Q1 2021 Energy Transfer LP Earnings Call
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Yeah.
Please form 10-K and form 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in our projections are forward looking statements. All statements made during this call are made only as of today may 620 21.
Ladies and gentlemen.
Technical difficulties.
Thank you operator, and good afternoon, everyone and welcome to the energy transfer first quarter 2021 earnings call and thank you for joining US today I'm also joined today by Maggie Mccree and other members of the senior management team.
We're here to help answer your questions after our prepared remarks.
Hopefully you saw our press release, we issued earlier this afternoon as well as the slides posted to our web site. As a reminder, we will be making forward looking statements within the meaning of section 21, eight at the security Exchange Act of 1944.
Statements are based on our current beliefs as well as certain assumptions and information currently available to US and are discussed in more detail in our quarterly report on form 10-Q for the quarter ended March 31st 2021, which we expect to be filed tomorrow.
I'll also referred to adjusted EBITDA distributable cash flow or D. C F and distribution coverage ratio all of which are non-GAAP financial measures, you'll find the reconciliation of our non-GAAP measures on our website.
I'd like to start today by looking at some of our first quarter highlights we generated adjusted EBITDA $5.04 billion and D. C. A triple to the partners a V T as adjusted a $3.91 billion or excess cash flow after distributions.
Was approximately $3.5 billion.
On it and heard basis.
We had excess D. C F of approximately $3.14 billion after distributions of $412 million and growth capital of approximately $360 million. The increased results were primarily due to one time impacts from winter storm Uri in February.
Largely driven by our significant ability.
To transport large volumes of natural gas from our storage facilities and for market hubs in Texas to Powerplants cities and to L. D C throughout the day.
A closer look at the performance of our assets during winter storm here.
As the winter storm approached we had ample advanced warning, which allowed us to pre position employees.
And prepare assets for this historic winter storm and throughout the storm or Texas pipelines processing plants and compressor stations performed extremely well our extensive experience in operating pipelines combined with a significant amount of both long and short term preparation allowed us to continued operating.
Reliably throughout the storm.
As part of our standard design process. We have spent a significant amount of time and effort determining which components and systems are particularly susceptible to extreme weather conditions or process disruption.
In the event of severe cold temperatures, we have taken various measures to winterize these components.
Our long term preparation has included the installation of heat tracing on our pipeline systems and at our processing plants to keep piping and internal fluids above freezing point.
We also know that it takes considerable investments to maintain one of the largest systems in the industry and over the past three years, we have span approximately $1.5 billion for maintenance related to our assets with approximately half of that spin on our Texas assets.
Going back to 2014, we have been investing in and developing a dry gas fuel system in west, Texas, which provides a reliable fuel source to our compressors, while preventing freezing.
In the days, leading up to the storm, we injected additional natural gas into our pipelines as line pack prior to the storm that not only served as additional storage, but also allowed us to place natural gas volumes as close to our customers as possible and we brought in specialized equipment that was strategically allocated a.
Cross our systems to help prevent freezing including heart starts for engines stained trucks steam generators and methanol injection units.
Our employees, including operations personnel and mechanics were deployed to key assets and to those facilities at greatest risk during freezing operating conditions.
It's included more than 25 facilities on our pipelines and more than 25 processing plants across Texas.
These Keith facilities, we're man 24 hours a day from February 13th through the 18th.
Which resulted in approximately 50000 hours of overtime work our employees.
This pre deployment preparation allowed us to resolve and prevent most operational issues once the storm era.
To manage through the storm, we did everything within our control to keep our plants running and circulating fluids and filled compression idling. So that we were prepared to deliver gas to customers as soon as long as volumes returned our facilities.
We utilized our Texas storage facilities, we're we have 63 B C F of working storage capacity.
Withdrawals from these facilities reached a peak range of approximately 1.7 B C F. During the storm.
Additionally, we did everything we could to purchase and or transport natural gas from other areas, including marine gas in from out of state for delivery to our customers.
We conserve power everywhere, we could including facilities like Mont Bellevue, where we reduce power are shutting down our fractionator and we also switch from electric to gas on a dual drive compressor units, leaving in excess of approximately 200 megawatts per hour on the grid.
This storm highlighted and emphasize the importance of having reliable flexible assets and an experienced operations team.
I've said it before but we truly believe our operations team is second to none and their average during the winter storm youri or extra ordinary.
In a year, we celebrate our 25th anniversary, we had a history of reliable service through multiple extreme adverse weather events in our performance. This time was no exception.
Not a surprise here, we now have opportunities to lock in longer term contracts for storage and firm transportation capacity.
Switching gears to an update on the acquisition of enable midstream partners, which we expect will provide increased scale and the midcon and architects regions and improve connectivity for a natural gas and NGL transportation businesses.
On April 7th CFCC declared the registration statement on form S bore effective.
And on April 12th the two largest enable unitholders centerpoint no G N. A deliberate written consent to approve the merger, which is sufficient to approve the transaction. The transaction is subject HSR another customary closing conditions.
The combination of energy transfers and enables complementary assets will allow the new larger company to provide superior flexible and competitive service to our customers as we pursue additional commercial opportunities that combined company also expects to achieve significant cost savings, while enhancing our ability.
To serve customers and.
Integration teams from both companies are currently engaged in the integration planning process and we continue to expect the combined company to generate more than $100 million of annual run rate call synergies before factoring in potential financial and commercial synergies.
I will now walk through recent developments on our major growth projects, starting with Dakota access well may 3rd the Army Corps filed a status report informing the court that he has not changed its position related to the continued operations of the pipeline. The Army Corps also advised the court that expects the environmentally.
Impact statement to be completed by March of 2022, we continue to cooperate with the Army Corps related to their preparation of the I S process.
Dakota access is a world class asset and we expect it to continue flowing all reliably safely and efficiently as it has done for the past four years.
Dakota access is critical to this country for jobs tax revenue and for energy security and independence.
Net construction on the Ted columns link is progressing and we expect it to be in service early in the fourth quarter of 2021. This project will ultimately allow us to transport up to 300000 barrels per day of crude oil from West, Texas, and Nederland tore a Houston terminal upon full completion.
In April we announced that we will post a joint terrorist for crude oil transportation service to move a T and third party powder River and D. J base in barrels through our Cushing and white cliffs pipeline to our needle and terminal.
Joint pair of service is expected to commence by June 1st of this year. Upon completion of the first phase we will be able to transport approximately 65000 barrels per.
Per day, a poodle from the D J basin, and Cushing area to needling expandable to 120000 barrels per day.
Now turning to our military system first quarter of 2021, NGL volumes through the Mariner East pipeline system increased more than 20% over the first quarter of 2020, and we are experiencing very strong demand will mariner east for April and May.
On April 1st we began transporting natural gasoline through Mariner east to our Marcus of terminal for gasoline blending in local consumption. We also recently completed the final drill necessary to commission or Pennsylvania access project, which will allow refined products to blow from the Midwest supply regions.
To Pennsylvania, New York and other markets in the northeast we continue to expect the next significant phase of the Mariners projects to be in service in the second quarter of 2021.
And the final phase of Mariner East pipeline is expected to be completed in the third quarter of 2021.
Our Mariner east pipeline system, and Marcus a terminal provide the most efficient transportation route for liquids in the northeast providing customers the optimal way to reach the highest price markets for their products.
Now for a brief update on our recently completed projects at our needle in terminal.
We have completed the expansions of our L. P. G facilities, along with construction of a new 20th pipeline that directly links are fractionation and storage assets amount Bellevue to our needle and export terminal in the fourth quarter of 2020.
Volumes on these assets began ramping up in the first quarter of this year and we expect them to continue to increase throughout the year.
We are now capable of loading nearly five 100000 barrels per day of Lpga's at our Kneeland terminal, which we expect to consistently remain above 80% utilized year round.
And on our 180000 barrels per day ethane export joint venture with satellite petrochemical.
We have now loaded three D. L E sees under this joint venture.
Each with over 900000 barrels of ethane and we have loaded three additional ships with ethane out of our needle in terminal, bringing our total ethane loaded out of this facility day, nearly three and a half million barrels per April.
Our NGL franchise. It Nederland mop Bellevue now have for pipeline systems capable of moving large volumes of ethane propane butane and natural gasoline from our fractionator and our storage facilities amount Bellevue through our needle in terminal.
As a reminder, with the completion of our L. P. G in orbit.
Expansions at a needle in terminal as well as expansions completed at our Marcus a terminal in northeast at the end of 2020 are total NGL export capacity is now just over 1 million barrels per day, which supports the strong international demand for NGL exports from the U S.
Lastly, we are pleased to announce that we are moving forward with our Permian Bridge project, which will connect are gathering in processing assets in the Delaware basin with our G. M P assets in the Midland Basin.
For this project, we will convert approximately 55 miles of an existing twenty-four Angie NGL pipeline into rich gas service and utilize it to tie our Midland in Delaware based on assets together.
This will allow us to move approximately 115000 M. C F per day of rich gas out of the Midland basin and operate existing capacity more efficiently.
While providing access to additional takeaway options.
This project is included in our revised 2021 growth capital guidance and sizes significant capital by being able to fully load our entire Permian basin processing assets before we commit to building another cryogenic processing plant.
This conversion is expected to be completed in the fourth quarter of 2021.
Now for a quick update on our alternative energy activities in February we announced that we have created an alternative energy group to focus on renewable energy projects, such as solar and wind farms, either as a power purchaser or in partnership with third party developers and we'll also look to develop renewable <unk> <unk>.
Renewable natural gas opportunities.
We have significantly ramped up our export a propane and ethane for power generation that in many cases displace diesel and other bills that calls greater C. O. Two emissions. We recently saw the startup of the Maplewood two solar project and we are utilizing power from the solar farm to help run our assets in West Texas.
Including three cryogenic plants in the region as well as numerous compressor and pump stations.
We are in advanced discussions to to support a significantly larger solar project with a long long term power purchase agreement that we anticipate announcing in the next few weeks.
We're also in discussions with our solar developers regarding the utilization of some of our existing acreage in the northeast we continue to pursue several carbon capture and sequestrating projects related to our gathering and processing facilities in Texas that we believe will generate attractive returns through.
The restructures that would provide third parties with the benefit of federal tax credits and provide us with annual cash flows with very low capital requirements are engineering and commercial teams are currently developing a carbon capture project related to our Marcus of terminal that would involve carbon utilization for commercial application.
And based upon preliminary cost estimates and customer feedback this project looks feasible without the benefit of federal tax credits.
We're also reviewing our ESG profile.
As reported by external ESG rating groups, and we are working to improve our profile scoring.
Partially resulting from improved communications to address various in accuracies and misrepresentations and we're also expanding R. E. S. G metrics reporting through industry recognized reporting templates.
Now, let's take a little closer look at our first quarter results consolidated adjusted EBITDA was $5.04 billion compared to $2.64 billion for the first quarter of 2020.
D C F a triple to the partners as adjusted was $3.91 billion for the first quarter compared to $1.42 billion for the first quarter of 2020.
The increased results were primarily driven by our ability to transport natural gas from our storage facilities and market hubs in Texas to Powerplant cities and to Ldc's throughout the state during the historic freezing conditions.
On April 22nd we announced accordingly cash distribution, a 15 and a quarter Sam's per common unit or 61 stance on an annualized basis.
This distribution will be paid on may 19th to unit holders of record as of the close of business on may the 11th.
Turning to our results by segment, starting with our intrastate segment adjusted EBITDA was $2.8 billion compared to $240 million in the first quarter of last year. This increase of approximately $2.6 billion.
Was primarily due to the higher natural gas storage withdrawals related to winter storm here.
For 2021.
As I already mentioned, we are now seeing new opportunities as producers look to lock in firm transportation and storage.
For NGL and refined products adjusted EBITDA was $647 million compared to $663 million for the same period last year.
This was primarily due to a 37 million dollar impact related to lower producer volume from West, Texas on our Texas, NGL pipelines and beating.
Ah Mont Bellevue Fractionator is during the storm here as well as COVID-19 related volume reductions.
Eight eight Greece's were partially offset by higher margins from our Mariner <unk> system and needle in terminal Angie.
NGL transportation volumes on a wholly owned and joint venture pipelines increased to 1.5 million barrels per day compared to 1.4 million barrels per day for the same period last year.
This increase was primarily due to increased volumes on our Mariner east pipeline system as well as increased export volume speeding into our needle in terminal from the initiation of service on our propane and ethane export projects.
On our fractionator average fractionated volumes were 726000 barrels per day compared to 804000 barrels per day for the first quarter of 2020.
Transportation and fractionation volumes have been increasing in the second quarter and are currently back to above first quarter 2020 levels.
For crude oil segment, adjusted EBITDA was $510 million compared to $591 million for the same period last year.
This was primarily due to lower volumes through our taxes and Bakken crude pipelines and terminals as a result of COVID-19 demand reductions.
As well as lower rates of longer, Texas crude pipelines and a 20 million dollar impact from winter storm Uri.
Since the end of the first quarter, we have seen Permian basin crude volumes increase on our system is.
Is drilling picks up and more ducks for being completed.
Or midstream adjusted EBITDA was $288 million compared to $383 million for the first quarter of 2020.
This was largely the result of a $167 million impacted a winter storm Uri as well as lower volumes, which will partially offset by favorable natural gas and NGL prices and reduced operating expenses.
Gather gas volumes were 12 million M. M D to use per day compared to 13.3 million Mbt's per day for the spirit last year due to lower volumes in our south, Texas, or Midtown and Panhandle area Permian in North, Texas Regents much of which was due to the winter storm.
This was partially offset by volume growth and the architects region, where.
We are starting to see production pickup and Permian Basin inlet volumes, reaching a monthly record in April. This growth is also expected to have a positive complimentary impact on our NGL segment from additional production of Ngls.
Out of our West, Texas processing plants.
And our Interstate segment, adjusted EBITDA was $453 million compared to $404 million for the first quarter of 2020, primarily due to an $88 million positive impact from our ability to utilize our python pipelines to bring additional natural gas to the mid continent region. During the February storm.
As well as reduced operating expenses.
These were partially offset by contract explorations on Tiger and on FPP.
For 2021.
Our previous full year, adjusted EBITDA guidance was $10.6 billion to $11 billion.
Which we announced during the week of winter storm here.
These numbers that included in expected impact of approximately $200 million related to the store.
Do you have in our ability to utilize our extensive natural gas storage and transportation assets to provide a significant amount of natural gas for consumption during winter storm Uri and total we now expect to realize approximately $2.4 billion from the storm a full year of 2021 inclusive of 100.
Million dollars of expenses, which may be incurred throughout 2021 related to the storm.
As a result, we're updating our full year adjusted EBITDA guidance to $12.9 billion to $13.3 billion, excluding any contribution from the announced a naval acquisition.
This is up approximately $100 million compared to our previous adjusted EBITDA guidance, excluding the impacts of winter storm here.
Our system was designed to be reliable and flexible even under adverse operating conditions and combined with a significant amount of preparation our team completed prior to the storm. We believe this highlights just how valuable our assets and our employees are to energy transfer.
Now moving to a growth capital update for the first quarter ended March 31, 2021 energy transfer spent $360 million on organic growth projects, primarily in the NGL and refined product segment, excluding sun and USA Capex.
For a full year 2021, we now expect.
Capital expenditures to be approximately $1.6 billion.
The increase from our previous forecast of $145 billion is primarily due to the addition of several small opportunistic projects primarily in the midstream segment as well as the celebration of some project spanned from 2022 into 2021, we continue to focus on a lining capital I.
Outlay with customer needs and remained discipline in regards to all spending.
These new projects are focused on improving optionality around our existing assets.
The Permian Bridge, which is a new project I discussed earlier on the call involves converting a portion of an NGL line and the Permian into rich gas service in order to connect our Midland in Delaware Basin GMP assets together, we remain disciplined and for 2022 and 2023, we continue to expect to.
Spend approximately $500 million to $700 million per year.
Now looking briefly at our liquidity position as of March 31, 2021, total available liquidity under a revolving credit facility.
Was approximately $5.08 billion and our leverage ratio was 323 times for the credit facility.
The additional cash flows achieved from the winter storm also allowed us to accelerate the timing of our debt reductions.
During the quarter, we were able to repay approximately three $7 billion in debt with cash flow from operations, which equates to in a permanent reduction to our run rate leverage of approximately a third of return.
We continue to focus on accelerating debt reduction in achieving our leverage target Ah four to four or five times on a rating agency basis.
Once we have reached our leverage target, we will look to return additional capital to unit holders in the form of unit buybacks and or distribution increases with the mix dependent upon our analysis of market conditions at the time, we remain committed to maintaining and improving our investment grade rating.
And concluding remarks that.
The performance of our Texas, Interstate and storage assets during winter storm here demonstrates the value of having a strong reliable and extensive geographical footprint, which allowed us to meet critical demand throughout the extreme adverse weather event. In addition, our employees deserve a significant amount of credit for the day.
Medication during the extremely difficult weather conditions are strong first quarter results helped accelerate the paydown of debt.
Capital disciplined and deleveraging continue to be among our top priorities.
Looking ahead, we remain excited about the acquisition of enable which we view as a strategic opportunity to expand our scale in midstream connectivity, while remaining consistent with our goal of improving our financial position through deleveraging.
Our long term business outside of the winter storm is returning to pre COVID-19 levels and will be enhanced by further ramp up from our LPG and ethane export projects at our needle in terminal. In addition April and May volumes are shaping up favorably.
We also continue to explore development of alternative energy projects and opportunities to reduced our environmental footprint.
Operator, please open the lineup for our first question.
Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press.
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Indicate your line is my question Q U.
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Please let me to one question and one follow up question.
Question gave Maureen.
Please proceed with your question.
Good afternoon, everyone, maybe I can start off and congrats Thomas uncle terrific quarter, maybe if I can start off on the winter storm of the 2.4 billion.
You are and how much of that I guess at this point is cash in the door or you can also talk about how much you might have a reserve against your strong warnings for a couple of consoled litigation.
To resolve some of <unk>.
Yes. This is Tom long.
I would say up at 2.4 billion.
You can say all of it is in the door as highlighted in our prepared remarks, we pay down three $7 billion in debt. So when you look at the cash you can see that the collection efforts have gone very well I will say as far as any disputes that we may have with their like that we have recorded very.
A strong numbers.
For the quarter very solid solid numbers and as far as reserves go I would say the numbers stand as presented for this quarter.
Thanks, Tom and then maybe if I can follow up on the premium brings project and how you think about your overall processing capacity within the Permian both Midland in Delaware.
This project, let you defer additional processing capacity here for about four you know Ross.
Aw volume sure again, so I can get to speak to kind of help how 'bout projects pets at the mall the capacity out there.
Yeah. This is Mac he gave welcome back by the way.
We.
One of the biggest players and have been growing out there for years I think we built 10 or 12, two hotels day trials.
Kind of a pet pandemic did it slowed down certain areas of the Permian basin and allowed us to cash step back see what our commitments were and take a more disciplined look harel adjusted to look at us to spin and capital of Counterpath, we've been on.
And as we see the volume grow more right now and the Midland Basin is made more sense to not build another plant there into Bridget over a move rich gas over to our Delaware system, where we do have some capacity. However, as time goes on we we will need another crowd at some point in the future, but this gives us time to it.
<unk> waited to watch all the volumes return into fully load what we've already built before we start spending more capital. So it's a great project that our team came up with we continue to look for ways to better utilize our pipeline assets and this is a great example of that.
Alright, thanks bracket.
True.
Thank you. Our next question is from standard.
Please proceed with your question.
Alright, good afternoon, everyone, Yeah, I I just.
Wondering if we can start off with the guidance aspect.
Clearly the the natural gas.
Did obviously very well when I started to think about it <unk>.
The rest of the segments were obviously are a lot of day seconds were impacted boggess storm, yet you were able to increase your guidance or your legacy guidance by $100 million countermand, an extra storm basis. It sort of seems to suggest that you sort of expect the basic needs to do even better than 100 million that you've shared with us kind of.
Ongoing basis.
Can you show up I should be components of what's driving the improved outlook is it the exports that you Protestant or talked about it will prepared remarks or are there. Some other areas that we should be thinking about.
Yeah. This is Matthew again I'll start in Tom can follow up but.
Couldn't be more pleased with our results and what they're these assets did but more importantly, what are people did but really where I excitement is is the future and.
A reflection of the volume in the first quarter aren't where we're going if you look at and what you'll see here in the future is where the volumes are now in April and May we're seeing significant growth.
Give you an example that the word record.
Falls into almost everything we're working on and I'll just walk through a few for example, you heard earlier, where it record volumes all Tom volumes in the Permian Basin, we've never process more gas than we are right now the volume the revenue volumes coming out of the fourth based on that we move about 25% of is that all time high it's about 13 to $13 one Bcf.
Which is right at our higher than the highest level, we've ever had in the Permian basin.
Somebody reported here recently the Haynesville the most gassed it's ever been produced.
Lola was produced in the month of April and you just go on and on and if you look at Mexico. The record for almost seven Bcf about 30% of that volume most of our assets are 242 inch pipelines in West Texas are now moving one four Bcf a day, where they have been significantly less than that in the past those are much higher volumes and we expect.
<unk> and it kind of goes on and on if you look at on our even our refined product.
On our terminals were now are at higher levels than we've been since the end of of 2019.
Our throughput on our.
Refined product pipelines are up about 70% from the lows of last.
Summer so there's a lot of aspects to go into this of why not we're very bullish on not only this year for many years to come in a few adders to that and it was mentioned on on the script is that we.
<unk>.
The industry in the country I think is recognized how valuable natural gas generation is and more importantly, how how important big inch pipe. They can deliver large volumes two powerplants into cities and Ldc's and that can bring gas al storage is really invaluable and.
Those assets have been way undervalued for the last hour opinion 567 years and that value is recognized big Tom in February So ironically, a lot coincidentally a lot of the <unk>.
Contractor rolling off on our transport in our storage deals. This year, even look me in the next month or two and as you can imagine the value of that service is going up and so we'll be able to extract of fair, but market value for that service and we're excited about that.
And then also we're agency and spreads for example, and one of our tougher segments are crude segment. We're now seeing the prices at Nederland at 15% to 25% per barrel premiums above Houston, and there's and there's reasons for that and you can Saint James which helps.
It helps fill up our Bayou bridge.
Pipeline there is a higher demand there. So this is a long winded answer to your question, but the bottom line is there is so much upside that we really didn't see before this year started that we're now seeing as we've come out of the storm really across the board on all of our systems.
Now that.
Super helpful and more than I expected I appreciate that [laughter].
Maybe to to continue on kind of day momentum and so forth one day or one of your peers noted on video conference call that.
The the storm impact caused a lot of customers to sort of rethink their service at their services in general and they're seeing some more requester inquiries around potential contracting contractor more business and so forth is that something that you're seeing as well too and something.
That you would look to capitalize on.
Yeah. This Mexican yes, absolutely as I mentioned, we believe that service or transportation service and more importantly, our storage capacity has been.
Undervalue for many years, so we have had many.
Questions.
Some RFP that have come out requesting more we have some existing customers that are asked to double their storage capacity, they're asking for more withdrawal capability and we're certainly work with those and would love to contract up the majority of our storage of what we believe we're fair market prices and so we're we're pretty how the value of those assets.
And look forward to.
Some much improved margins around those.
Perfect. Thank you very much for the color today and have a great afternoon.
Yeah. Thanks.
Thank you. Our next question is from Jeremy J.
J P. Morgan. Please proceed with your question.
Hi, good afternoon.
Good afternoon, Jeremy how are you.
Good how long of a lot of great commentary there Tom Thanks for that to start off just wanted to pick up on carbon capture as you outline there.
A lot of thoughts day I was just wondering if you could help me. Thank you I guess, what could be possible here and I think he noted that that could be it makes it kind of third party capital as well here and so I'm. Just wondering is this at a situation where you could kind of take existing assets repurpose and contribute to like a JV or just trying to see I guess how.
Far along the these opportunities are and where you see the best place for for storage here.
This Tom Mason.
It's an interesting.
Area of course and were spent a lot of time looking at opportunities.
In Texas.
Gas processing plants, we have a fair amount of.
That we're evaluating how to best capture that and try to.
Work of structure, where we can get the 45 Q tax credits. So therefore.
Get joint venture getting third party money to actually pay for the capture equivalent in the sequestration wells. So that's interesting that the permanent takes a while but we're doing some stuff.
Studies on the viability location for those.
Injection wells, but.
And so that's a tax credit or play in the northeast, we're looking at market circus potential way.
Monetizing the C O two capturing it.
Using it for industrial C O two applications and so that would not rely on the credits and.
We.
Working through some feasibility studies on that so we spend a lot of time on it looks.
Real attractive opportunities to capture carbon and and actually make some money.
Got it that that's very helpful. There, thanks, and switching gears here and maybe this will be premature, but just wondering given.
How profitable quarter wise, if you've had any conversations with the agencies or if you have any expectations of what this could do if it can lead to some stabilization to improve and Alex they're just kind of curious in general for your thoughts on that.
We have had a good conversations with the rating agencies clearly before we come out with these earnings we will always sit down and go over the results with them.
And likewise will start looking at a long longer term forecast with them and yes, we remain very bullish that we should.
Continue to target to get to a higher rating, but first step obviously would be to get back to a stable stable outlook. So we're going to continue to work and communicate with them. We think we do have good relationships with them and are very optimistic.
Got it I'll leave it there thank you.
Thank you.
Thank you our next question.
Amen.
Energy. Please proceed with your question.
Good afternoon, and thanks for taking my questions and congrats on delivering a very strong first quarter bye.
My question.
Following up from me earlier questioner pertains to Repurposing asset, specifically permeant oil pipelines and I'm just curious.
How hard is it to repurpose, an oil pipeline to carrying natural gas or ngl's, both from a commercial and a physical standpoint, and lastly, if industry participants do repurpose some assets oil takeaway assets. What are you see at the impact energy transfer.
Okay that is Matthew again.
If you kind of go back to our history. We've done a lot of what you just said, we we converted and NGL line.
Out in West Texas.
I'm sorry, we component of Transwestern line to NGL service years ago, we converted at cough, which was a natural gas pipeline to crude service we've converted a python the range Cross, Texas that was actually in NGL service and we converted that too refined product. So it's not a very difficult.
Process.
Depending on the product and what you are exchanging it with or maybe more cleaning evolve the more pigs or whatever but it's fairly simple process.
The asset that you might have to add on one and then the other if you have to handle liquids you may have to add some liquid handling facilities and things like that but just the the the act of.
Converting a line and put a different service is actually pretty simple.
From a physical perspective from a commercial it just all comes down to.
Utilization the most profitable use less utilization of those assets and right now we have plenty of capacity to move NGL barrels out of the Delaware, Adam New Mexico through an existing 24 inch another line. So this gives us the ability to convert this however in the future. We think we will see the NGL.
NGL growth out there Ah hit count some of our expectations, we may be converting it back at some point, but this at least saves us a significant amount of capital.
And we were able to move very quickly because this capital that we're spending on a Permian bridge. It's a very short term will be seen revenues on this by.
Latter part of the third quarter and early part of the fourth quarter.
And then and I didn't really follow your question about how it pertains to the industry on these conversions could you ask that again I just met.
Some others other pipelines were to convert.
Or repurpose, how would that impact energy transfer.
Well it depends on what day would what day of convert if it hurting aligned.
Aligned compete with us to a different commodity of course that would benefit us but.
I think all all companies right now in the midstream, especially in Texas are looking at their assets. There are certain segments that are overbuilt, that's very evident and so I think everybody's looking at that but we pretty much focus on what we have the products that we're moving through our pipelines and how do we better utilize them to.
Provide more revenue for our unitholders.
Thank you Mathew for the helpful answer and that was my only question. So thank you.
Well.
Thank you. Our next question is Rebecca Followell with you last capital advisor. Please proceed with your question.
Hi, guys and.
The guidance that you've given the updated guidance incorporate we're covering all the sales of gas even those that you haven't booked in other words could there be upside the guidance.
You to resolve some of the credit disputes.
Yes, yes, there could we have scrubbed them really well Becker and feel like that where we are right now.
Pretty solid but there is there is some upsides depending on how some disputes are resolved.
Thank you and then the second question is how much of 2022 and 2023 Capex that you find out is for energy transitional opportunities.
Hi, This is Matthew again.
At this point not a whole lot as Tom mentioned, a lot of what he's working on his team.
Hi capital projects anyway. So we don't have a lot of that in there yet we certainly as we get closer to the finish line into FIV on some of these projects, which were moving along very well on some of them. Then we'll we'll look at doing that but remember in 22 and 23 on the range that we've given there's some cushion that range I mean, we know that there is.
We're going to always be taught in wells or doing things like premium bridge, where we're saving capital and connecting different areas. So.
We have some room to add some capital without change in that that outlook.
Okay. Thank you.
Becker. This is tompkins, let's clarify one part of the first part of your question real quick.
Reserve that you're talking about are the upset just to make sure. If there's any additional settlements as we go out the guidance. We have given you is with everything that we've got right now it's not baking in any additional type upsides to settlements.
Thanks, that's how I understood. It thank you.
Okay.
Thank you. Our next question income Michael Brown with Wells Fargo. Please proceed with your question.
Good afternoon, everyone.
I wanted to ask you about Marcus Okay. Now in the past you know you're talking it's discussed building that out kind of as a big hub.
Export all kinds of stuff at the echolocation target aren't talking about where that stands today, both from an export capacity perspective, and other things you were thinking about.
How's that been developing.
Mackey, Michael you bet as you can imagine we are so excited to be at the tail end of a project that has gone on for awhile, but what an incredible franchise, maybe there's really no way to get.
Are the most economic way to get barrels out of Western Pennsylvania in Eastern Ohio, and West Virginia is the Mariner franchise. So.
As we complete the final phases of the manor projects, we couldn't be more excited everytime, we kind of complete a phase we ramp up and we're loaded up. So we're moving is may barrels as we can do that pipeline today with this next phase that will completing over the next 30 45 days, we'll be able to ramp that up.
As well and that is the final phase completed hopefully by the end of the third quarter will be in a real good situations bills.
Fully utilised all of our cooling and storage in and capabilities that Marcus hook.
As you can as you probably know we have a significant footprint. There was just an incredible amount of capability of expanding.
Since the dynamics kind of it will come the tail end of the pandemic, we have increased our conversations around a diff additional ethane opportunities and also the propane butane growth will continue to improve from matter for net terminal. So we're very excited on what will be bring internet terminal.
And the projects additional projects that will bring.
Some of the work we've talked about and some that we're working on so similar to neater limits incredible terminal with only company that has to be able to do that because you know out of the east East Coast and also the Gulf and.
What a great asset to have we're excited about it.
Great and then on a related note as you are getting closer to Eric Margaret.
Getting back to the finish line.
Can we talk about where do you stand from a contractual perspective day.
How much is contracted today for how long and and do you think once you get the full system up and running and you'll be able to contract.
More of the pipeline and is that the strategy. Thanks.
Absolutely the strategy, we built a lot of pipeline capacity and once we complete and the third or fourth quarter, we will be fully utilizing.
All of our.
Very quickly ramping up and utilizing all of our chilling in our storage capacity at Marcus Hook. So we're looking at some fairly inexpensive expansions for some level of volumes to also increase our volume stood Marcus hook and as I alluded to earlier, we're also looking at some bigger expansions both around ethane.
In and around propane butane, so the pipelines give us a tremendous opportunity to grow with very little capital Disbar, Adam pumps. So the additional capital will come with adding more chilling and more storage at market hook.
Thank you.
Thank you.
Our next question is from Christine Chow with Barkley. Please proceed with your question.
Thank you Uhm I just Wanna talk about you guys. Just had this take wind fallen I recognize.
As a priority for for that Paydown, but you know it that has been accelerated.
So how do you think about.
There can be some potential selling pressure in the upcoming quarters from.
Owners have enable what are your thoughts of buying back stock to offset some of the dilation from deal uninstalling pressure.
Yes, Christine clearly that's that's something that's on the drawing board as well as distribution discussions and you use the right term. When you said accelerated this has accelerated the plans that we've been laying out. So we're obviously very very excited about it and we will continue to evaluate that based upon.
Market conditions.
And.
With respect to just a broader maybe capital allocation plan.
When should we expect that is that something I can we can here.
20 tail or is it is it beyond that.
Christine we're looking at it more from a leverage metric, meaning getting to the four and a half and that's the guidance that we've not put out there but.
Like I said in the prepared remarks, this accelerated by nearly a third of a turn getting to that that much quicker. So we're very very excited once again to be able to bounce the ball down the down the field so to speak.
Great and then maybe I'll just end with.
With respect to dapple on the Supreme Court process can you just give us some color on what the next steps are here and the timing for each of those steps.
And we heard you know just a lot in the last couple of weeks about shepherds, having set up alternative takeaway to prepare far worst case scenario and I recognize that that is kind of off the table, but would you say that that has impacted volume on our system today.
This is mackie.
What's really impacted the volumes on that bill has been drilling.
We were at 1.6 million barrels a day before the pandemic and now we're down around 1112, so that certainly has impacted it to a certain degree, but but we're seeing it come back I move there is a lot of dust that on the process being completed and so there's also some comments from some of the bigger producers, they're going to start moving riggs, but the volume fluctuations.
On that or more related to the lack of drilling up their net area.
Got it and the Supreme Court process.
Yes. This is Tom Mason.
We made a filing to kind of put us in line to go to the Supreme Court, if we need to.
We don't really.
Anticipate that we will need to go that route.
Judge Grossberg is good.
Rule on the motion for injunction sometime in the near future. We expect a favorable results from that and if that happens then we continued in the environmental impact statement preparation process that the Corps Army Corps is working through and we just kind of business as usual will continue to operate the pipeline and continue to work through the.
Yes process I don't.
Three court route is probably not.
Top of our list.
Great. Thank you.
Thank you. Our next question is from Keith.
Stanley Walgreens. Please proceed with your question.
Hi, Thank you.
I guess first just a clarification on the storm sorry enough data dead horse, but.
2.4 billion storm benefit is that is that the amount that's in the queue. One EBITDA figure or is it even more than that because I think Tom you alluded to having $100 million lingering costs over the balance of the year from the event.
That is correct it was more.
What we bake Dan was the full year 2021, when we gave you the two four.
Got it okay.
Second question on.
On enable I just noticed in the press release.
I'm not sure. If this is new or not so you expect FTC to grant unconditional clearance for the transaction is that just a reference to not expecting to have to sell assets or take other mitigation actions just curious on on the use of that term.
Yeah. This is Tom Mason, it's <unk>.
That's exactly right.
Going to work through a process of <unk>.
Providing additional information to the FTC second request, but you're exactly right. We don't expect the divestiture or consent decree that would limit so kind of operational issue.
Got it thank you.
Thank you.
Question is handyman Salisbury with Brian.
Please proceed with your question.
Hi, and congrats to you and your people on the ground.
Oregon quarter, and just a couple of her knee. According tier 10-K last year, you had about 430 million and reductions on Creek pipelines, I think primarily DDT relative Permian Express.
Could you comment on where we are and kind of this this rollout lifecycle and would you expect comparable roll this year or is the worst behind us at 430.
Oh, Yeah. This is Matthew.
This year I don't believe we have any contracts rolling off we might have one or two next year, but we certainly have embedded in any of our guidance of a role in those over where market prices are today and.
And we are.
We've got a kind of a new team leading are crude group and we couldn't be more excited we've over the last three or four months, we've grown our volumes about 20%, 20% to 25% more we've been we're getting more creative we're we're we're looking at as far down as we can from from Midland taken all the way up to the.
Through mid valley to the refineries. So there was a tremendous amount of upside on our crew business and.
Any contracts that are rolling off we expect to extract.
Better spreads and what we're seeing in the market today and.
In fact, I got a text travel for this earnings call that we just closed the deal fairly fairly long term deal at spreads water than what they are all day because of the ability to offer.
We offer kneeland offer Saint James to offer storage, some blooming opportunities and so that's how we're approaching this we're not we're not just looking at it at the spread from point a to point B. We're looking at is a full service from the wellhead to wherever Leo producer or the market wants to take the the volume. So we're excited about that.
Hello, Thank you.
And then it feels like the LNG market.
Just even near to day, just wondering if that if there's been any uptake in interest in Lake Charles.
Yes, it's Tom makes again.
Has been an uptick in prices both in Europe and in Asia, and so we are.
Experienced an increased interest and have a lot of productive discussions with customers all over the world. So.
It could be a good turn that.
Get that project moving forward a positive way.
Alright, that's not funny.
Thank you ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call over to Tom long for closing remark.
Once again, we really do appreciate all of you joining us today as I mentioned, we are very excited about the performance of our existing asset base at all of the projects, we have coming online and we look forward to.
Talking with all of you with any follow up questions you might have thank you all.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation and have a great day.