'll update you guys as soon as possible.

Got it and then on time and it is.

Scott and messy, obviously at the city Council and with the litigation underway as well both state and federal just curious.

Is there an opportunity to use your partners pipeline Theres, a second pipeline that kind of runs not too far from by hail, Yes, do you have that opportunity.

We utilize that as a work around or is that of full pipe right now.

Michael This is willing and I would tell you we are evaluating all options and leave it at that.

Got it okay. Thanks, guys much appreciate it.

Thank you.

We have all our next question from Jean Ann Salisbury from Bernstein.

Your line is open.

The committed tariff that was posted for wink to Webster recently.

<unk> and then 45 cents per barrel, which I think has caused some investor confusion and and for being on this and confusion for me is on.

Is the right way to think about it and that's just an interim rate for large customers and the true committed long term range hasnt been posted or disclosed yet.

Dean and this is Jeremy you're absolutely correct. This is just the interim service with limited on capacity is limited origination capacity and it's effectively matching the R from Midland.

Houston during a period of the prior to the fourth quarter when the.

<unk> kick in for that is net debt has no reflection on the long term committed tariff and limited adjusted.

Alternatives and eventually when the pipeline is up and running that long term era of freight let me put debt.

That's correct.

Okay. Thank you and.

And then as a follow up on any update on the range land expansion and it seems like with Keystone and getting at that might be garnering more interest.

And this is Jeremy we are in constant dialogue with our customers we are.

We have interest and that expansion, but at this point, we're shipping and our capacities for going South from Canada to the U S and multiple destination.

Okay. Thanks, that's all for me.

Thanks, Jean Ann.

We have all of our last question from Harry Mateer from Barclays. Your line is open.

Hi, good afternoon guys.

All you you highlight of the the large drop and short term debt and the first quarter and I think historically, you've tended to guide for that number to sort of fluctuate and of 400 day $800 million range is that so that's all good guide to use and how should we think about the short term debt line trending for the rest of the 2021.

Yes.

We would say is obviously the number of variables that will impact kind of the long term trend that thats probably still.

A reasonable long term number.

What I would say is we do expect some of the benefit we saw and <unk> to the <unk>.

But we do expect again on our free cash flow after the after distributions to be in that 400 million number clearly <unk> was 500 millions of the kind of tells you and we expect.

Some of that benefit we've seen and low <unk> growth.

Okay. Thanks, and then.

Related to that just when it comes to debt reduction and think about.

On getting these asset sales proceeds in the door.

Most of our.

Hi, Keith.

On debt has a lot of maturity left to sort of obviously harder to get out and take out in terms of the.

Upfront costs associated with debt.

We do have I think of $1 billion 150 maturing and within the next couple of years.

And a few other issues shortly after so we will likely target.

Some of the near term senior note maturities.

Look to retire some on the front end.

With that said, we will we will take a look at if there is an economic benefit to some of the longer dated stuff but.

It's out there of ways and we think we'd be better suited to try to maintain and manage the near term exposure.

Okay got it thanks very much.

Harry.

Hey wanted to thank everybody again for joining our call and we look forward to having follow up conversations with many of you and.

And the coming days. So thanks, again, and we look forward to updating you again in August.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating and that was going.

Right.

Q1 2021 Plains All American Pipeline LP and Plains GP Holdings LP Earnings Call

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