Q4 2020 Sempra Energy and Oncor Electric Delivery Company LLC Earnings Call

Please standby were about to begin.

Good day and welcome to the Sempra Energy fourth quarter earnings Conference call.

Today's conference is being recorded at.

At this time I'd like to turn the conference over to Nelly Molina, Vice President of Investor Relations.

Good morning, everyone and welcome to our fourth quarter, 'twenty and 'twenty earnings call for Sempra Energy a live webcast of this teleconference and slide presentation is available on our website under the Investor section.

That's today on the line we have several members of our management team, including Jeff Martin Chairman and Chief Executive Officer before me Halleck Executive Vice President and Chief Financial Officer, Justin Bird, Chief Executive Officer of Sempra, LNG, Kevin Ferrara group precedent on Clevenger cheap.

Financial often set up on core and Peter Wall, Senior Vice President controller, and Chief Accounting Officer.

Before starting I'd like to remind everyone that we'll be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, and actual results may differ materially from those projected in any forward looking to stay and then we make today.

The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K filed with U S E T.

Although the earnings per share on my own in our presentation are shown on a diluted basis and well.

Be discussing certain non-GAAP financial measures.

Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures.

I'd also like to mention that the forward looking statements contained in this presentation and speak only as of today February 25th 2021, and the company does not assume any obligation to update or revise any of these forward looking statements in the future.

And lastly, as you know due to our filings and the U S and Mexico with limited and while we can say about the propose you and all of US exchange offer and will be unable to respond to questions about these transaction with that please turn to slide four and let me hand, the call over to Joseph.

Thanks, a lot and Allie and thank you all for joining us today to start I would like to take a moment to thank all of our employees and partners for their dedication and professionalism throughout 2020 and continuing to serve over 36 million consumers and I'd also like to briefly touch upon the extreme weather events that transpired last week our thoughts.

Well with all those who have been impacted and the encore employees, who are tirelessly working to maintain the integrity of the grid and Texas, We've often discussed our investment strategy and how it is focus on building 20, <unk> century energy networks, where transmission and distribution investments.

Our essentials from modern life and the past year really highlights the importance of those essential services, while new investments will be needed to keep the grid.

Growing and improving its resiliency and I'm pleased to report that in 'twenty and 'twenty. We also delivered strong financial and operating performance, creating positive momentum heading into 2021 as we build on our mission to be North America's Premier Energy infrastructure company.

Turning to the financial results earlier. This morning, we reported full year 'twenty and 'twenty adjusted earnings of $8 and <unk> <unk> per share the highest and our company's history. We also exceeded our previously increased 2020, adjusted EPS guidance range, which reflects our firm resolve to always try to meet.

Or exceed our commitments.

In line with this positive momentum, we're reaffirming our 2021 EPS guidance range.

And I'd also like to mention that this guidance range excludes the impacts of the proposed.

On exchange offer and the sale of and Noncontrolling interest and separate infrastructure partners.

Additionally for the 11th consecutive year, we're raising our dividend our board of directors approved an increase to our annualized dividend to $4 40 per share from $4 18 per share while future dividends are at the discretion of the board we plan to target a 50%.

And as 60% dividend payout ratio.

This demonstrates our commitment to generating value for our shareholders by continuing to grow the dividend while also reinvesting in the future growth of the business now.

And now please turn to the next slide where I'll highlight some of our more notable accomplishments for the year.

Our strong performance is attributable to our strategic focus on value creation.

Track record and disciplined execution and operational excellence, we're proud of our many accomplishments in 2020, we continue to advance our capital plan with approximately $7 billion spent in 'twenty and 'twenty, which continues to be anchored around safety and reliability investments at our U S utilities.

We also completed the sale of our South American businesses and June amidst the backdrop of a global pandemic and international travel restrictions and this was a terrific accomplishment and a credit to our talented team and Mark the full completion of our multi year strategic capital rotation program, which has allowed us to succeed.

As we reposition our business and what we believe to be the most attractive markets and North America.

And in line with our consistent focus on creating value for our shareholders and December we announced a series of integrated transactions intended to simplify our energy infrastructure businesses under one growth platform. This platform is also intended to create scale and strategic alignment, while unlocking value by selling and <unk>.

Non controlling interest to a strategic partner Trevor will provide an update on our progress later on and the presentation financially. We've achieved strong results raised and our 2020 adjusted EPS guidance range last June and today significantly exceeding net increase range. Additionally, we made great.

Progress on our five year capital plan, while also executing a $500 billion share buyback program funding.

Fundamentally across our U S utilities and infrastructure platforms, we remain focused on investing and growing our businesses and to a point that I've made previously we're allocating capital into a lower risk portion of the energy value chain and what we believe are the most attractive markets in North America that really is the <unk>.

Centerpiece of our strategy and is reflected and the strength of today's results.

Please turn to the next slide.

Our 2020 accomplishments are a testament to the remarkable growth, we're continuing to see at our utilities. Our 2020 financial results were underpinned by strong performance grounded and safety and reliability. We also ended the period with approximately $37 billion of total combined rate base.

Of which nearly 74% is from electric T&D investments. So the key takeaway here is our two year capital rotation program was specifically designed to build out this position as a leader and our North American energy networks and order to improve the strength and consistency of our financial results.

<unk>, which has clearly been demonstrated over the last several years looking to the future. We believe our utilities platform will benefit from growth opportunities associated with serving the largest consumer base and the United States and operating in markets with the highest concentration and manufacturing and industrial production and in combination.

Asian makeup nearly a quarter of the total GDP and the United States and in addition to growth I also want to mention several other competitive advantages that allow our utilities be successful and a variety of market conditions, such as decoupled revenues in California constructive authorized ROE is average.

And just over 10% and constructive regulatory environments that support serving growth and investing to meet bold sustainability goals that further our efforts to Decarbonize energy and also improve the safety and reliability of our system as an example.

California utilities have over 10 hydrogen and research and development projects, we expect to showcase as well as other innovations that we have underway and our Investor Day. Later. This spring now please turn to the next slides and I'll turn the call over to Trevor to provide both business and financial update thanks.

Thanks, Jeff.

We've made substantial progress on the announced Sempra infrastructure partners integrated transactions since our last business update call in December.

As these transactions continue to advance we wanted to reemphasize, our key objectives and expectations.

By simplifying the ownership structure of Sempra LNG and he Nova under Sempra infrastructure partners. We believe this new streamlined platform will offer scale benefits and portfolio synergies as we continue to grow the business by advancing investments and cross border renewable opportunities large scale integrated LNG.

<unk> projects and other investments in energy networks.

Overall, its our expectation that these integrated transactions will simplify our business model and strengthen our balance sheet and highlight significant value and the underlying businesses.

Please turn to the next slide and I'll review the expected timing of this process.

Yes.

We continue to make good progress and I'd like to highlight and we plan to complete the exchange offer and announced the sale of the Noncontrolling interest by the end of the second quarter.

While timing is important and getting to the right partner and the right value is what is driving this great initiative.

Additionally, I want to emphasize that while these two integrated timelines are part of our overall execution plan and the exchange offer and the sale of the Noncontrolling interest are advancing independently and are not contingent upon the others timing. Please.

Please turn to the next slide.

Yeah.

We've had several positive developments this past quarter, and our U S utilities and infrastructure businesses and.

And our U S utilities, we executed record capital investments in 2020 of nearly $6 billion, continuing our focus on grid modernization and.

And so Cal gas, we're proud that we achieved approximately 20% methane reductions below 2015 levels, which is five years earlier than mandated.

Moving to Encore, we continued to see strong growth throughout the service territory.

And the fourth quarter alone Oncor connected approximately 18000, new premises, which brought the full year total to approximately 77000.

This is a 20% increase compared to 2019 connections, which is an amazing figure and reflects the best organic growth rate encore has ever experienced.

This is particularly noteworthy considering the backdrop of the global pandemic.

On the transmission side on core set a record for interconnection requests and 2020, driven by continued strong development activity and utility scale generation with a focus on the renewable and battery storage markets and their service territory.

Also on core completed six major transmission projects in West, Texas totaling approximately 260 circuit miles and approximately $300 million of investment.

Shifting to our infrastructure businesses LNG phase one reached final investment decision. This past November and we subsequently provide a technique FMC with full notice to proceed under the EPC contract.

The total expected capital investment is approximately $2 billion, which includes an equity contribution of approximately $250 million each from Sempra LNG any nova.

And in December and affiliate of total took a 16, 6% equity stake and the project.

Shifting to Mexico.

We continue to advance our pipeline of construction projects focused on improving the country's energy security and.

The Don Diego Solar project reached commercial operations and recently.

<unk> announced an agreement to acquire the remaining interest in ESG and Additionally.

Additionally, last week and over CEO, Tania Ortiz and energy Minister Rocio knowledge Commission, the Veracruz refined product storage terminal.

As a reminder, the Veracruz Marine terminal is situated and the largest Mexican port on the Gulf Coast and is expected to be one of the largest fuel terminals and the country with the capacity to serve $2 1 million barrels of refined product.

Let's turn to the next slide where I'll review our financial results.

Earlier. This morning, we reported fourth quarter, 2020, GAAP earnings of $414 million or $1 and 43 per share.

This compares to fourth quarter, 2019, GAAP earnings of $447 million or $1 55 per share.

On an adjusted basis fourth quarter, 2020 earnings were $553 million or $1 90 per share.

This compares to our fourth quarter 2019 earnings of $447 million or $1 and 55 per share.

Full year 2020, GAAP earnings were $3 billion $764 million or $12 and 88 per share. This compares to 2019, GAAP earnings of $2 billion and $55 million or $7 and 29 per share.

On an adjusted basis full year, 2020 earnings were $2 billion $350 million or $8 and <unk> <unk> per share.

This compares favorably to our previous full year 2019, adjusted earnings of $1 $911 million or $6 and 78 per share.

Please turn to the next slide.

The variance and the full year 2020 adjusted earnings compared to last year was affected by the following key items.

$146 million of lower earnings due to the sale of our Peruvian and Chilean businesses and April and June of 2020, respectively.

This was offset by $284 million of higher equity earnings from Cameron LNG JV, primarily due to phase one commencing full commercial operations.

$81 million of higher earnings at the California utilities from higher FERC and CPUC base operating margins.

$63 million of lower losses at parent and other due to lower net interest expense and higher income tax benefits 50.

And $57 million of higher earnings at the California utilities from the release of a regulatory liability in 2020 associated with and income tax expense memorandum account that that track differences between actual and forecasted estimates from 2016 to 2018.

Partially offset by income tax benefits in 2019 from the release of a regulatory liability established in connection with 2017 tax reform for the excess deferred income tax balances that the CPUC directed to be allocated to shareholders and a January 2019 decision.

$51 million of higher equity earnings at Sempra, Texas utilities, primarily due to increased revenues from rate updates to reflect on invested capital and on course acquisition of inquiries and May 2019, and.

And $41 million of higher earnings from Sempra, LNG marketing operations, primarily driven by changes in natural gas prices.

Lastly, I'd like to highlight that we're making a few changes regarding our financial guidance going forward and 2021 and beyond.

We're continuing to work on ways to provide you a cleaner and clearer view of our operational performance and financial results and after various discussions with a number of our investors and sell side analysts starting in the first quarter of 2021, we will be adjusting out foreign currency and inflation effects as well as unrealized mark.

Mark to market gains and losses.

This change is incorporated into our reaffirmed 2000 and 'twenty one guidance range.

Reporting our earnings with these items adjusted out allows for greater focus on earnings from ongoing business activities and we appreciate all the input we received on this change of convention. Please turn to the next slide.

Over the last three years, we have successfully narrowed our investment focus to T&D investments and what we believe are the most attractive markets in North America.

And those of you who have followed us over the last three years have seen the difference. This has made since 2017, we've transacted on approximately 27 billion and.

And enterprise value, while still growing our adjusted EPS annually by approximately 14%.

Not only has our adjusted EPS growth and exceptional but the overall adjusted earnings quality has substantially increased providing greater visibility into future cash flows.

We're proud of where our business stands today and believe we are well positioned to continue providing strong financial results.

With that please turn to the next slide where I'll.

And we'll review our new five year capital plan.

Last year, we laid out a record five year capital plan of $32 billion and when rolling out planned for this year, we continued to see robust opportunities to invest and our U S utilities and infrastructure businesses.

And 2021% to 2025, the capital plan is anchored by $29 billion of U S utility investments, which represents over 90% of our total capital plan and is the largest utility program and the Companys history.

For <unk>, and Socal gas safety and reliability continue to be at the forefront of our capital plan.

We're making investments at both utilities to enhance our pipeline infrastructure through our risk assessment mitigation phase and risk spending accountability reporting.

And <unk>, we continue to advance our industry, leading wildfire mitigation program by investing in innovative and cutting edge technologies to keep our community safe and as Socal gas, we're making strides toward achieving our greenhouse gas emissions reductions and executing on our strategy to.

To achieve at least 40% reduction and methane emissions by 2030.

Additionally, at Encore the capital plan is attributable to tremendous organic growth that we're seeing on the distribution side Dallas Fort worth is the fastest growing metropolitan area and the fastest growing state and the country.

This is coupled with continued investments on the transmission side, resulting from the increase and wind and solar generation as well as battery storage being interconnected into the aircraft system.

When compared to <unk> capital plan, we shared with you last spring, we've identified and increase of roughly $1 $1 billion of incremental utility Capex and 2021 and 2022 combined.

Lastly, we plan to fund our robust capital plan with cash flows from operations as well as using some of the cash proceeds received from the proposed sale of a non controlling interest and sempra infrastructure partners and other available sources.

As we've historically done we will continue to be disciplined and evaluate all available financing sources based on the timing of our investments and what we believe is the most efficient for our shareholders. Please turn to the next slide where I will review and rate base projections.

Our continued investment and safety and reliability provide strong projected rate base growth of approximately 9% annually from 2020 to 2025.

By 2025, our combined total rate base is projected to be approximately $56 billion.

Notably over that period, our rate base mix does not change materially with approximately 70% of total rate base from electric infrastructure, which reflects how well positioned we are to continue supporting strong trends and electrification.

Please turn to the next slide where I will hand, the call back over to Jeff to review our priorities for 2021. Thanks.

Thanks, a lot Trevor as we turn our attention to the rest of 2021, we plan to continue our positive momentum we've identified several priorities to capitalize on the critical role that energy infrastructure is providing and support of the energy transition.

Priorities include among others executing health and safety programs to help mitigate COVID-19 risks and our employees.

Maintaining our focus on safety and operational excellence across all of our companies.

Continuing to execute on utility centered capital plan.

Delivering strong financial results and completing the simpler infrastructure partners integrated set of transactions and look forward to share more about how we're delivering on a sustainable future for all of our stakeholders and our Investor Day. Later this year. Please turn to the next slide.

And finally, let me summarize for you our investment proposition, which we believe is differential to others and our industry and offers compelling value both in the near and long term. We're building a top tier T&D infrastructure platform and is well positioned to succeed and attractive markets continuing to execute a row.

<unk> capital plan with significant expected growth and rate base.

Growing our EPS and improving our earnings visibility.

Maintaining an attractive and growing dividend and remaining committed to innovation sustainability and leadership.

Please turn to the final slide.

In summary, 2020 was a record year for our company against the challenging economic and operating backdrop, we deployed a record amount of capital and produce the best financial results and our company's history top and the prior year's record of adjusted earnings results by over $400 million.

We look forward to continuing to execute on our value proposition and 2021 and remain committed to creating long term shareholder value.

And with that this concludes our prepared remarks, and we will start to take your questions.

Before opening the call to questions. However, I would like to remind you that we will not be discussing the exchange offer.

Thank you if you would like to ask a question you may signal by pressing star one on your telephone keypad.

If you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again star one for questions. We will take our first question from Shar <unk> with Guggenheim partners.

Hey, good morning, and Shar.

So as we're sort of thinking about.

Can you share jobs on the proceeds can be somewhat substantial just given sort of the prior comments are on the potential transaction multiple in terms of use of proceeds you, obviously have an opportunity to reinvest and further buyback and delever and you sort of priorities here and how much do you sort of envision could be recycled at the.

And just from an equity standpoint and.

How should we sort of be thinking about potential limits with efficient redeployment of the proceeds and the near term.

And I appreciate the question Shar and I think the way we think about it as you know we've gone through and our prepared remarks kind of what we think the critical success factors are from the transaction and obviously one of the things we've identified and net order of criteria as to credit accretive transactions and when you think about the use of proceeds.

I tried to describe the.

Essentially it depended upon three factors number one how will you successfully execute the tender offer and number two how well you execute the sell down process that includes both the overall quantity of equity sold and the implied valuation and to the point that you're getting to the third part of that transaction so to speak.

<unk> is the use of proceeds.

And one of the things we noted on the call is that you've seen not only the same $32 billion capital program while forward.

But youre also seeing a higher portion of capital and the five year plan allocated towards and utilities. So last year's play and was roughly 85% to 86% utility spending over the five years. This year's plans closer to 90% and we did highlight for you that we.

We think there's at least $1 1 billion of incremental <unk>.

Capex just at our California utilities, and the next two years and you've seen us raise the capex for oncor by another 300 million average five year timeframe. So we're going to look at.

Both debt reduction, we're going to look at opportunities too.

And additional utility Capex will always test that against share repurchases and there are scenarios, where you could see has taken on and kind of investments from investors. All of that is probably a lower likelihood. So what we're going to try and do is manage all three of those things that tender process.

And the equity sell down and then.

And I shouldn't use of proceeds and a way that delivers all the critical success factors that we identified and are prepared remarks.

Got it and then adjusted.

The amount of the cell kind of obviously remains on now.

And find out pretty sure where that stands but should we be assuming sort of cash or a combo of cash and maybe and asset swap that could be like EBITDA neutral or accretive and swapping EBITDA per EBITDA. So how do we sort of just thinking about that.

So I Wouldnt I mean with what we've said publicly is that we're going to sell and Noncontrolling interest.

And so we'll always have control of the entity going forward and we have a very robust view of this platform and what the value and trade over time, but.

But the most important thing is.

And is working on focus on doing that those transactions as I described to you as officially as possible and I would focus probably most likely on cash transactions, but we're not rolling out the idea that we could do on the asset swap or allows them to contribute and someone that contributed assets as part of the overall value.

Got it and then just one last housekeeping and then I'll pass it on someone else's you. Obviously, you kind of reiterated the 'twenty, one guidance, which I think from prior comments may have had some upside and thats likely just Jeff a function of not jumping ahead of that and the S. I P deal and the <unk>.

Analyst day is how do we sort of think about.

I think you probably summarized it better than that because I think both of those points are accurate and I think the.

You have followed our company for for quite a while and I would tell you that we went through a relatively thoughtful process with our board and 2018 and to make sure we have the right strategy and we.

And I wanted to focus on North America, and sell non core assets and make sure. We're on the right markets and I will tell you if anything.

Last week, and Texas and some of the challenges you're seeing in your industry points to anything and it's really the value of investing and the grid.

As you recall from some of our prior conversations we have specifically avoided that generation marketplace.

Avoided being exposed to commodities and Thats why being in a decouple, a marketplace like California, and Florida. So you've seen over the last three years to be able to grow our EPS at about a 14% CAGR.

And as we think about 2021, I would probably go back and just mentioned to your debt.

Think about how we did our guidance last year I think it was on this call.

Debt, we talked about our guidance last year and some people were a little bit disappointed and the Q4 call for 'twenty and 'twenty guidance and you recall short it was on the Q1 call that we guided to the high end of the range and later in Q2 went ahead and revised guidance upward to $7 2000 and sense to $7 80.

And the Q3 call last year and November we've added high and the range and think about what we've done right during a pandemic, probably the worst economic downturn and the history of our country separate energy is produced a record EPS, we produced record earnings and all five business units for the first time and the history of this cut.

And each one of them produced record earnings results.

So as we go into 2021, you should expect US today. So we continue to look at getting the ZIP transaction done get further along and the execution of our capital program, specifically and our utilities and come back to you with a view toward trying to always under promise and over deliver.

Terrific. Thank you, Jeff. Thank you Trevor I'll jump back into queue. Thanks, a lot sure sure.

Thank you we'll take our next question from Steve Fleishman with Wolfe Research.

Yeah, Hey, Jeff Trevor Thank you and I've got a couple of questions. So first just a clarification because I think on.

And on the comments Trevor you said and.

Ounce per.

And you sell down.

Q2, but if you look at the slide.

On the timeline it has the announcements by the still by the end of Q1.

So is it announced by the end of Q1 and closed Q2.

Or is it and announce.

I think the game plan is the slide is correct, we're going to look to announce the transaction and a sell down.

Next month, we hope to also watch on.

Agenda process next about the both transaction and Steve are geared to close in Q2.

Okay great.

And then just one other clarification here and in terms of the transaction being accretive.

Would that also be.

Ultimately to earnings per share accretive.

And not necessarily during 'twenty, one, but just beyond.

Most likely.

I'm, sorry, Steve I'm not sure I understood. The question, we definitely believe that the transaction will be EPS accretive if that's the nature of your question Greg.

And that's all I just wanted to clarify that and then.

And then.

Maybe.

Jeffrey brought up a little bit on Texas could you.

Talk a little too.

And how youre thinking about.

What that event, if anything and four.

Non core.

And earnings.

And investment needs.

And at what times Theres been talk on the utilities.

And maybe doing battery investments are.

Other things that could help out.

Do you see any political risk also to oncor and this process even though.

It was clearly not a.

Distribution event.

Thank you, yes, well look I would start to see let's say and then I think the debt.

As of last week, which were in the Midwest, Obviously in Texas, and obviously, northern Mexico as well. They also impacted California, which were also comfortable talking about it if you like to go into that but it was the most important event and the energy markets globally last week and.

We've always started by thanking our employees for their hard work and the Dallas community and across North, Texas, and certainly there's been a lot of people have been hurt by this and our Hearts go out to all those folks, but as for Oncor, you recall that their job and it really is the grid operators to execute the.

Commands of ERCOT and terms of load shedding just to make sure. There was a complete failure of the grid and I think one of the things that's taking place and Austin today as Youre going through Legislative hearings are CEO, Alan and I got to also justify those hearings, but I think the most important thing is on course to tall. During last week's event I think they were one of the more.

Positive participants and the overall marketplace. That's also a view shared by the governor by the way I think what's important and should we think about future reforms. So I just want to be a little bit cautious Steve that we don't front run the activities that are underway today at the state theres going to be a full scale investigation. The railroad commission will be involved the PUC T. The Gulf.

And there is office.

And the PCT, obviously, but and all the intervenors in the marketplace. So I think what will happen from this as you'll probably find opportunities for the state to improve its resiliency. There's also a lot of generation as we've talked about on prior calls and the interconnection queue and we certainly expect debt that will lead to additional investments and the T&D space.

But look I don't want to start talking about capital at this point I just think that as you think about building that marketplace, which has the strongest economy at least the growth economy and the country.

We don't think theyre going to be spending less capital, we think that spending more capital we will certainly be part of the solution.

That's great and just since you mentioned.

Before just I am curious comment because I think gas got very expensive and.

And Cal Southern California, too and I don't know if there's any.

And issue in Mexico, but just could you talk about the impacts of that from last week.

Yeah, you'll recall that.

Texas took up most of the new cycle, but they had a DC time and Midwest It went down.

Obviously, there were impacts already crossed into Louisiana, which had some temporary disruptions to our camera and facility camera and sign its online and operating well.

You'll also recall at one point and time, the Governor issued an order and natural gas and Texas had to stay and Texas to meet electric generation needs first before me and export it at all.

And obviously it has impacts to Mexico, Mexico had rolling blackouts and four or five of its northern states. So we're working very closely with Tania and you'll recall that we've got seven pipelines, we move gas across the U S. Mexico exchange and she was being quite helpful to Texas to make sure that people were not unnecessarily scheduling and <unk>.

Gas across debt interchange and she was also working very closely with Cfe and so you think about.

LNG facility and Baja versus a giant storage facility. It was critical and that process of serving the needs of northern Mexico, and Southern California and.

Again, the state of California called on our storage network and Socal gas, which is a very critical piece of infrastructure here and the state and what people sometimes forget Steve is that California sets at the western and of the pipeline system. We don't have much if any indigenous production of natural gas and state. So we're very reliant on the debt.

Outside the state like you saw last summer for us to import power from neighboring states that also to import gas, particularly here in the winter time. So it was a system lot of it and the western United States and I think what we feel great about is we really been hit and that's pretty hard with our investment community see because we are the picks and shovels to the gold rush.

Like where the company and that's investing and grids, we're investing in storage and we are a big part of the solution today.

And you look at where the market's going I think we've got the wind behind ourselves in terms of our investment thesis and we should expect to see continued strong capital spending across our enterprise.

Okay. Thank you.

Thanks, Dave Thanks, Dave.

We will take our next question from Michael Liberties with Goldman Sachs.

Hey, guys. Thank you Michael My question Good morning GAAP.

Questions.

Oh, sorry on policy.

First of all.

Talk about when you look at the rate base growth changes many of the old forecast and the new forecast.

One of the things Thats, the and that is the oncor and the FPGA any kind of capital spend and trajectory have pretty big step ups relative to the one you gave last spring and so.

And how gas one much smaller percentage wise and we'll talk about the opportunity that at socal gas and especially given some of the legislative and policy to limit the growth of net growth of Bob and that's.

So that's and usage on the state of California.

Yeah. Thanks, Michael for the question and I will tell you that.

Yeah, we certainly think that the theme of electrification is a hard secular trend and I think and as you think back to the Oncor acquisition in March of 2018. It was really premised on that expectation that that trend would continue and so as you see us lay out today. We've currently got 74% of our U S utility rate base.

<unk> is exposed to that dominant trend and I would go back to the point that was making the Steve Fleishman too which is there is really an untold story of the criticality of natural gas to support the energy transition so Michael 80% of the world's energy emissions today related.

And to carbon come from oil and coal and by the Middle of next decade, the most dominant fuel and the world will be natural gas and fact Royal Dutch shell came out just yesterday and forecasted that the LNG trade with double by 2040. So there is a strong recognition there's the one country and the world has got it right and.

This reduced emissions and most has been the United States and for last two decades, we've led the world and emissions reductions and number one by committing to renewable capacity and number two making sure that we fuel switch from coal to natural gas and when you come back to California, clearly, Michael we had blackouts last summer and that was because we were over rely on.

On imports I think there's a recognition that natural gas is the natural partner to renewables. So I think we're going to have headwinds we've got tell a better story. The most important thing we can do and Trevor talked about this is we have to make sure that natural gas plays the appropriate role, but it's incumbent upon us as a company so.

Linda fugitive emissions around methane and that is very critical all across this country that we're on top of that I expect to see the buy and administration.

And <unk> continue to regulate that area, but longer term natural gas, which we think over time will be replaced the hydrogen and green molecules that will be the best way to get after heavy duty transportation and the industrial side of the equation. So electrification can take you so far.

I'll be moving from natural gas and hydrogen we believe and the green molecules that will support what we need to do to reduce emissions both in industry and transportation and so I think youre going to contain and see the type of rate base growth that you see in front of our utilities and I'll remind you and when we got a rate case at Socal gas and it basically approved.

A record capital expenditures because as you go forward and time, Michael you've got and extra that you maintain the reliability of that system, but also that it maintains and Safeway. So we're going to we're going to definitely grow our electric side of our portfolio as you can see by the middle of this decade, we expect to have 55 billion and rate.

Base across those three utilities were very excited about it.

Got it. Thank you Jeff one other question, Mexico Theres. Some interesting legislation that's been battered around their voting reforms to the power sector. It seems like that would present, some challenges to all privately held or or non governmental and power generation renewable conventional et cetera.

Just talk about that or can you talk about that whether they think that legislation and it actually happens and gets done and what the rain application would be Brian up.

Sure No problem I think what the administration is looking to do is they proposed et cetera reforms for the power industry and there's a complex set of things are and that are embedded in the proposed law, but the one that's probably received the most press coverage is the attempt to really reorder the dispatch curve. So as you know typically market by market and United.

The state's lowest cost generation dispatches first and particularly plants that have no or zero fuel costs like nuclear renewables I think with the downturn and the global economy, you've got to remember that Mexico is a member of OPEC plus.

So they are a participant in the oil market place and they have a little bit higher sulfur content and their fuel oil.

So this is an opportunity for them to use more of their natural resources and power production and what they're really trying to do is privileged and that dispatch curve that <unk> oil fired plants with dispatch first and the one that impacts the most or the IPP market participants that are actually using oil or natural gas and a competitor.

Format, and we're not in that business line and the only electric generation plant. We have is connected to California and in fact, it's not even connected to the cfe grid and that provides support here in southern California, It does impact our renewable portfolio, but keep in mind there.

Net short and electricity, so renewables will always dispatch and this.

I think our renewable business represents about 10% to 15% on the EBITDA and <unk> and ear and over represents roughly 10% of the overall earnings of separate but we think it's a manageable situation and that would also conclude on one thing which is that if the law is passed and it clears the Senate chambers and the next two.

Three weeks, it's got three fatal flaws.

Number one.

Under the Mexican Constitution, there's an implied curve and a fair dealings and open competition. So there'll be constitutional challenges to the law number two under the U S MCA and.

But there's also a requirement that governmental entities will not be privileged to have or state owned entities.

And then secondly, I mean thirdly.

Thirdly.

We also have arguments that you can't pass all like that and then retroactively apply to marketplace. We've got bilateral agreement. So we have tried not to be in the middle of that fight like I think we've really set a course and Mexico to be an active participant and helping Lopez obrador and his administration and be successful and that's one of the reasons I think it was.

As important and Trevor said in his prepared remarks that the minister of Sydney are Rocio Gnarly joined US last week at the Veracruz terminal. We also have senior officials joining us at other development projects. So our goal is to help Mexico be successful they need more foreign direct investment.

Have a deficit and their infrastructure and this administration and Fortunately has been very committed to fiscal discipline and so.

I think our job is to make sure that we're working in partnership with the government to advance the government's goals and it'll be interesting to see how the legislation you referred to plays out.

Got it thank you Chuck much appreciate it.

Thank you Michael for joining us.

Thank you and we'll take our next question from Julien Dumoulin Smith with Bank of America.

Hey, good morning, Hey, Thanks for the time good morning. So good morning, So a couple of clarifications if I can go back.

On the call here, so first off.

With respect to your desires to this transaction and the timing when you say the timing is separate and parallel youre not saying that you would close one and say we're going to separate this out youre, just saying that frankly, you you can close on them in parallel, but non or at least announce them separately.

And not necessarily close and that's why I think still encompasses this Mexican and tender presumably right I just wanted to clarify that and then separately did I hear right that you've described deemphasize, taking assets and kind or some other kind of asset swaps or.

Earlier.

Sure I'll take both questions. The first is what we're trying to convey is that one transaction does not have to happen sequentially before the other one right. So these can be pursued in tandem, but not crowds out probably the largely committed to one methodology.

Certainly our intent on clothes and both of them expeditiously and that would also convey that theyre going forward and the ordinary course, we've had no disruption to our expectation, it's probably taken a little bit longer and we might have forecasted before and I was joking with some people on the team rarely are we criticized for being overly optimistic when you think about our guidance, but in this case and I personally take per style.

Severity for it we thought we could get it done in Q1, but I think we have a high confidence level that will happen in.

In Q2.

And then the second part of your question if you don't mind reminding me Julian.

Yeah, just what are you trying to deemphasize the asset swap side of this or do you think of it as a cash proceeds and seller or otherwise.

So I think like what I'm conveying to you is that we have talked to a broad list of investors. So you think about I think we've had this conversation before publicly you'd think about focusing on people who are traditional infrastructure investors and you talked about focus on people, who might characterize as strategics or strategic infrastructure investors and you were like.

And for people that can come forward and have and identity of interest with Sempra to build a very successful business and we think this platform can grow and we think it can grow aggressively and what we're really focused on is what investor out. There has a shared view of the franchise value of Mexico and a share do you have the franchise.

Value of LNG and whatever consideration they bring forward.

Certainly up and nodded I would tell you that it's most likely a cash transaction I've never signaled that a potential and card transaction, what's the most likely although there are opportunities for investors to contribute cash and and kind of investments I don't see that as a high probability, but we're open minded about it.

Got it excellent and lastly, sorry, if I can clarify this as well on the use of proceeds question again.

And you've raised your capex nicely done.

This announcement here when you think about other uses is there another uptick here and capex that we could see I mean.

That's really tied to the Texas annual.

Rehash the fall here or should we really think about whatever cash proceeds and minus $2 billion, that's principally going to be allocated towards shall we say debt buyback.

And et cetera.

And I think the nature of your question goes to this issue of why we've raised and kind assets before because as you think about use of proceeds this entire discussion very much is geared to how much equity do yourself, what's the implied valuation because that creates a pool of capital and is that all cash or is that cash and.

Partly and cod.

And I would tell you when you think about using that capital. We've tried to think about all the different permutations and whether it's 50 50 incremental capex and debt reductions or some other ratio and we're pleased to be able to come forward today and mentioned the fact that even though on our slides just and two businesses, we've identified incremental capex of $1 1 billion at <unk>.

<unk> and Socal gas over the balance of this year and next year, we've talked about in the past Julien and I think on the Q4 on the Q3 call. The oncor raised its overall capital program from 11 9 billion to $12 2 billion and this is something we're constantly assessing all the time, so I would not rule out the opportunity for us.

The source or identify additional capex as we go through the year.

Okay excellent thanks, very much best of luck.

Thank you for joining us Julien.

We will take our next question from Jeremy Tonet with J P. Morgan.

Hi, good morning, Jeremy.

Morning.

With with regards to SAP and your goal to self fund capex through SAP contemplate kind of like the full scope of potential LNG development opportunities. There are there any other.

Considerations here and just lastly, I just wanted to clarify.

When you talked about the sell down and being accretive if that was specific to 2021 just wanted to clarify.

If that was your thought there.

So.

What I would say is.

In terms of accretion we've always said the transaction is accretive we haven't talked about years, but I would just say generally speaking the transaction's accretive on all the box again. This turns on use of proceeds and the things that I've outlined previously and I'm sorry. The first part of your question was.

Just as far as but.

If this JV could self fund on.

All right.

Yeah. Thank you for saying that that is definitely one of our goals are they've got about over $1 billion of annual cash flow. So the whole goal of this transaction is to make sure that we continue to unburdened and separate balance sheet to really grow aggressively a regulated utility platform at the same time that we're <unk>.

Freeing up the balance sheet, a separate infrastructure partners to self fund its growth, but one of the things we've talked about Jeremy is making sure that we're working with the credit rating agencies and we've been doing this since last summer.

And we complete this transaction and simpler infrastructure partners will have an investment grade balance sheet and it will be able to self fund all of this expected capital needs and the one exception, maybe port Arthur but it depends on how we approach.

Sending out our obligations there and we would even consider bringing in equity partners at the project level if needed.

Got it.

Very helpful. Thanks, and just a last one if I could.

And you reaffirmed the 2021 guide there and talked about switching out the FX and commodity Mark to markets. There did that have any impact on 2021 at all just wanted to be clear on that.

Well I would say when you think about year over year. Obviously in 2020, there were some earnings such as our discontinued operations I think it was close to $93 million of contributions from our South American businesses before we sold those.

Generally there are positive contributions from the items you just mentioned, but because they are one time and they tend to inject a small amount of interest fee into our earnings I think and the conversations we've had with various owners, we think that there and it's not material and I think anything we can do to keep doing what we've done over the last three years to improve our earnings quality.

It's really important to our owners and Thats why we took that slight change.

I appreciate that and welcome to change as well and so I was just curious when you when you reaffirmed 2021.

Did that change impact your view on 2021 at all.

No it did not impact us.

Great. Thanks, so much.

Thank you, we'll now take our next question from Stephen Byrd with Morgan Stanley.

Hey, thanks, so much for taking my questions.

Good morning, Mark.

And.

So yeah. There is as you mentioned, there was a pretty pretty compelling here and going on and in Texas as we speak and.

And I guess I wanted to revisit and area of.

Debt that you all are focused on and the past, which was with energy storage.

And just get your latest thoughts and and we can certainly extend it beyond Texas, but just lessons learned and Texas as well as and California, just wanted to make sure I heard your latest thoughts on the potential of storage and and then and Texas, specifically and how youre thinking about that.

Yeah look there's no question that.

Resiliency is becoming a more important theme all across the U S energy space right. So you saw some of the challenges we had in California last summer obviously, the challenges that people net in Texas.

A price a lot of people last week and I think what we really wanted to do is make sure that people understand the importance of gas storage. So Texas has a lot of geology that supports natural gas storage one of the things, Steve and that you've seen particularly on the east coast and the northeast as you've covered utilities is the important sometimes we've had and liquid fuel onsite.

So peak shaving and LNG is quite comment on the East Coast I think there's over 50 facilities. So as you think about future solutions for the state of Texas I think part of it is to make sure that they've got a balanced energy strategy to continue to make investments and green energy that will require future investments and transmission, but also making sure that.

Not only are there existing natural gas and coal plants properly weatherized and that includes a nuclear plant that went down on last week to South Texas power. It also means making sure that you have reliability and there's this old say and from someone who lives and overtime or who onetime pointed to a cold stack is that a power plant and so and that's what reliability looks like.

Well, I'm, certainly not and advocate for coal and I do think that by privilege and natural gas storage and the geology that Texas has and.

Looking at ideas, either around electric storage or particularly LNG peak shaving and when the banks you should expect to do is make sure that they've got the appropriate reserve margin and they've got fuel that is available and callable to meet the needs of the state during events like they had last week.

That's helpful and maybe just related on on transmission.

And obviously your growth and Texas has been fantastic.

It does look like you know the state because certainly use use more transmission.

I know in general and your support of that from a process point of view and just sort of next steps as we think about Texas and and what could come out of all the lessons learned here from what happened last week, how can we sort of think about the potential for for further enhancements and transmission grid reliability upgrades I think we on.

And I appreciate that it's it's a general opportunity, but just sort of trying to connect the dots to figure out kind of where we go from here and and what the process might look like.

I've said this and earlier comment I want to make sure that I don't front run all the good folks and Texas are they look at this thing fresh off we've got done and club enjoyed the CFO rely on quite a lot and I'll pass it to him in a minute, but we've recently gone through a strategy session with our board, where we look at what it takes to the United States to get to net zero by 2050, and one of the key issues is the most.

The important thing as we March towards more renewables green molecules like we've talked about before and hydrogen as a significant expansion of our energy networks. So the biggest issue and there's different studies out there Theres a principal study and other studies some of them even have the electric grid, increasing by five X 2007.

And so it doesn't matter what market you're in this idea of electrification and being a hard trend and the idea that distribution and transmission networks need to be extended and expanded its really really important and I think we're as well positioned as anyone given our footprint and Texas and California, but maybe done if you want and I'm talking about your thought.

From Texas, and I know you don't want to get in front of the regulators in terms of what you think might happen and she may just talk about how well positioned you are with the 1100 different points on your system, where it where generators will be connected.

Yes, sure George I think and Thats exactly right and if you just look at the ERCOT Q, putting aside the events of last week.

7200 megawatts of gas under review, there's 26000 megawatts of storage under review and that's ERCOT wide and our system alone. There's 5000 megawatts of storage along with 9000 megawatts of wind and 25000 megawatts of solar so theres certainly a lot of opportunity for additional transmission and generation.

And interconnection and that's going to come out of that as that continues to develop and then when you look at just west Texas alone 40 per cent of the Delaware basin, and the oil and gas facilities and 40% of the oil and gas facilities out there on self generation waiting to be hooked up to the grid. So we're still catching up out there and the big loops like the cobalt and move out.

There continues to set peaks every year. So there's still a lot of demand out in that area and we'll continue to build generation out there for the oil and gas as well as the renewables and the storage.

Really helpful commentary. Thank you.

Thank you we'll take our next question from Ryan Levine with Citi.

Hi, everybody.

Is there a way to quantify or frame and the cash flow and vacations in the Texas free as advance on on our core and to the extent that there is any at Cameron.

I'm, sorry would you mind and say that one more time please.

And a way to quantify or frame any of the working capital fluctuations are cash flow implications at all and core from the events and the last two weeks.

Yeah, I would just go back and say one of the interesting things about on core just to remind you run is.

We're not involved and the commodity marketplace. So as you see other participants and have an obligation to go procure gas or generate electricity or produce electricity were not involved and that business.

And so we don't have any direct bills that go to customers. We typically bill on the retail energy providers on <unk>.

<unk> finished the year I think they are December 31 balance sheet had about $2 billion and liquidity. So we don't see any material issues of liquidity anywhere within the Sempra family of companies and I think Ryan and this goes back to a point I've made a couple of times, where and infrastructure provider right. We did not want to own generation, we do not want to be exposed to commodity and we only participate.

And markets, where we're decoupled from the volumetric exposure.

And our customers consumption.

Okay, and so youre not seeing any change in your receivables related to the retail providers or any potential regulatory assets.

And I agree with relative to that.

So in Texas, and and California, There is a moratorium on shut off right and there's a regulatory process that allows you to record of regulatory assets, but in terms of liquidity, we don't see anything of significance and if there is any issues with retailers one of the things Youre seeing and Texas.

And the retailers have raised their hands to be providers of last resort and they tend to be the retailers Ryan and have a stronger balance sheet and also owned generation and we're not seeing anything of material concern and if we do have any bad debt risk and the future. We certainly have a regulatory model and Texas, and California, where we can fall from a regulatory asset.

Okay, and then within Texas. It looks like you increased your capex guidance for 'twenty and 'twenty two.

What is the driver.

It looks like on either tender and $50 million worth of inquiry.

Yeah. So you know one of the things we've talked about and our prepared remarks was that we see incremental capex.

In California of $1 1 billion and we've also seen and you may recall this from our Q3 call. We raised our overall Capex plan and Don's organization.

Over five years by about $300 million. So they weren't Ryan from 11 nine to $12 two and in terms of maybe provide a little bit more color, Don about where youre seeing some of those increases and Texas could you. Please supplement the response here and please yeah.

Yeah sure. Thanks, Jeff Yeah, when we raise debt by 300 million and the main things. We were looking at is continued continued growth and Texas and it just continues to exceed what we project out on each side and your plan and then and increased emphasis on maintenance as well not only traditional maintenance, but system hardening and resilience and we're always looking at what we need to do on that regard and.

And cyber cyber if and when we also continue to make to make a very hard look at.

Okay, and then last question for me.

And the events of the last couple of weeks change the conversation around each day.

In terms of its uses and import Saudi or any of the contracts there.

So it's interesting and you recall that rebuilt debt facility last decade, as a re gas facility and it's fully contracted for 20 years and those contracts are in place and it will continue to serve that his current role through 2028.

And so I think this was just making sure that that facility was available to support both markets and Mexico, and the United States and they have ongoing obligations and contracts with Cfe down there, but it does highlight something that's important right and which is the value of storage. So theres been a lot of obviously discussions around the value of electric storage, which I think has a great future.

But the value of storage and California, and I think the increasing importance of storage and Texas has really been highlighted and the last couple of weeks.

Okay, great. Thank you.

Thank you Ryan.

We'll take our next question from Anthony and crude out with Mizuho.

Hey, good morning, Jeff Good morning, and Trevor.

And just a quick question.

If I could focus on California, first I guess.

Strong capex growth.

Cash rate plan I guess on <unk>.

And in 2008, and the 2020 I forgot really supported the gas infrastructure and everything but is there has there been any pushback on sales and California, given the wildfires spend and you guys are really helping with policy initiatives have there been any policymakers or parties involved and a pushback on customer bills.

Yes, it's interesting.

Kevin and cigars with us on the call as well, but when I was at <unk> and I remember looking at some of the old strategies books from 1987, and 1990 and there wasn't a body and focus on making sure that Bill's did not get too high and this is something that we've been very focused on over multiple decades to make sure that the value of what we're providing is consistent.

What's the value of what they're receiving and I will tell you.

And we have relatively high rates in California, and we expect those rates to go higher because of the needed capital spending, but what's most important and people missed sometimes is our bills are well below the national average and that's largely because you had very moderate weather here. So many parts of the year in many parts of San Diego don't even have air conditioning, and so because of the model.

And whether because of the commitment to energy efficiency across the state.

You're incentivizing customers to use less and as you do that the per unit cost of electricity goes up right. So rates probably continuing to go up we tried to do everything possible to make sure that we meet those needs with energy efficiency and come up with programs to help people save on their bills, but right now the annual Bill is below average for the and.

Nine states.

Great and I and I guess.

More of a high level just.

And it seems that the sempra modeled capital recycling, maybe selling non controlling interest is <unk>.

That and replicate it.

And the utility space, but I guess I think on the utility space Center, maybe one of the last on one of our lap one of the few.

Non pure play and utilities left if I could just get your thoughts on being one of the last ones of not being a pure play just thoughts on that business mix.

And look I think for a long period of time, we've tried to say that we want to have the right strategy and we want to make investments that are consistent with areas, where we can produce the best financial returns at the lowest risk for our utility investors and we tend to focus on businesses have substantially similar cost of capital and a model that.

Provides substantially similar risk adjusted cash flows and I think we've been set successful and doing that and if you've covered the industry for the last couple of decades, you've seen people move into unregulated businesses and out of it but the common denominator for people who have moved out of unregulated businesses, they've either had challenges growing those businesses and a way.

And where they've got a stride or Australia on the issue of having a substantially similar cost of capital and I think what you're seeing US do is we've made a very clear statement. We're gonna be what we think is one of the most important owners of energy networks, specifically utility and networks in the country and we're gonna be as well positioned as any other.

Or to take advantage of what we think is important trends around electrification and what you're seeing us do with Sempra infrastructure partners is make sure that we sourced the lowest cost of capital to ensure that that business can self fund and when it self funds. It really unlocks simple balance sheet to continue to fund our priority which is building.

Analysis network platform, and we have and California, and Texas. So as you see people who cannot grow outside the utility they may hang a label of simplification on top of it but you have to look back and how those changes and strategy has been helpful and not helpful to investors I'm very deferential to how other companies run it but at our company.

As long as we have an opportunity to add more value for our investors I think it's something we want to continue to do and I'll actually add something which ive been really intrigued by it.

When you look back over the last 12 months and.

Think about the fact that our stock is trading and about $160 on February 19th of last year and ask ourselves have we added value to our overall franchise, specifically, including some of the diversified investments that you're referring to we've been able to bring two trains at Cameron online, it's transformed our LNG business and led to record earnings last.

Here, we were able to sell both of our utilities and South America, and Derisk, our business model and bring back $5 $8 billion of pretax proceeds we've been able to improve our credit metrics Trevor talked about this and strength of our balance sheet. We finished the year, we had a target of 16% <unk> to debt and.

And we finished with 17% and were below a 50% threshold and debt to cap, we had record capital investments last year across both business lines utilities, and non utilities of $7 billion.

We raised guidance and exceeded guidance, we secured a 10, 6% Roe.

At FERC on Stg's transmission assets, we bought back $500 million of stock we took as I D. The only S. I D and the world around LNG last year and.

We announced this two parts ZIP transaction and so what you should expect us to do is be very active about derisking. The model always challenging herself about whether our unregulated businesses fit and our portfolio and actually this underpins our transaction and finding a co investor and as a shared vision for that business at the.

Same time that we unlike simple balance sheet and support our credit initiatives by insurer and then on a going forward basis separate infrastructure partner, both has and investment grade balance sheet and the capability to fund all of its development initiatives.

Great that was very helpful. Jeff. Thanks, so much and I hope everyone stays healthy.

Thanks, a lot I appreciate you joining us.

We will take our next question from Sophie Karp with Keybanc.

Yeah.

Hi, good afternoon and thank.

Thank you.

Thank you for taking my question on.

Most of the topics have been discussed I just had maybe a housekeeping question here could you give us some and remind us out on the status and the status of the San Diego franchise and negotiations. Please.

Yes, Scott.

Group, President of California, with Us, Kevin and cigar and Kevin perhaps you could update our audience on where we're at with the franchise.

Thanks, Jeff and thanks for the question <unk>. So as you recall last year. The city ran and ran a process and it culminated a bid from SD Genie and and that process. There were no other theaters.

Since then we've got a new may or has it gotten and new city Council and and in the spirit of cooperation with that New government. We agreed to extend our franchise out to June one of this year, we believe the cities.

And getting ready to issue and you like E. D. We expect that to come out and the next month, hopefully and there and Theyre tracking currently to the schedule that the mayor put out when he took office in January so we feel constructive about the process and as Jeff had said many times before and.

And we're going to put our best foot forward, we lead and all of the areas of the city wants us to be good in which is safety and reliability clean energy and we firmly believe with the right partner for the city. So we're just looking forward and the issuance of this next ATB and putting our best foot forward.

Got it. Thank you so much that's all from me I've got all day.

Thank you Sophie.

We'll take our next question from Jonathan Arnold with vertical research partners.

Morning, gentlemen, thank you for taking my call.

Hi, a quick one on the capex that you're showing for and.

And for structure for $3 1 billion Greenway.

Does that assume.

Your current ownership and.

Proportionate.

Or is there some kind of and an assumption around the two transactions.

Embedded that.

Yes, Jonathan that's a completely external.

The zip transactions on that.

And that's been put into this plan with regards to our two infrastructure partners and so it just really just represents the investments made in LNG and Mexico.

And then and that's the case then could you maybe just bridge.

Yes.

'twenty 'twenty to 'twenty four plan was I think $4 4 billion between the two segments and our $3. One per just as a reminder of what what's what's going on there.

And they've got 25 and 20.

Somebody else.

And sort of timing.

And.

Yeah. So the difference there from last year and so this year is we did put in place the Mexican terminals and so those projects have have gone into operations and so that's not reflected in this prospective plan.

And then <unk> is also now kind of layered in and and while we did have it and last year's plan solidified with the EPC contractor and that's layered and here as well, but predominantly it's their staff those projects in Mexico that came on line.

Okay and on the current.

Our debt current basis, that's great. Thank you.

Thanks, very much Jonathan.

That will conclude our question and answer session. At this time I would like to turn the call back over to Mr. Martin for any additional or closing remarks.

So let me just conclude by saying we appreciate everyone attending our call I'd like to acknowledge the challenges and the last 12 months and the significant impacts that everyone's had we sincerely hope you all are staying safe and appreciate you taking the time to join US today per our convention and please feel free to reach out to our IR team with any additional questions. This concludes today's.

Carl Thank you.

That concludes.

Today's call. We appreciate your participation.

Yeah.

Okay.

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Yeah.

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