Q4 2021 Plains All American Pipeline LP and Plains GP Holdings LP Earnings Call

Speaker 1: Good day and thank you for standing by. Welcome to the PAA and PAGP fourth quarter full year 2021 earnings conference call. At this time all participants are on a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during that session you'll need to press star one on your telephone and if you require any assistance during the call please press star zero.

Good day, and thank you for standing by welcome to the PAA and PAGP fourth quarter full year 2021 earnings conference call.

At this time all participants are in a listen only mode.

After the Speakers' presentation there'll be a question and answer session to ask a question joined that session you will need to press star one on your telephone.

You require any assistance during the call. Please press star zero.

Speaker 1: I would now like to hand the conference over to your speaker today, Mr. Roy Lamoureux. Mr. Lamoureux, the floor is yours.

I would now like to hand, the conference over to your speak today, Mr. Roy Lamoreaux Antelava wrote the floor is yours.

Speaker 2: Thank you, Chris. Good afternoon and welcome to Plains All-Americans fourth quarter and full year 2021 earnings call. Today's slide presentation is posted on the investor relations website under the news and events section at plains.com, where an audio replay will also be available following today's call.

Thank you Chris Good afternoon, and welcome to Plains, All American <unk> fourth quarter and full year 2021 earnings call. Today's slide presentation is posted on the Investor Relations website under the news <unk> events section that plains Dot Com. We're an audio replay will also be available following today's call.

Speaker 2: Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide two. A condensed consolidating balance sheet for PAGP and other reference materials are located in the appendix.

Important disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide two.

<unk> consolidated balance sheet for PAGP and other reference materials are located in the appendix.

Speaker 2: Today's call will be hosted by Willie Chang, Chairman and CEO , and Alice Watson, Executive Vice President and CFO .

Today's call will be hosted by Willie Chiang Chairman and CEO and Al Swanson Executive Vice President and CFO .

Speaker 2: Other members of our team will be available for the Q&A session, including Harry Paphonis, our president, Chris Chandler, our executive vice president and chief operating officer, Jeremy Goble, executive vice president and chief commercial officer, and Chris Herbold, senior vice president of finance and chief accounting officer. With that, I'll now turn the call over to Willie.

Other members of our team will be available for the Q&A session, including Harry <unk>, Our President, Chris Chandler Executive Vice President and Chief Operating Officer, Jeremy Goebel, Executive Vice President and Chief Commercial Officer, and Christopher Volk, Senior Vice President Finance, and Chief Accounting Officer with that I'll now turn the call over to Willie.

Speaker 3: Thank you, Roy. Good afternoon, everyone. And I want to thank you for joining us today. It's really quite remarkable what a difference a year can make. Year over year global crude oil demand is up over 5% and back to near pre-COVID levels. And global oil prices have increased over 50% with WTI and Brent trading near $90 a barrel.

Thank you Roy and good afternoon, everyone and I want to thank you for joining us today.

Really quite remarkable what a difference a year can make.

Year over year global crude oil demand is up over 5% back to near pre COVID-19 levels in global oil prices have increased over 50% for <unk> and Brent trading near $90 a barrel.

Speaker 3: The Permian Basin, which is key to our price of financial success, exceeded our 2021 expectations, exiting the year at roughly 5 million barrels a day, with crude oil production growth of approximately 540,000 barrels a day over year-end 2020.

The Permian Basin, which is key to our financial success exceeded our 2021 expectations exiting the year at roughly 5 million barrels a day with crude oil production growth of approximately 540000 barrels a day over year end 2020.

Speaker 3: We expect the basin to add approximately 600,000 barrels a day annually for the next several years and our asset base, built over decades, is well positioned to capture future growth with meaningful operating leverage and modest capital requirements.

We expect the basin to add approximately 600000 barrels a day annually for the next several years and our asset base built over decades is well positioned to capture future growth with meaningful operating leverage and modest capital requirements.

Speaker 3: We also have a significant NGL position in Canada with asset optimization and emerging energy opportunities across our foot.

We also have a significant NGL position in Canada with asset optimization and emerging energy opportunities across our footprint. All of this all of this puts us in a good position to continue improving our financial flexibility and reinforces our confidence in the long term outlook for our business.

Speaker 3: All of this puts us in a good position to continue improving our financial flexibility and reinforces our confidence in the long-term outlook for our business.

Speaker 3: This afternoon, we reported fourth quarter in full year 2021 results exceeding our expectations. Additionally, we furnished 2022 full year guidance incorporating plain share of the Permian Joint Venture. And we have revised our reporting segments to create two business segments, one for each of our crewed and NGL businesses, which more consistently aligns with how we view and how we operate our business.

This afternoon, we reported fourth quarter and full year 2021 results exceeding our expectations. Additionally, we furnished 2022 full year guidance, incorporating planed share of the Permian joint venture and we have revised our reporting segments to create two business segments, one for each of our crude and NGL businesses, which.

More consistently aligns with how we view and how we operate our business our.

Speaker 3: Our 2022 adjusted EBITDA guidance attributable to planes is 2.2 billion, which represents approximately 200 million of growth when adjusting for unique items benefiting 2021. I will discuss these in other details during his portion of the call.

Our 2022, adjusted EBITA guidance attributable to Plains is $2 2 billion, which represents approximately $200 million of growth when adjusting for unique items benefiting 2021 al will discuss these and other details during his portion of the call.

Speaker 3: As shown on slide four, 2021 was a year of solid execution for us in a competitive environment.

As shown on slide four 2021 was a year of solid execution for us and a competitive environment.

Speaker 3: Overall, it executed well and we achieved our goal set out in February to maximize free cash flow, complete our multi-year capital program, further optimize our portfolio, and advance our sustainability up.

Overall, we executed well and we achieved our goals set out in February to maximize free cash flow complete our multi year capital program further optimize our portfolio and advance our sustainability efforts.

Speaker 3: We generated approximately 1.65 billion of free cash flow out of distributions, exceeding our February forecast by approximately 600 million, primarily driven by asset sales, that exceeded our target by 125 million, continued capital discipline with reduced capital expenditures of approximately 230 million versus our initial guidance, and further operating and commercial

We generated approximately $1 65 billion of free cash flow after distributions exceeding our February forecast by approximately $600 million, primarily driven by asset sales that exceeded our target by $125 million continued capital discipline with reduced capital expenditures of approximately 230.

Versus our initial guidance.

And further operating and commercial optimization.

Speaker 3: We repaid a billion dollars of debt, built 450 million of cash on our balance sheet, and we repurchased 175 million of our common equity, bringing our cumulative repurchases to 228 million since November of 2020.

We repaid $1 billion of debt built $450 million of cash on our balance sheet, and we repurchased $175 million of our common equity, bringing our cumulative repurchases to $228 million since November of 2020.

Speaker 3: We also completed our multi-year cathode program with both the Cathline reversal and winged to Webster projects now in service. We are also well on our way to integrating our Fermi and assets with the ORT system. And we are confident that the JV will generate at least 50 million in consolidated run rate synergies in 2022.

We also completed our multi year capital program with both the cap line reversal and Wink to Webster projects now in service. We are also well on our way to integrating our Permian assets with the <unk> system and we are confident that the JV will generate at least $50 million in consolidated run rate synergies in 2022.

Speaker 3: In addition, we also made meaningful progress in our sustainability efforts, including establishing a new health, safety, environmental, and sustainability board committee for providing additional oversight and perspectives.

In addition, we also made meaningful progress in our sustainability efforts, including establishing a new health safety environmental and sustainability Board Committee for providing additional oversight and perspectives in.

Speaker 3: In regards to our admissions profile, we have further increased disclosure around our scope one and scope two emissions, which reflect ongoing reductions over the past three years and absolute emissions at the lower end of our period.

And in regards to our admissions profile, we have further increased disclosure around our scope, one and scope two emissions, which reflect ongoing reductions over the past three years and absolute emissions at the lower end of our peer group.

Speaker 3: We expect to continue the improvement trajectory through the efforts of our newly established emerging energy team, which is focused on a number of capital efficient opportunities to further optimize our existing assets and lower our emissions.

We expect to continue the improvement trajectory through the efforts of our newly established emerging energy team, which is focused on a number of capital efficiency.

<unk> efficient opportunities to further optimize our existing assets and lower our emissions.

Speaker 3: Operational excellence continues to be a primary focus in our sustainability efforts and we strive to continue to raise the bar and we've made tremendous progress in our key health safety and environmental metrics over the past five years. We've reduced federally reportable releases and total record total recordable injury rate by approximately 40 and 50% respect.

Operational excellence continues to be a primary focus and our sustainability efforts and we strive to continuing to raise the bar and we've made tremendous progress in our key health safety and environmental metrics over the past five years, we've reduced federally reportable releases and total recorded total recordable injury rate.

Approximately 40% and 50% respectively.

Speaker 3: Although we missed our 20% reduction targets in 2021, the severity of incidents we had were down greater by 25% and lost time days were down more than 90%. And I'm confident in our ability to continue improving going forward.

Although we missed our 20% reduction targets in 2021, the severity of incidents we had were downgraded by 25% and loss time days were down more than 90% and I'm confident in our ability to continue improving going forward.

Speaker 3: With regards to capital allocation, our goals and initiatives remain centered on maximizing free cash flow and allocating it through a balanced approach, continuing to focus on debt reduction in the near term while increasing cash returned to our equity holders over time.

With regards to capital allocation, our goals and initiatives remain centered on maximizing free cash flow and allocating it through a balanced approach continuing to focus on debt reduction in the near term, while increasing cash return to our equity holders over time based.

Speaker 3: Based on the progress we've made today, and our expectation of generating meaningful cash flow over the next number of years, we intend to recommend to our board and increase in our annualized distribution of 15 cents per common unit, which based on our guidance, maintains the capacity for continued discretionary repurchase activity.

Based on the progress we've made to date and our expectation of generating generating meaningful cash flow over the next number of years, we intend to recommend to our board an increase in our annualized distribution of <unk> 15 per common unit, which based on our guidance maintains the capacity for continued discretionary repurchase activity.

Speaker 3: Our expect that 2022 coverage ratio taken into account, the distribution rate that we plan to recommend to our board is approximately 250%.

Our expected 2022 coverage ratio taken into account the distribution rate that we plan to recommend to our board is approximately 250%.

Speaker 3: This leaves room for responsibly returning additional capital to equity holders over time. I will share additional detail on our financial strategy and our capital allocation priorities later in the call.

This leaves room for responsibly, returning additional capital to equity holders over time.

Al will share additional detail on our financial strategy and our capital allocation priorities later in the call.

Speaker 3: Now let me share some comments on industry fundamentals that are shown on slide 5.

Now, let me share some comments on industry fundamentals that are shown on slide five.

Speaker 3: As I briefly mentioned earlier, global crude oil demand is near pre-COVID levels, with the EIA and other third parties forecasting demand growth of approximately 3 to 4 million barrels a day in 2022, and continued growth for the foreseeable future.

As I briefly mentioned earlier global crude oil demand is near pre COVID-19 levels with the EIA and other third parties forecasting demand growth of approximately three to 4 million barrels a day in 2022.

And continued growth for the foreseeable future.

Speaker 3: We expect this demand growth, combined with the multi year back-prope, back-prope, I've reduced upstream investment in a continuation of OPEC discipline, will exacerbate many of the market concerns already being experienced today. This includes tight global markets and continued commodity price volatility.

We expect this demand growth combined with the multiyear backdrop backdrop of reduced upstream investment and a continuation of OPEC discipline will exacerbate many of the market concerns already being experienced today.

This includes tight global markets and continued commodity price volatility.

Speaker 3: As a result, over the longer term, we expect that North American energy supply will continue to play a key role in meeting global demand growth and the Permian exposition to drive a vast majority of U.S. production growth.

As a result over the longer term, we expect that North American energy supply will continue to play a key role in meeting global demand growth and the Permian. It is positioned to drive the vast majority of U S production growth.

Speaker 3: It's against this macro backdrop that we expect to generate significant cash flow on a multi-year basis supported by our integrated business model from producing regions to key market and export hubs.

It's against this macro backdrop that we expect to generate significant cash flow on a multiyear basis supported by our integrated business model from producing regions to key market and export hubs.

Speaker 3: We have a very flexible asset footprint with operating leverage, particularly in the Permian and modest capital investment needs for a number of years to come. With that, I'll turn the call over to Al.

We have a very flexible asset footprint with operating leverage, particularly in the Permian and modest capital investment needs for a number of years to come with that I'll turn the call over to al.

Speaker 4: Thanks, Willie. To open my portion of the call, I will share a few comments on our new crude oil and NGL reporting segments, as well as the treatment of non-controlling interests within our reporting. Our new segments are reflective of how we view and run our integrated crude oil and NGL systems.

Thanks, Willie to open my portion of the call I will share a few comments on our new crude oil and NGL reporting segments as well as the treatment of noncontrolling interests within our reporting our new segments are reflective of how we view and run our integrated crude oil and NGL systems.

Speaker 4: Aggregating supply from producers, delivering to end market demand and all the steps in between.

<unk> supply from producers delivering to end market demand and all the steps in between.

Speaker 4: We believe the new segments will provide better visibility and transparency into the drivers of our overall business and reduce inter-sagman X.

We believe the new segments will provide better visibility and transparency into the drivers of our overall business and reduce intersegment activity.

Speaker 4: Additional information regarding the new segments will be disclosed in our 2021 10K filing. As a reference tool, we have included a number of segments, specific materials within the appendix of today's presentation, including historical, financial, and operating information by corps.

Additional information regarding the new segments will be disclosed in our 2021 10-K filing as.

As a reference tool we have included a number of segments specific materials within the appendix of today's presentation, including historical financial and operating information by quarter.

Speaker 4: As a reminder, our NGL segment typically generates seasonally stronger results during the winter.

As a reminder, our NGL segment typically generates seasonally stronger results during the winter months and.

Speaker 4: in regards to our red river and Permian basin JVs, both of which are consolidated into our financial.

In regard to our Red River and Permian Basin Jv's, both of which are consolidated into our financials. We are reporting adjusted EBITDA attributable to PAA, which excludes EBITDA attributable to the noncontrolling interests.

Speaker 4: We are reporting adjusted EBITDA attributable to PAA, which excludes EBITDA attributable to the non-controlling interest as our segment measure for both historical and forward looking numbers.

Our segment measure for both historical and forward looking numbers. We will also use this measure in calculating our leverage ratios.

Speaker 4: We will also use this measure in calculating our leverage ratios as both consolidated entities are debt-free.

Both consolidated entities are debt free the.

Speaker 4: The adjusted EBITDA attributable to the non-controlling interest in our Red River JV is $17 million for 2021. Accordingly, our full year 2021 adjusted EBITDA guidance of $2.175 billion.

The adjusted EBITDA attributable to the Noncontrolling interests in our Red River JV is $6 $17 million for 2021, Accordingly, our full year 2021, adjusted EBITDA guidance of $2 $1 75 billion.

Speaker 4: provided in November , corresponds to an adjusted EBITDA attributable to PAA of $2.158 billion. And this compares to our 2021 actual results of 2.196 billion.

<unk> in November corresponds to an adjusted EBITDA attributable to PAA of 215 $8 billion and this compares to our 2021 actual results of $2 $196 million.

Speaker 4: Moving to the quarter and overview of our fourth quarter results is illustrated on slide six. Fourth quarter segment of just the deed but a $564 million was driven by better than expected performance of our Canadian crewed in NGL businesses, as well as stronger volume throughput across our Permian pipe.

Moving to the quarter and overview of our fourth quarter results as illustrated on slide six fourth quarter segment, adjusted EBITDA of $564 million was driven by better than expected performance of our Canadian crude and NGL businesses as well as stronger volume throughput across our Permian.

Pipeline systems.

Speaker 4: A summary of our full year 2021 results and 2022 financial and operating guidance is included in slide 7 and 8.

A summary of our full year 2021 results in 2022 financial and operating guidance is included in slide seven and eight with.

Speaker 4: We've modified our guidance approach, but providing annual guidance only, guiding on our expected year end leverage ratio, and including these within our quarterly earnings.

We've modified our guidance approach, but providing annual guidance only guiding on our expected year end leverage ratio and including these within our quarterly earnings slides for 2022, we expect to generate full year adjusted EBITDA of $2 2 billion.

Speaker 4: In 2022, we expect to generate full-year adjusted EBITDA of $2.2 billion, $2.1 billion of cash flow from operations, and $1.4 billion of free cash flow. And we expect to exit the year with a leverage ratio of plus or minus 4.25 times, which is further explained on the slide.

$2 $1 billion of cash flow from operations and $1 $4 billion of free cash flow and we expect to exit the year with a leverage ratio of plus or minus four to five times, which is further explained on the slides.

Speaker 4: I would also note that our cash flow from operations and free cash flow guidance incorporate reasonable assumptions for short-term working capital needs and do not factor in material unforeseen impacts.

Also note that our cash flow from operations and free cash flow guidance incorporate reasonable assumptions for short term working capital needs and do not factor in material unforeseen impacts.

Speaker 4: We expect approximately $100 million of asset sales in 2022, including $50 million deferred from 2021, which closed in January .

We expect approximately $100 million of asset sales in 2022, including $50 million deferred from 2021, which closed in January .

Speaker 4: Now let me put our 2022 Adjusted EBITDA guidance in perspective versus 2021 results as illustrated by the EBITDA lock on slide nine. 2021 results included certain unique items totally and approximately $200 million in the aggregate. These items consist of net margin activities, including crude oil, contango profits from positions established in 2020, partially offset by improved NGL marks.

Now, let me put our 2022 adjusted EBITDA guidance in perspective versus 2021 results as illustrated by the EBITDA walk on slide nine 2021 results included certain unique items totaling approximately $200 million in the aggregate. These items consist of net margin activities, including crude oil.

Contango profits from positions established in 2020, partially offset by improved NGL margins.

Speaker 4: 2021 also included the benefit of seven months of earnings from our guest storage assets and one-time items related to winter storm early.

<unk> 2021 also included the benefit of seven months of earnings from our gas storage assets and one time items related to winter storm <unk> the <unk>.

Speaker 4: The unique items are expected to be largely offset by approximately $200 million of growth, including the benefits of Permian Volume Growth Expectations, Permian JV Synergy, and the recent project completion.

<unk> items are expected to be largely offset by approximately $200 million of growth, including the benefits of Permian volume growth expectations, Permian JV synergies and recent project completions. Furthermore, we expect 2022 to benefit from resumed activities at our Fort SaaS facility and tear.

Speaker 4: Furthermore, we expect 2022 to benefit from resumed activities at our Fort Sask facility and tariff escalation, which we forecast to be a modest uplift after offsetting inflationary.

If escalation, which we forecast to be a modest uplift after offsetting inflationary impacts.

Speaker 4: Moving on, slides 10 and 11 provide the overviews of our financial strategy, capital allocation priorities, and current financial profile. We remain focused on maximizing pre-cashflow and allocating it through a balanced approach that reflects a continued focus on debt reduction in the near term while increasing cash return to our equity holders over time.

Moving on slides 10, and 11 provide the overviews of our financial strategy capital allocation priorities and current financial profile, we remain focused on maximizing free cash flow and allocating it through a balanced approach that reflects the continued focus on debt reduction in the near term, while increasing cash returned to our.

Equity holders over time.

Speaker 4: As a result of our progress today and our continued prioritization of debt reduction their term, Moody's upgraded plans to investment grade in November .

As a result of our progress to date and our continued prioritization of debt reduction near term Moody's upgraded <unk> to investment grade in November .

Speaker 4: As shown on slide 11, we established a new leverage ratio which closely aligns with the rating agencies leverage calculations and we are targeting a range of 3.75 times to 4.25 times.

As shown on slide 11, we established a new leverage ratio, which closely aligns with the rating agencies leverage calculation and we are targeting a range of 375 times to four to five times or.

Speaker 4: Our leverage is currently above the high end of the range, which reinforces our commitment to further reduce that. We believe the new ratio and disclosing our expected year-end 2022 leverage as part of our guidance process will provide greater clarity into our capital allocation.

Our leverage is currently above the high end of the range, which reinforces our commitment to further reduce debt. We believe the new ratio and disclosing our expected year end 2022 leverage as part of our the guidance process will provide greater clarity into our capital allocation decisions.

Speaker 4: Slide 12 summarizes our capital program. With the completion of our multi-year buildout, we remain focused, disciplines and focused on must-do, no regrets, cap.

Slide 12 summarizes our capital program with the completion of our multiyear Buildout we remain focused.

Disciplined and focused on must do no regrets capital net to planes, we expect 2022 investment capital of plus or minus $275 million and maintenance capital of plus or minus $210 million inclusive of a $35 million NGL facility turnarounds going forward, we expect annual run rate.

Speaker 4: Net to Plains, we expect 2022 investment capital of plus or minus $275 million and maintenance capital of plus or minus $210 million, inclusive of a $35 million NGL facility turnaround. Going forward, we expect annual run rate investment and maintenance capital of $250 to $350 million and less than $200 million respect.

Investment in maintenance capital of $250 million to $350 million in less than $200 million respectively. This.

Speaker 4: This includes approximately 50 million of capital related to non-controlling.

This includes approximately $50 million of capital related to Noncontrolling interests Slide 13 shows our sources and uses of cash in 2021, our current guidance for 2022, and our directional expectations for capital allocation in 2023 and beyond.

Speaker 4: Slide 13 shows our sources and uses of cash in 2021, our current guidance for 2022, and our directional expectations for capital allocation in 2023 and beyond.

Speaker 4: Including asset sales in 2021, we generated roughly $1.65 billion in pre-cash law after distributions, allocating nearly 90% to debt reduction and the balance of 175 million to common equity repurchase.

Including asset sales in 2021, we generated roughly $1 $65 billion in free cash flow after distributions allocating nearly 90% of debt reduction and the balance of $175 million to common equity repurchases. The debt reduction allocation includes $450 million in cash on the balance sheet.

Speaker 4: The debt reduction allocation includes 450 million in cash on the balance sheet at your end. The majority of which would be applied towards the early retirement of $750 million of senior notes on March 1, 2020.

At year end, a majority of which will be applied towards the early retirement of $750 million of senior notes on March one 2022.

Speaker 4: In 2022, we expect to settle into a more normalized cash flow profile driven by business performance in capital discipline versus asset sales. We forecast free cash flow after current distributions at plus or minus $700 million.

In 2022, we expect to settle into a more normalized cash flow profile, driven by business performance and capital discipline versus asset sales, we forecast free cash flow after current distributions at plus or minus $700 million and we intend to continue to focus on achieving our targeted leverage ratio.

Speaker 4: and we intend to continue to focus on achieving our targeted leverage ratio by allocating approximately 75% to debt reduction.

By allocating approximately 75% to debt reduction with the remaining 25% funding the contemplated distribution increase as well as discretionary.

Speaker 4: with the remaining 25% funding the contemplated distribution increase as well as discretionary report.

Purchase activity.

Speaker 4: As we expect to reach the top end of our leverage range by year end 2022, we believe we are well positioned in 2023 and beyond to further increase the percentage of free cash flow allocated to equity holders while reducing the percentage allocated to debt reduction. With that, I will turn the call back over to Will.

As we expect to reach the top end of our leverage rate range by year end 2022, we believe we are well positioned in 2023 and beyond to further increase the percentage of free cash flow allocated to equity holders, while reducing the percentage allocated to debt reduction with that I will turn the call back over to Willie.

Speaker 3: Thanks, Al. Well, 2021 was a positive year for our business, generating significant free cash flow, allowing us to reduce absolute debt levels and return cash to our equity goals.

Thanks Al.

2021 was a positive year for our business generating significant free cash flow, allowing us to reduce absolute debt levels and return cash to our equity holders. Looking ahead, we are well positioned to drive multi year free cash flow generation and unit holder returns. There are four primary levers to increase our <unk>.

Speaker 3: Looking ahead, we are well positioned to drive multi-year free cash flow generation and unit holder returns. There are four primary levers to increase our cash flow as they are reflected on slide 14. And they include first the operating leverage of our core Permian business supported by improving global fundamentals.

Flow as they are reflected on slide 14, and they include first the operating leverage of our core Permian business supported by improving global fundamentals.

Speaker 3: Second, our integrated NGO operations and the opportunities around those assets.

Our integrated NGL operations and the opportunities around those assets.

Speaker 3: Three, a continued optimization of our existing assets, including renewable opportunities, and last but not least, are improving financial profile.

Three our continued optimization of our existing assets, including renewable opportunities and last but not least our improving financial profile.

Speaker 3: Overall, we like our positioning and we are very optimistic about the future. As we discussed throughout the call, 2021 was a strong year of execution. In that regard, I would like to acknowledge our entire planes team for their dedication, perseverance and patience through an uncertain and challenging 2021. And I want to thank them for their ongoing contributions to the partners.

Overall, we like our positioning and we are very optimistic about the future as we discussed throughout the call 2021 was a strong year of execution and in that regard I would like to acknowledge our entire plains team for their dedication and perseverance and patients through an uncertain and challenging 2021 and I want.

To thank them for their ongoing contributions to the partnership a summary of our 2022 goals and key takeaways from today's call are provided on slides 15, and 16 with that I'll turn the call over to Roy to lead us into Q&A. Thanks Willy.

Speaker 3: A summary of our 2022 goals and key takeaways from today's call are provided on the slides 15 and 16. With that, I'll turn the call over to Roy, the lead us into Q&A. Thanks, Willie.

Speaker 2: As we are the Q&A session, please limit yourself to one question and one follow-up question and return to the Q if you have additional follow-ups. This will allow us to address the top questions from as many participants as practical in our available time this afternoon. Additionally, our investor relations team plans to be available throughout the week to address additional questions. Chris, we're now ready to open the call for questions.

As we enter the Q&A session. Please limit yourself to one question and one follow up question and then return to the queue. If you have additional follow ups. This will allow us to address the top questions from as many participants as practical in our available time. This afternoon. Additionally, our investor relations team plans to be available throughout the week to address additional questions. Chris We're now ready to open.

The call for questions. Thank.

Speaker 1: Thank you. And again, to ask a question, please press start when on your telephone to withdraw your questions, please press the panel key. Stand by as we compile the Q&A roster.

Thank you.

Again to ask a question. Please press star one on your telephone to withdraw your question. Please press the pound key standby as we compile the Q&A roster.

Speaker 1: Our first question comes from Keith Stanley of Wolf Research. Your line is open.

Our first question comes from Keith Stanley.

Your line is open.

Speaker 5: Hi, thank you. Maybe I could start with the dividend and the 20%

Hi, Thank you.

Maybe I could start with the dividend and the 20% increase.

Speaker 5: From here, I'm assuming you're thinking annual assessment of the dividend.

From here I am assuming youre thinking annual assessment of the dividend.

Speaker 5: I guess once balance sheet objectives are fully achieved and not just the top end, how do you think about the payout ratio as a percent of free cash flow? It's still a little low versus peers. Is there any guidepost you would use to skies the ultimate dividend once you hit your balance sheet target?

I guess one's balance sheet objectives are fully achieved and not just the top end how do you think about the payout ratio as a percent of free cash flow.

It's still a little low versus peers is there any guidepost you would use to size the ultimate dividend once you hit your balance sheet targets.

Speaker 3: Yeah, thanks Keith. Let me start by saying we've had an annual vivid policy review, distribution policy review, ongoing for a number of years. So this is not a change from that.

Yes, Thanks Keith.

Let me start by saying we've had an annual dividend policy review distribution policy review ongoing for a number of years. So this is not a change from that.

Speaker 3: and we're going to continue that going forward. And the way I would look at our allocation, it's probably a little bit of a shift. We've talked about free cash flow after distribution. And we've articulated a wedge, I call it the capital allocation wedge, where we're taking 75% of it to debt this year and targeting 25%.

We're going to continue that going forward and the way I would look at our allocation.

Probably it's probably a little bit of a shift we've talked about free cash flow after distribution and we've articulated a wedge I call. It the capital allocation wedge or we're taking 75% of it to that this year and targeting 25%.

Speaker 3: into the unit holder in the forms of distribution increase as well as discretionary purchase.

Until the unit holder in the forms of distribution increase as well as discretionary purchases as we go forward, obviously that free cash flow.

Speaker 3: As we go forward, obviously that free cash flow, we think it's going to stay for a number of years. And as debt comes down into 2023, the allocation will increase back to unit holders. And what we'll do is as we go forward, we'll start allocating against a percentage of free cash flow, a cash flow from operations as kind of a metric going forward. How do you want anything to that? part?

We think it's going to stay for a number of years.

That comes down.

Into 2023.

The allocation will increase back to unit holders and what we'll do is as we go forward, we will start allocating against.

Our percentage of free cash flow, our cash flow from operations as kind of a metric going forward.

Al do you want to add anything to that.

Does that help keep.

That helps thank you.

Separate question just looking at the <unk>.

Speaker 5: Waterfall on slide 9.

Waterfall on slide nine.

Speaker 5: The Permian bucket, you have a number of positive drivers there that are helping.

Okay.

The Permian bucket you have a number of positive drivers there.

That are helping.

Speaker 5: The one thing, just some of the commentary on volume growth in the system, I think it's on slide 8 actually.

The one thing just some of the commentary on volume growth in the system I think it's on slide eight actually.

Speaker 5: It talks about 350,000 a day of sort of core your over-year volume growth as some of the volume shift to the Wing to Webster.

It talks about 350000, a day of sort of core year over year volume growth as some of the volume shift.

To Webster.

Speaker 5: Or are you, I guess my question is are your margins on your existing long haul pipelines stepping down at all in 2022? Or are you just flagging that volume shift over to Wing2 Webster, but you know you're kind of already at MVC levels so there's no real hit to EBITDA if that.

What are your I guess my question is are your margins on your existing long haul pipelines stepping down at all in 2022 or are you just flagging that volume shift over to wink to Webster, but youre kind of already at MVC levels. So theres no real hit to EBITDA.

That makes sense.

Speaker 3: Well, keep I've got two comments on that. One, we highlighted.

Well keep I've got I've got two comments on that one.

We highlighted.

Speaker 3: There is a significant shift with a new pipeline coming on. Weak to Webster clearly takes vimes that used to go on our assets and puts it into what I would call durable vimes that have the ability to ramp up. So that's a change between 2021 and 2020.

There is a significant shift with the new pipeline coming on Wink to Webster clearly takes volumes that used to go on our assets and puts it into what I would call durable volumes that have the ability to ramp up so thats a change between 2021 and 2022 .

Speaker 3: And as far as the competitive environment, I mean the way I would characterize it is we're in a very competitive environment, right? With the reset of

As far as the competitive environment I mean, the way I would characterize it as we're in a very competitive environment with the reset of production, resulting from Covid.

Speaker 3: of production resulting from COVID, the long haul lines, there's been a lot of capacity, surplus capacity in that. And over these last few years, it has been a very competitive environment. We expect that to continue over the next few years until production starts catching up with stress balance.

The long haul lines, there's been a lot of capacity surplus capacity in that over these last few years. It has been a very competitive environment. We expect that to continue over the next few years until production starts catching up with.

First balancing with capacity.

Speaker 5: Okay, but I guess I thought you were already kind of running at MVC levels in 2021 on those long haul pipes. So I guess should we think of that shift to Wynx to Webster as having a headwind on the company in 2022 or is it more of volume?

Okay, but I guess I thought you were already kind of running at MVC levels in 2021 on on those long haul pipes. So.

I guess should we think of that shift to wink to Webster as having.

A headwind on the company in 2022 or is it more of a volume issue.

Speaker 3: Well, one common element. A good example of that would be the basin pipeline, which does not have MVCs.

Well one comment subsequent a good example of that would be the basin pipeline, which does not have nbc's in.

Speaker 3: In 2021, we're able to capture volumes going up to pushing on that. And going into 2022, we expect more of those volumes to go to the Webster. Jeremy, do you want anything to that?

In 2021, we're able to capture volumes going up to Cushing on that and going into 2022.

You can expect more of those volumes to go to Wink to Webster, Jeremy do you want to add anything to that.

Speaker 5: Hey Keith, this is Jeremy Gov. A few things. One, you're correct, we're at NBC level.

Hey, Keith this is Jeremy Goebel.

A few things one you're correct, we're at MVC levels, but it is not just playing that federal if some of the MVC to Houston won't get filled as well. So I think it's a mix of pipelines across the industry.

Speaker 6: But it's not just playing that, that's that it's some of the NBC's to Houston won't get filled as well. So I think it's a mix of pipelines across the industry. There's only a fixed amount of demand in Houston. So you can see that disproportionately impacted as well. I think think of basin as balancing the mid-cona when

Only a fixed amount of demand in Houston. So you can see that disproportionately impacted as well I think I think of basin at balancing the mid continent when <unk>.

Speaker 6: Inventories get low in pushing like they are now, you're gonna start seeing a pullback on the basin system. So there's gonna be rateable demand to pushing. It's gonna ebb and flow as you saw through the quarters last year. And as Permian basin fills and midland starts to weaken, you would see that more rateable. But think of that as somewhat cyclical throughout the year. So I think that mid-time of demand will largely be driven by refining runs in that area. The, as far as your question on both pipelines to the Gulf Coast,

Inventories get low in Cushing like they are now youre going to start seeing a pullback on the basin system. So theres going to be ratable demand to Cushing is going to ebb and flow as you saw through the quarters last year and as Permian basin fills in Midland starts to weaken you would see that more ratable, but think of that as somewhat cyclical throughout the year. So I think that mid con.

Demand will largely be driven by refining runs in the in that area.

As far as your question on pipeline.

Pipelines to the Gulf Coast.

Speaker 6: largely protected by MVCs, but the spot capacity will represent what the market is. So the only part that I would say is there's two parts to that. One is based in some of the opportunistic may go away, but there'll be a portion there. The Winx-Western will be at T&D levels. Cactus 2 and Cactus 1, those T&Ds will be in place. That marginal spot capacity is midland and MEH has come in.

Largely protected by MVC, but the spot capacity will represent what the market is so the only part that I would say there's.

Two parts to that one is base and some of the opportunistic may go away, but there will be a portion there.

Western will be a T&D levels cactus II and cactus one those T&D will be in place that marginal spot capacity at Midland and <unk> come in that part will be a different tariffs those incentive tariffs. So that will be one headwind and then maybe a portion of on volume, but by and large will compete for barrels processed.

Speaker 6: That part will be a different tariff, those incentive tariff. So that will be one headwind, and then maybe a portion on volume, but by and large, we'll compete for barrels across the system and look to fill them as we always ask.

System and look to fill them as we always have.

That's helpful. Thank you.

Thank you.

Speaker 1: Our next question comes from Michael Blum, a well-fargo. Your line is open. Thanks.

Our next question comes from Michael Blum of Wells Fargo.

Your line is open.

Thanks, Good evening everyone.

Speaker 7: First question I want you to ask about operating leverage. Basically, how much operating leverage do you have in the Permian as volume's ramp? Let's say that's 600 a year or so.

First question I wanted to just ask about operating leverage basically how much operating leverage do you have in the Permian as volumes ramp, let's say that 600, a year that you are.

Speaker 7: I guess put another way how does that 600 a year of growth translate into annual ebit time?

I guess put another way how does that 600, a year of growth translated into annual EBITDA growth for PAA.

Speaker 6: Jeremy? Thanks for the question, Michael. So it's a little bit more nuanced than that. The first 600,000, think of the next 18 to 24 months.

Jeremy.

Thanks for the question, Michael So, it's a little bit.

More nuanced in that first 600000.

The next 18 to 24 months on a long haul basis, if that's going to fill in Dcs and the ramps on wink to Webster and others. So there is leverage on the gathering system, which is somewhat market share at the existing tariffs that we have because it's largely dedicated barrels. So there's that one touch barrel plus anything we can do on the market.

Speaker 6: on a long haul basis is that's going to fill MVCs and the ramps on Wink, the Western, others. So there's leverage on the gathering system, which is somewhat market share at the existing tariffs that we have to largely dedicated barrels. So there's that one touch barrel plus anything we can do on the marketing side with quality segregation pump overs, that type of business. There's a throughput component, and then there's the tariff component. But as we get to leverage,

Syed what quality segregation pump overs that type of business Theres, a throughput component and then there's the tariff component, but as we get to leverage let's say, it's another two years of growth consistent with last year.

Speaker 6: Let's say it's another two years of growth consistent with last year.

Speaker 6: Then you start to get leverage on increasing spreads to the golf coast into markets outside. And there's also volume components of that spot volume. So it's not linear. It's going to have a certain impact this year and next year, which we view to be competitive markets. But then it gets materially higher as you go, because it's volume is tariff. And it's not single touch, it's multiple touch barrels. So hopefully that's...

Then you start to get leverage on increasing spreads to the Gulf coast into markets outside and there is also a volume component to that spot volume. So it's not linear it's going to have a certain impact this year and next year, which we view to be competitive market, but then it gets materially higher as you go through this volume Thats tariffs and it's not <unk>.

I will touch it's multiple touch barrel. So hopefully that's helpful.

Speaker 7: It is, thank you. Second question on the NGL segment.

It is thank you.

Question on the NGL segment.

Speaker 7: I just wanted to confirm or clarify that the earnings coming from this segment are basically coming from the Canadian assets entirely and I wanted to ask in terms of the guidance what's driving the year-to-year improvement in the NGL segment I think the EBIT does up like 33%.

Just want to confirm or clarify that the earnings coming from this segment are basically coming from the Canadian assets entirely and.

Wanted to ask for the in terms of the guidance, what's driving the year over year improvement in the NGL segment I think the EBITDA is up like 33% for the guidance. Thanks.

Speaker 3: Yeah, so Michael, there's a couple things. It's primarily Canada. We do have some terminals and we've got some facilities in the lower 48, but it's primarily Canada. You're correct there. And as you think about the difference between last year and this year, a big piece of that is the Fract spread environment. And part of the reasons, you know, we've resegmented, is I think it'll allow people to see.

Yes, so Michael there's a couple of things, it's primarily Canada, we do have some terminals and we've got some facilities.

In the lower 48, but it's primarily Canada Youre correct, there and as you think about the difference between last year and this year a big piece of that is the frac spread environment and part of the reasons. We've re segmented. It's I think it will allow people to see.

Speaker 3: two segments, a little more with a little more transparency as we talk about the business, it's certainly how we think about it. So, but probably the biggest driver is a difference in the fractured environment that between last year and this year.

Sure.

The two segments, a little more with a little more transparency as we talked about the business. Its certainly how we think about it so but probably the biggest driver is a difference in the frac spread environment between last year and this year.

Thank you appreciate it.

Okay.

Thank you.

Speaker 1: Next we have GN Celebrity of Bernstein's Your Line is Open.

Next we have Tien Salisbury of Bernstein your.

Your line is open hi.

Speaker 8: Hi, do you see the potential looming lack of Permian gas takeaway as a threat for Plains' grows? Post kind of 2023-2024 if AMP's don't want to flare this camera.

Do you see that potential looming lack of Permian gas takeaway as a threat for plaintiff growth post 2023, 2024, if e&ps don't quite FLIR this turnaround.

Speaker 3: Why can't you do that? Definitely if there's good.

Well I can tell you Jean Ann.

Definitely.

Speaker 3: If there's people are not going to flare so there's going to be pressure on

If people are not going to flare, so theres going to be pressure on.

Speaker 3: on gas takeaway. And we don't operate long haul gas lines in the Permian, but if you hear others that are talking about that, a line sky with your two or three years, 2024-ish timeframe, and at that point, I think there's gonna have to be a solution. We've heard.

On gas takeaway and we don't operate long haul gas lines.

In the Permian, but if you hear others that are talking about that aligns with your two or three years 2024 ish.

<unk> frame and at that point I think there is going to have to be a solution.

<unk> about some people with a newbuild option and then obviously there's been a number of discussions on is our ability to repurpose align and as we've shared before it's a difficult conversation to have because <unk> got a number of parties you've got commercial contracts. That's complex. So I think it's something that we're going to have to.

Speaker 3: about some people with a new build auction and then obviously there's been a number of discussions on is there a ability to repurpose a line? And as we've shared before, it's a difficult conversation to have because you've got a number of parties, you've got commercial contracts that's complex. So I think it's something that we're gonna have to continue to watch as we go forward, but there will be a constraint at some point in time.

As we go forward, but there will be a constraint at some point in time.

<unk>.

Speaker 6: Okay. Just a follow on to that. I think once again, they...

Okay.

Just a follow on to that I think once again.

Speaker 6: From a long haul standpoint, there's a number of players that have firm capacity. Their growth is largely protected. So the extent, the production's coming from those, it's the undeticated component that will have more restrictions. And so when you think of customer mix and who's growing now, versus then aligning with larger customers, allows those barrels to flow. I think...

From a long haul standpoint, there is the number of players that have firm capacity their growth is largely protected.

The production is coming from those SDN dedicated component that will have more restrictions and so on.

When you think of customer mix and who's growing now versus then aligning with larger customers allows those barrels to flow I think we've considered that in our growth expectations I think gas takeaway being one I think there is some supply chain concerns we talked we're actively talking to our customers.

Speaker 6: We've considered that in our growth expectations. I think gas take away being one, I think there are some supply chain concerns. We talked to it, we're actively talking to our customers from a regulatory standpoint on the water size.

From a regulatory standpoint on the water side. So I think we do consider those when we go through our production forecast and talk to our customers. Those issues are actively being managed but we do pay attention and monitor that I'd say on the gas takeaway side the half a bcf a day that's out there with the Whistler project that should help and maybe <unk>.

Speaker 6: We do consider those when we go through our production forecast and talk to our customers, those issues are actively being...

Speaker 6: But we do pay attention and monitor that. I'd say on the gas take away side, the half of BCF today that's out there with the Whistler project, that shouldn't help and maybe extend that couple quarters or so, but you're right, the clearing is something that could.

And that.

A couple of quarters or so, but youre right. The flaring is something that we've seen in the last six months pause intermittent disruptions in the field. They will not players. So if there's a problem with the processing plant. So the industry is in a good way that's from an ESG perspective people go into the lower carbon that's one way we are seeing very actively manage on the producer.

Speaker 6: We've seen it in the last six months called intermittent disruptions in the field. They will not flare, so there's a problem at a processing plant. So the industry is in a good way. This is from an ESC perspective, people go into lower carbon.

Speaker 6: That's one way we're seeing very actively manage on the producer side.

Speaker 6: But we do take that in consideration of our forecast and we're costly, after this day in the street, we'll come to a solution.

Your side, but.

We do take that into consideration in our forecast and we're cautiously optimistic the industry will come to a solution.

Speaker 8: Great, thank you. And then, relatedly, you all have talked about it quite a bit before, but just wanted to make sure that your latest view is that planes will not, is sort of one of the more, the less likely to convert a crew pipe to gas, just given what your foot burn is, then perhaps some other pipeline from the basin might be.

Great. Thank you and then Relatedly you all have talked about it quite a bit before but just wanted to make sure that your latest view is that plans will not sort of one of the more the less likely to convert our crude pipe gas just Kevin.

And perhaps some other pipelines in the basin might be.

Speaker 6: Dean, this is Jeremy. You know, you're gonna need a thicker wall sickness and a higher diameter pipeline than the ones we have going to market. So I think it'd be unobviously for us to convert something to a gap on it. Okay, great. That's all for me. Thanks.

Jean Ann this is Jeremy.

Youre going to need a thicker wall thickness.

<unk> hired a higher diameter pipeline than the ones. We have gone in the market. So I think it would be unlikely for us to convert something to gaslog.

Okay, Great. That's all for me thanks.

Thanks, Jean Ann.

Thank you.

Speaker 1: And next we have Jeremy Tone, our JP Morgan. Your line is open. Hi, good afternoon.

And next we have Jeremy Tonet JP Morgan.

Your line is open.

Hi, good afternoon, Hi.

Hi, Jeremy.

Speaker 9: I just want to dive into the guidance a little bit more with EBITDA in

Hi, I just wanted to dive into the guidance a little bit more with EBITDA and.

Speaker 9: If I look at just 4Q here, and I know there's a little bit of seasonality in 4Q, but if I annualize the 4 Q2 021 number, that comes up above the 2022 guide. And so I'm just wondering, does the 22 guide really have nothing on the SNL side or does resegmenting impact it? Or is it really the line fill from Wink to Webster really offsets all the Permian group? Just trying to wrap my head around better how 2022 guide is lower than 4Q.

If I look at just for Q here, and I know theres, a little bit of seasonality in <unk>, but if I annualize. The <unk> 2021 number that comes up above the 2020 guide.

So I'm just wondering does the 22 guide really have nothing on the SNL side or just re segmenting impacted or is it really the line fill from Wink to Webster really offsets all the Permian growth just trying to wrap my head around better how 2022 guide is lower than <unk>.

Speaker 3: Yeah Jeremy, there's a lot of vines that shift for Q as we earlier talked about into the Wink-the-Webster line so it's not a clean match to do a run rate on Q4.

Yes, Jeremy there is theres a lot of volumes that shift.

Q as we earlier talked about into.

Wink to Webster aligned so it's not a clean match.

Do a run rate on Q4.

Speaker 6: Jeremy, you got anything else to add? Yeah, just Jeremy, if you think about it from a modeling standpoint.

Jeremy you got anything else to add.

Jeremy as you think about it from a modeling standpoint.

Speaker 6: The seasonality in the business, the NGO business, I think it's in the appendix shows the NGO business generating 140 million of EBITDA. So if you deduct that from the total and annualize that on a crude basis, at Skiver take a $425 million or a quarter run rate.

The seasonality in the business the NGL business I think it's in the appendix shows the NGL business generated 140 million of EBITDA. So if you deduct that from the total and annualize that on accrued basis, that's give or take a $425 million per quarter run rate.

Speaker 6: What we have forecasted for crude this year is supposed to $455 million run rate. So there was just some timing of some sales in the NGL settlement of some MVCs. But by and large, the crude segment is growing on a run rate basis, $120 million, $140 million, or $130 million over the year, and the NGL business is going to more normalize quarter.

We have forecasted for this year is close to $455 million run rate. So there was just some timing of some sales and the NGL side of the settlement at some NBC, but by and large the crude segments growing on a run rate basis, 120, $140 million or $130 million over the year and the NGL business is going to more normalized.

<unk>.

Speaker 3: That's a good point on the, uh, the insularity of the NGL. Definitely has an impact.

That's a good point on the seasonality of the NGL definitely has an impact.

Got it thanks for that.

Speaker 9: And as far as capital allocation is concerned, you provided a lot of thoughts today, but just wondering if I could dive in a little bit more. It seems like the cat-backs this upcoming year, 2022 is a little bit higher than your run rate. And I'm guessing that's just associated with the synergies with Orics or initial projects there. And that's the key driver there. And it'll come down in future years. And then I guess, buybacks versus dividend.

And as far as capital allocation is concerned you provided a lot of thoughts today, but just wondering if I could dive in a little bit more it seems like the capex. This upcoming year 2022 is a little bit higher than your run rate and I'm guessing that's just associated with.

The synergies with orix or initial projects there and that's the key driver there and it will come down in future years, and then I guess buybacks versus dividend, we were kind of thinking that the buybacks might be tilted a little bit more than a 21% dividend increase as planes trains at one of the lowest valuations in the space. So even really just buybacks versus dividend.

Speaker 9: We were kind of thinking that the buybacks might be tilted a little bit more than a 21% dividend increase has claims trades at one of the lowest valuations in the space. So even really just buybacks versus dividend growth if you could help us with how you view that going forward. Now why don't you...

Both if you could help us with.

How do you view that going forward.

Al why don't you take a shot at this.

Speaker 4: Yeah, yeah, sure. We look at between the way we all allocate capital back to equity holders as a balance between the two, between distributions and.

Yes, sure we look at.

Between the.

The way, we allocate capital back to the equity holders as a balance between the two between distributions.

Speaker 4: and repurchase activity. As an MLP, I think the primary approach for returning capital to our shareholders would be through distributions. So we think we can balance and...

And.

Repurchase activity.

As an MLP.

I think the primary approach for returning capital to our shareholders would be through through distributions. So we think we can balance.

Speaker 4: and accomplish both, so to speak. I think the capital is pretty much in line. I think this year we're showing a, quote, consolidated of investment capital of about 330 million net 275. So it's right on top of, I think, where we kind of expect.

And.

Accomplish both so to speak I think the capital is pretty much.

In line I think this year.

So in a quote consolidated of investment capital of about $330 million net 275. So it's right on top of I think where we kind of expect to be that consolidated number is up because of the added at a JV.

Speaker 4: That consolidated number is out because of the added JB. You know, we show a net number on our guidance slide on page seven. But that's pretty close to where we expect them to run maintenance capital is the one this year that's a little higher due to the one turnaround. That's more of a 10 year type of turnaround. I wanted a big, big units up in Canada.

We show a net number on our on our guidance slide on page seven.

But that's pretty close to where we expect them to run maintenance capital is the one this year, that's a little higher due to the the <unk> turnaround thats more of a 10 year type of a turnaround on one of the big Big units up in Canada.

Speaker 4: prospectively we'll be more talking in CAP-ACs on a gross or consolidated base.

Prospectively, we will be more talking capex on a gross consolidated basis.

Speaker 3: Jim, let me just add to that a little bit. You know, I think everything outside is right. I just wanted to reinforce.

Yes.

Jeremy Let me just add to that a little bit I think everything else that is right I just wanted to reinforce.

Speaker 3: We've got a lot of free cash flow going forward. And what I would take away from the recommendation of the 15 cent annualized is really the conviction that we have in our cash flow stream going forward. And to Owl's point, we don't see it as one or the other. We think we can do both.

We've got a lot of free cash flow going forward and what I would take away from the recommendation of the 15th annualized is really the conviction that we have in our cash flow stream going forward and to Al's point, It's we don't.

Don't see it as one or the other we think we can do both.

Speaker 3: And we've proven that we can buy back shares as we demonstrated over the last year plus. And this was a signal really to say, we've got plenty of capacity as far as coverage. It was a nice step up recommendation that we'll make to the board on distribution and still leaves us enough capital to be able to buy back some shares at the appropriate time.

And we've proven that we can we can buy back shares as we demonstrated over the last.

A year plus and this was a segment all really to say.

Got plenty of capacity as far as coverage.

It was a nice step up recommendation that will make to the board on on distribution and still leaves us enough.

Capital to be able to buy back some shares at the appropriate time.

Got it I'll leave it there thank you.

Thanks, Jeremy.

Thank you.

Speaker 1: Next we have Christian Richardson, a two-it-sectorities. Your line is open.

Next we have kitchen Richardson.

Securities Your line is open.

Hey, good evening guys. Appreciate all the comments on the new segments.

Speaker 5: Hey, good evening guys. I appreciate all the comments on the new segment. So just, I know it's not a perfect metric, but...

Just.

No, it's not a perfect metric but.

Speaker 5: You guys used to talk about guidance and expressometric as sort of an EBITDA, you know, per transport barrel, but if I just look at 22 crude segment volume guidance against the crude segment EBITDA suggests sort of that.

You guys used to talk about guidance.

Express a metric as sort of an EBITDA.

Per transport barrel, but if I just look at 'twenty two crude segment volume guidance against the crude segment EBITDA suggests sort of that.

Speaker 1: Evidot Perbaral from out less than maybe what you guys have talked about under the previous segments is should we just think about this as sort of an eight eighth volumes versus a net EBITDA of PAA comparison or but you know we also would have thought there would have been some marketing activity in that EBITDA number. Could you maybe just talk about that a little bit just in the context of how you guys used to talk about EBITDA Perbaral?

EBITDA per barrel somewhat less than maybe what you guys have talked about under the previous segments.

Should we just think about this as sort of.

Eight eighths volumes versus the net EBITDA to PAA comparison or but.

I would've thought that would've been some marketing activity in that EBITDA number could you maybe just talk about that a little bit just in the context of hey, guys used to talk about EBITDA per barrel.

Speaker 4: Yeah, this is all, I'll take a shot. Yeah, as we clapped all of the crew business in the one segment, and we had been reporting crew to activity under three.

Yes. This is al I'll take a shot yeah as we collapsed all of the crude business into one segment and we had been reporting crude activity under three.

Speaker 4: As we looked at it, we didn't believe that we should necessarily try to choose one or two, quote, volume metrics to calculate the per unit.

As we looked at it.

We didn't believe that we shouldn't necessarily try to choose one or two quote volume metrics to calculate.

The per unit because ultimately there are there are variations to it what we did historically wasn't perfect either over time with changed volumes. When we thought there was one was more of a driver or less of a driver et cetera.

Speaker 4: because ultimately there are variations to it. What we did historically wasn't perfect either. Over time we had changed volumes when we thought there was, one was more of a driver or less of a driver, et cetera.

Speaker 4: Clearly today, what we showed in the volumes is pipelines, the commercial capacity that we use and lease out, as well as our lease purchase activity. But it's hard to say that all those barrels are necessarily equal as how they drive them across our...

Clearly today, what we showed in the volumes as pipelines the commercial capacity that we use and lease out.

As well as our lease purchase activity.

But it's hard to say that all those barrels are necessarily equal is how they drive them across our our cash flow stream and that's why we chose to not actually do the calculation.

Speaker 4: cash flow stream and that's why we chose to not actually do the calculation for it. And again, it's the pipelines are probably the bigger driver, but the least volumes that we purchase and move through our assets effectively are kind of double counted. So anyway, we recognize it's not perfect, but that's why we chose not to because as we put it all together, we didn't think there was one way to do it that was really reflective of

For it.

And again, it's the pipelines are probably the bigger driver, but the lease volumes that we purchase and move through our assets effectively are kind of double counted.

So anyway, we recognize it's not perfect, but thats why we chosen not to because as we put it all together we didn't think there was one way to do it that was really reflective of.

Speaker 4: the waiter show it and similarly on the NGO.

The way to show it and similarly on the NGL side.

Okay I appreciate it thanks Al and then I guess, just you talked about kind of priorities for Capex and maintenance Capex.

Speaker 5: I appreciate it, thanks Alan. And then I guess just, you know, you talked about kind of priorities for CAPEX and maintenance CAPEX really being connected, you know, well-connect focused. You also talked about asset optimization, that be brown field expansion, and JVs.

Really being connected.

Well connect focused.

You also talked about asset optimization that'd be brownfield expansion in GBS.

Speaker 10: But you get this sense of maybe examples of what that might look like or potential projects from the horizon that we kind of fit under that optimization category.

Could you give us a sense of maybe examples of what that might look like or.

Potential projects on the horizon that would kind of fit under that optimization category.

Speaker 4: Chris, yeah, Chris and his Chris camera. I'm looking at a number of opportunities around optimization. Some of the ones that are maybe further along than others are around our Canadian assets and our fractionating facilities. It looks like we have some low cost expansions available there that would enable additional food, but an additional engine oil production and or fee-based service up there. And then along the ESG lines, we fundamentally believe that...

Chris I'm not sure Tristan, it's Chris Hammer arm, we're looking at a number of opportunities around the optimization some of the <unk>.

Ones that are maybe further along than others are around our Canadian assets and our fractionated facilities. It looks like we have some low cost expansions available there that would enable additional throughput and additional NGL production <unk> fee based service up there and then along the ESG lines.

Fundamentally believe that.

Speaker 4: Energy efficiency at the end of the day is also a good business. So we're looking at opportunities to reduce energy consumption and increase energy efficiency at some of our assets that are large energy consumers. And we see some opportunities there as well that will look to fund if they meet our return for us.

Energy efficiency at the end of the day is also a good business. So we're looking at opportunities to reduce energy consumption and increased energy efficiency at some of our assets.

Our large energy consumers and we see some opportunities there as well.

We will look to fund if they meet our return thresholds.

Speaker 3: Hey Tristan, just to add to it, you know, when you think about our NGL business, we've got large complex.

Hey, Tristan just just to add to it when you think about our NGL business. We've got large complexes that our straddle plants slash fractionation facilities. So what we've been doing over the last few years is if you think about our Empress facility just as an example here is <unk> one through six.

Speaker 3: that are straddle plants, fractional facilities. So what we've been doing over the last few years is if you think about our Empress facility just as an example, there's Empress one through six.

Speaker 3: And the way that that system, that facility has been set up is we've had multiple owners, joint venture partners.

And the way that <unk>.

System at facility has been set up as we've had multiple owners joint venture partners and what we're doing now as we go recall, we swapped our milk river asset for proportions of that by being able to do.

Speaker 3: And what we're doing now is we go over call, we swapped our milk river asset for proportions of that by being able to to clean up, if you will, the ownership structure, both the commercial side and operating side is there's a number of optimization opportunities to run run the sixth Empress 1 through 6 more of a system versus being constrained with each one with different owners.

Clean up if you will the ownership structure.

The commercial side and operating side is there is a number of optum optimization opportunities to run around six.

<unk> one through six more of a system versus being constrained with each one with different owners. So that's something we've been working on for some time and that offers us the ability to be able to optimize that whole complex. That's probably another very good example of what we're trying to do.

Speaker 3: So that's something we've been working on for some time and that offers us the ability to be able to optimize that whole complex. That's probably another very good example of what we're trying to do. Appreciate it, Willie Chris.

Appreciate it Willi Chris Thank you guys.

Thanks Kristen.

Thank you.

Speaker 1: And next we have Becca Follow-Will of US Capital Advisors. Your line is open.

And next we have Becca Followill of U S capital Advisors. Your line is open.

Speaker 11: Hi guys, thanks for taking my call. I think you talked about earlier about $150 million of synergies for orgs, if I'm correct, that you expect to realize in 2022. Where specifically should we look for those synergies to occur in terms of line items?

Hi, guys. Thanks for taking my call.

I think you talked about earlier about $150 million of synergies for Orix, If I'm correct that you expect to realize in 2022.

Where specifically should we look for those synergies to occur in terms of line items.

Speaker 3: So back to the, we never quoted 150 in 2022. It was 50 million in 2022, eight days, growing to 100 million longer term. And so those are both eight days number. And Jeremy, do you want to articulate where they, because you might see some of the synergy numbers. Sure, Becca, I think it's all the above. I'd say roughly half of that is probably gonna be in lower cap X. It'll create...

So back of the.

We never pointed $1 50 in 2022 was $50 million in 2022, <unk> growing to $100 million longer term.

And so.

And those are both anh number and.

Jeremy do you want to articulate where you might see some of the synergy numbers sure Becca I think it's all of the above.

I'd say roughly half of that is probably going to be and lower capex it'll create.

Speaker 6: We had capital in our standalone plan to capture some opportunities which required capital.

We had capital at our Standalone plan to capture some opportunities which would require capital.

Speaker 6: having the ORIC system merged with the plane system, the limited set, having the ability to connect to medications from one system to the other to short laterals is part of that. So let's call that path of the capital centers in spite of inflation able to reduce that 50 billion by roughly half. And then operating side is probably at 60% of the remaining number and 40% is just on the commercial side optimizations that we're able to do between.

Having the oryx system merged with the plane system eliminate eliminates that having the ability to connect dedications from one system to the other to short laterals as part of that so let's call that half of the capital centers in spite of inflation able to reduce that $50 billion by roughly half and then operating side is probably up.

I'd say, 60% of the remaining number and 40% is just on the commercial side optimizations that we're able to do between the two systems and our goal is obviously to beat that but that's where we stack our hands on today and feel like we can capture some of its cost some of it.

Speaker 6: And our goal is obviously to beat that, but that's what we stack our hands on today and feel like we can capture some of its cocks, some of its capital, some of its...

Capital some of it.

Okay.

Speaker 6: commercial and we think we'll step into more as we get to know the system. We've had it for three months. Over time, leases go away, operating agreements with others go away. There's more commercial opportunities across the system, more options to offer customers, more through, but that will all grow with the system. So we're excited about it and as Willie said in the beginning, we're comfortable with the 50 million and we'll look to grow.

Commercial and we think we will step into more as we get to know the system. We've had it for three months.

Over time leases go away operating agreements with others go away there is more commercial opportunities across the system more options to offer customers more throughput that will all grow with the system. So we're excited about it and Thats, what we said in the beginning we're comfortable with the $50 million and we will look to grow from there.

Speaker 11: Thank you. And then to following up on my Combloom's question on the NGL segment guidance, you talked about a big piece is the fractured environment. Can you talk specifically about what has changed in the fractured environment?

Thank you and then just following up on Michael <unk> question on the NGL segment guidance, you talked about a big piece of the crack spread environment can you talk specifically about what has changed.

Crack spread environment.

Speaker 6: Jeremy, you want to take that? Sure. Think of the fracks bread exposure being buying acogas and selling culture minus the nickel, mock belt, you type basis on the NDL side and it's C3 plus.

Jeremy you want to take that sure think of the frac spread exposure being buying eco gas and selling plus or minus a nickel Mont belvieu type basis on the NGL side and the C III plus.

Speaker 6: And it's cost-reinversement for F-Aing. It's basic structure to think about. So as you think of the run in liquid prices relative to natural gas, the fracks spread has increased materially. Some of the Fred's head just put on last year were done earlier in the year or in late 2020. So...

And it's tossed reimbursement for ethane is basic structure to think about so as you think of.

They run in liquids prices relative to natural gas the frac spread has increased materially some of the Fred hedges put on last year were done in earlier in the year or.

In late 2020 so.

Speaker 6: That step changed from an overall fracks spread in the 50s to north of 70 cents is what you're thinking about. So 15 plus cents and fracks spread across the whole program is largely driving that exposure. There's also a portion of volume that colder weather in the northeast is driving incremental demand through our travel plants, which is increasing volume. So it's some volume, some margin, but by and large, it's the commodity exposure in that portion of the business.

Step change from an overall frac spread in the fifties to north of 70.

What youre thinking about so 15, plus and frac spread across the whole program.

Largely driving that exposure. There is also a portion of that volume.

The weather in the North Sea northeast is driving incremental demand through our straddle plants, which is increasing volume.

Some volume some margin, but by and large it's the.

Our commodity exposure in that portion of the business.

Great. Thank you.

Thanks Pekka.

Speaker 12: Thank you.

Thank you.

Speaker 1: Next we have Michael Leapies of GF. Your line is open.

Next we have Michael <unk> of <unk> your.

Your line is open.

Speaker 5: Hey guys, thank you for taking my question. I actually have a couple of them. Just, I wanna see Nurtichek one thing. I'm looking at the fourth quarter volumes in the Permian at about 5.2, 5.3 million barrels a day. So your guidance for 22 basically assumes that you're gonna be flat relative to the fourth quarter actual. And I figured about that right. side of the other computer.

Hey, guys. Thank you for taking my question I actually have a couple of them just I wonder if <unk> seen any check one thing im looking at the fourth quarter volumes in the Permian at about five to $5 3 million barrels a day.

Your guidance for 'twenty to basically assume that youre going to be flat relative to the fourth quarter actuals and my thinking about that right.

Speaker 6: This is Jeremy Goeble. Yes, and part of that is the reduction in longer haul volumes, but it's a little bit more nuanced than that. Volumes that go on Wink to Webster, 16% type volumes. Volumes that went on our legacy systems are 88% to 100%. So total gross volumes are up like net to our interest they're down, but you've seen any reduction there, you're saying offset by increased growth on the gathering.

This is Jeremy Goebel, yes, and part of that is the.

A reduction in longer haul volumes, but it's a little bit more nuanced than that volumes that go on wink to Webster, 16% type volumes volumes at one of our legacy systems are 88% to 100%. So total gross volumes are up but net to our interests, they're down but <unk> seen any redemption, there youre seeing offset by increased growth.

On the gathering system and as we said before this is consistent with what we would expect to see in 'twenty, two and potentially part of 'twenty three at the growth projections. We have but then you can see that amplify as more volumes.

Speaker 6: And as we said before, this is consistent with what we'd expect to see in 22 and potentially part of 23 at the growth projections we have, but then you can see that amplify as more volume. It's not a one-for-one on volume growth, as NBC's get full on pipelines, you start to see a multiplier effect on gather.

It's not a one for one on volume growth as Nbc's get full on pipelines as you start to see a multiplier effect on gathered volumes.

Speaker 5: understood benefit of it should compound over time. The other...

Understood that's been put up it should compound over time.

The other question I had I'm just curious how you are.

Speaker 5: I'm just curious how you're, you know, when we think about both wing to webster and tap line, how long should we think about the timeline is for each of those to ramp up into kind of a normalized EBITDA run rate? Like is there a stag? Can you remind us? Is there a staggering of when the contracts go into effect and when kind of that year where they're all in a factor? Are they all start to be in a fully in effect for both lines?

When we think about both wink to Webster in cap line.

How long should we think about the timeline is for each of those to ramp up into kind of a normalized EBITDA run rate is there a stack can you remind us is there a staggering of when the contracts go into effect.

<unk> kind of that year, where they are all in a factory. They all start to be fully in effect for both lines.

Speaker 6: Sure, when the webster think of it as significant enforcement of volume kicked in in February of T and these, and then think about it over the next two years, rateable increases from there to get to full. So maybe two years from now, you'll largely be fully ramped up in MVC.

Sure.

The web sort of think of it as a significant portion of the volume kicked in in February of <unk>, and then think about it over the next two years ratable increases from there to get to full so maybe two years from now you will largely be.

Fully ramped up and MVC as for cap one it started at where we have the MVC levels, but were actively marketing additional capacity, we have roughly 100000 barrels a day of additional capacity to offer with no capital and we're in active discussions with shippers and we will update you at the appropriate time.

Speaker 6: That's for Capon. It started at where we have the MVC levels, but we're actively marketing additional capacity. We have roughly a hundred thousand barrels a day of additional capacity to offer with no capital. And we're in active discussions with shippers and we'll update you with the appropriate.

Speaker 5: Got it. Okay. Thank you much appreciated guys. Thanks Michael.

Got it okay. Thank you much appreciate it guys. Thanks.

Thanks, Michael.

Thank you.

Speaker 1: Next we have a trace module of Bank of America. Your line is open.

Next we have chase Mulvehill of Bank of America. Your line is open.

Speaker 7: Hey, thanks for squeezing me in here. A couple of kind of questions. I mean, so this is a discuss, but just want to dig a little bit deeper. But could you talk about, you know, what Permian oil production levels you would need to see before you really see a pickup in volumes to corpus, which is basically cactus for you. And then, you know, the follow up is the same question, you know, when, what does Permian oil production volumes, what do they need to get to see kind of a pickup in cushion volume?

Hey, Thanks for squeezing me in here.

A couple of questions.

Just want to dig a little bit deeper.

But could you talk about what Permian oil production levels, you would need to see before you really see a pickup in volumes to corpus.

Taxes for you and then the follow up is the same question.

What does Permian oil production volumes, what do they need to get to see kind of a pickup in Cushing volumes.

Speaker 3: So, Chase, I'll start. I do want Jeremy to talk about this because he lives this 24-7. When you think about our system, we get a lot of questions on why barrels aren't flowing and what one way versus the other. The thing I would reinforce is we've got a flexible system that allows barrels to go where markets are.

So Jason I'll start I do want Jeremy to talk about it because he lives was 24, 7%. When you think about our system, we get a lot of questions on why barrels arent flowing in one way versus the other the thing I would reinforce is we've got a flexible system that allows barrels to go where markets are.

Speaker 3: So I view that as a positive. Even though we've maybe taken some biomes off of a certain system to go to pushing instead of the Gulf Coast, we think that's a benefit. But there's a unique situation going on right now with the...

So I view that as a positive.

Even though we maybe taken some volumes off of a certain system to go to Cushing instead of the Gulf Coast, We think Thats a benefit but there is a unique situation going on right now with with the.

Speaker 6: With spare capacity and spot tariffs and in MVCs and production, Jeremy, would you kind of share your thoughts on that? Sure. And the way I think about it simply is that this year's production growth will go to Philadelphia and from the MVCs on Winged to Webster plus a little bit. And then next year's production growth will fill Winged to Webster plus any shorts in the market today. So you basically get back to an environment where people are not remarketing space.

With spare capacity and spot tariffs and MVP season production, Jeremy would you kind of share your thoughts on that sure.

The way I'd think about it simply is that this year's production and growth will go to fill the incremental mpc's linked.

Wink to Webster, plus a little bit and then next year's production growth fulfill linked web surplus any shorts in the market. Today. So you basically get back to an environment, where people are not remarketing space within the next two years based on what I would say industry standard production growth is.

Speaker 6: within the next two years of based on what I'd say industry standard production growth.

Speaker 6: And at that point, pipeline tariffs, you start to shift at incremental spot tariffs first.

And at that point pipeline tariffs, you start to ship, but incremental spot tariffs versus shipping at some marketed discounted level just to fill space and so that probably answers all of your questions, but thats just the way we're looking at the market. So it's going to be a competitive market for the next 18 to 24 months at current production forecasts.

Speaker 6: shipping at some market at this kind of level, just to fill space. And so that probably answers all of your questions, but that's just the way we're looking at the market. So it's going to be a competitive market for the next 18 to 24 months at current production forecast. And at that point, you filled all existing MVCs, you have spot barrels, which changes the dynamic. And also, when you think about that, if Midland is short, it starts to price at a premium, and it makes it difficult.

And at that point, you filled all existing Nbc's, you have spot barrels, which changes the dynamic and then also when you think about that if Midland is short it starts to price at a premium and it makes it difficult to go to other located locations, but as production grows and you get to the point where you are.

Speaker 6: But as production grows and you get to the point where you're filling NBC's, now that marginal barrel sets the spot price, it makes all markets competitive for the incremental about midland weekends relative to the other markets. And so pushing becomes more competitive all markets. So it is a dynamic market. It doesn't sit still, but hopefully that gives you enough to run.

Filling mdc's now that marginal barrel sets the spot price. It makes all markets competitive for the incremental about Midland weakens relative to the other markets and so Cushing becomes more competitive all market. So it is a dynamic market. It doesn't sit still but hopefully that gives you enough to run with.

Speaker 7: Yeah, I mean, if I kind of connect the dots on what you said and what you said earlier in the call, I think you said 600 kind of exit and similar growth next year in the Permian. And, you know, so basically what I'm hearing is you got about 1.2 million barrels a day of Permian oil production growth, where you really start seeing some kind of significant operating leverage or cost the long haul pike. Does that set up your assumption? I think at this point it is, but remember that dynamic, is it? I mean, a lot of people. Another pipeline.

Yes.

I kind of connect the dots on what you said, what you said earlier in the call. I think you said 600 kind of exit to exit and similar growth next year.

In the Permian.

So basically what I'm hearing is you got about $1 two.

1 million barrels a day of Permian oil production growth, where you really start seeing some kind of significant operating leverage or calls the long haul pipes does that kind of fair.

I think at this point it is but remember that dynamic is.

Hello.

Pipelines.

Speaker 6: then that number gets smaller. So it doesn't have to stay that way forever, right? It's just as MVCs roll off another pipeline, we control substantial bells and fill space. So it's dynamic, but in this 30 seconds, yes, that would be our... Okay, okay, that's all I had. I'll turn it back over.

That number gets smaller so it doesn't have to stay that way forever right. It's just us MVC roll off on other pipelines, we control a substantial <unk> health space.

It's dynamic but in this 30 seconds, yes that would be our assessment.

Okay, Alright, Thats, all I had I'll turn it back over thanks.

Thanks Chase.

Thank you.

Speaker 1: If you have Brian Reynolds of UBS, your line is open.

We have Brian <unk> of UBS. Your line is open.

Speaker 13: Hi, good evening, everyone. Start off on capo allocation as I follow up with some of the previous questions. We talked about a balance between buybacks and distribution raise.

Hi, good evening everyone.

Start off on capital allocation as a follow up on some of the previous question you talked about a balance between buybacks and distribution raise.

Speaker 13: Given the previous benchmark of 25% of free cash will go in towards the turn of capital, it seems like that's roughly a 50-50 split between distributions and potentially buybacks. Is that a fair way to think about buybacks this year around that $90 million mark? I'm just kind of curious as we go forward and reduce that further, just wondering if more free cash flow could go towards distributions or buybacks beyond $22.

Just given the previous benchmark of 25% of free cash flow going towards return of capital. It seems like that's roughly a 50 50 split between distributions and potentially buybacks.

A fair way to think about buybacks this year around that $90 million, Mark and just kind of curious as we go forward and reduce that further I'm just wondering if more free cash flow could go towards female distributions or more buybacks beyond 'twenty two.

Speaker 3: Yeah, so Brian , I think your map is pretty close. You know, if I take you back to the slide that we show this on a 13.

Yes, so Brian I think your math is pretty close if I take you back to the slide that we show this on 13.

Speaker 3: You know, again, the free cash flow after distributions, this would be reflect before any increase this year.

Sure.

Again, the free cash flow after distributions this would be reflected for any increase this year.

Speaker 3: There's two points. One, the point you made, which is the allocation of the 25% to the equity holders, which as we get as leverage comes down, it will shift and increase. But the real point I want you to take away from this is

There is two points one point, you made which is the allocation of the 25% to the equity holders, which is we get.

Leverage comes down it will shift an increase but the real point I want you to take away from this is we've got significant free cash flow going forward and if you think about this balloon what's circled in the yellow.

Speaker 3: We've got significant free cash flow going forward. And if you think about this balloon, what's circled in the yellow, our goal is to get our leverage down, but once that happens, it gives a significant amount of capacity to return to unit holders. And that's that at the point we really...

Our goal is.

Together get our leverage down but once that happens it gives a significant amount of capacity to return to unit holders and Thats. The point, we really want you to takeaway.

Speaker 13: Great, that's helpful. And then as a follow up on some of the previous Permian guidance questions as well, just want to clarify, it seems like 22 is filling the link to Webster, MDCs, et cetera. Well, on 23 is that where we could see volumes moving above MDCs on the legacy playing spikes and start to let material earnings up with.

Great.

Helpful and then as a follow up on some of the previous Permian guidance questions as well.

Just wanted to clarify it seems like 'twenty, two is filling wink to Webster <unk> et cetera.

23 is that where we could see volumes moving above MVC is on the legacy claims pipes insights.

Material earnings uplift.

Speaker 6: I think that was, it's very consistent with the last question.

I think that it's very consistent with the last question. So.

Speaker 6: That's the starting point. We're going to look to continue to attract incremental spot barrels, but we're not going to overpay because your market limit is at this point. There's a midlet MEH-Fred 20 to 30 cents. There's no cents in.

That's the starting point, we're going to look to continue to attract incremental spot barrels, but we're not going to overpay because your market limited at this point the Midland EMEA spreads, 20% to 30, there's no sense in.

Speaker 6: If we can get a 1010 premium selling at Midland versus consuming 15 cents of power and taking the risk of marketing barrels, it's better to sell at Midland. So your market's limited today and it's saying keep the barrels in the basin. As that changes will opportunistically move, as pushing inventory is fall, we're opportunistically gonna move barrels to pushing. So it's

If we can get a 10% premium selling at Midland versus consuming 15 cents of power in and taking the risk of marketing barrels.

The Midland So youre market limited today, and saying keep the barrels in the basin as that changes, we'll opportunistically move as Cushing inventories fall, where opportunistically going to move barrels to Cushing. So.

Speaker 6: But to your point on the balances, there are some limitations on that. And so sometime in the, as I said, 18 to 24 months from now, we're from the beginning of this year, you end up in a period where we think that starts to be.

But to your point on the balances there are some limitations on that and so some time and as I said 18 to 24 months from now where from the beginning of this year you end up in a period, where we think that starts to rebound.

Great I appreciate the color have a great evening everyone.

Speaker 2: Great, appreciate the colors. Have a great evening, everyone. Thanks, Brian . Hey, Chris, I think we have time for one more, one more set of analyst questions. So we'll take this next set of questions and then call the call.

Thanks, Brian Hey, Chris I think we have time for one more.

One more set of analyst question. So.

We'll take this this next set of questions and then call the call yes.

Speaker 1: I guess thank you. All right, our last question coming from 10 Schneider of City, your line is open.

Yes. Thank you.

Last question comes from Timm Schneider of Citi. Your line is open.

Speaker 2: Hey, thank you. Real quick. So if I back into the 150 million or so of a well connect for 2022, how should we think about the cycle time of that cap X, meaning could some of that show up in the event in 22 or is that longer dated?

Hey, Thank you real quick so if I add back the 150 million or so.

Well connects for 2022, how should we think about the cycle time of that capex, meaning could some of that show up in EBITDA in 'twenty, two or is that longer data.

Speaker 6: Jeremy, I would think of that as a continuous program and that's a gross number of 150 million. So think of that as a hundred million at the plane.

I mean, I would think of that as a continuous program.

That's a gross number of $150 million, so think of that as a $100 million net to planes and.

Speaker 6: and returns on that it's going to be like the clients in wells. So it's going to be continuous every month for connecting a rateable amount marginally. And so you think that cycle is largely continuous. So the cycle of the project, whether it's four to six-

Returns on that it's going to be like declines in wells. So it's going to be continuous every month, we're connecting a ratable amount largely and so you'd think that cycle is largely continuous so the cycle of the projects, whether it's 4% to six months realistically, we have that as a continuous program. So every.

Speaker 6: Realistically, we have, that is a continuous program. So every month, four to six month projects are finishing. It's not, don't view that as a large pipeline where it starts 18 month later, you get capital. That is a continuous piece of capital that's maintaining cash flow and generating substantial returns associated with.

<unk> four to six month projects are finishing its not don't view that as.

A large pipeline, where it starts and 18 months later you need capital that is a continuous piece of capital thats, maintaining cash flow and generating some.

Substantial returns associated on a standalone basis.

Speaker 6: Okay, got it. And then the shifting gears to Warbeck at Warwick. So you said uh, capital synergies 50 million going to 100. But what's the actual EBITDA contribution that you're forecasting that the planes of Warwick since 2022? Sure. That's an eight eighth number. So if you take 65% of that. And then like I said, the contribution in 2022 is half capital half.

Okay got it and then shifting gears to or back to Orix, who said that.

Synergy is $50 million going to 100, but what's the actual EBITDA contribution that you are forecasting that the planes of orix in 2022.

Sure that's an eight as number so if you take 65% of that and then like I said the contribution in 2022 is half capital App.

Speaker 6: half capital half, EBITDA generating concepts. So the thing about NETS to planes is 65% of the 50 million and half of that would be EBITDA half of that would be reduced capital, the total 65% would go to free cash flow, which is largely how we're looking at our business. So, we're looking at our business.

Half capital half EBITDA generating concepts, so think about it net to plains is 65% of the $50 million and half of that would be EBITDA half of that would be reduced capital.

The total of 65% would go to free cash flow, which is largely how we're looking at our business.

Okay got it and then.

Speaker 6: Sorry, go ahead. I was just saying anything that reduces sustaining capital to us is free cash flow generating. So that's how we're looking.

Sorry go ahead.

I would just say anything that reduces sustaining capital to us is free cash flow generating and so that's how we're looking at the business.

Speaker 2: Okay, understood. And then the 600,000 barrel a day increase, is that just clarifies that in the exit, the exit number?

Okay understood and then the 600000 barrel a day increase is that just to clarify is that an exit to exit number.

Speaker 6: It isn't in this year, it's actually somewhat the same, but yes, exit to exit is how it would look at it. All right, thank you.

It is in this year, it's actually somewhat.

Same but yes exit to exit.

Alright, thank you.

Thanks, Tim.

Thank you.

Speaker 1: Okay, turn the conference back over to Willie Tang for closing remarks.

I'll now turn the conference back over to Willie Chiang.

Closing remarks, Hey, Thanks, Chris Hey, I, just wanted to make a couple of comments hopefully came through in our presentation. We've worked very hard on this strategy and we've executed against it and hopefully what you've seen is we've really positioned ourselves well, we're taking that down we've got this mantra maximizing free cash flow.

Speaker 3: Hey, thanks, Chris. Hey, I just wanted to make a couple of comments. Hopefully it came through in our presentation. We worked very hard on this strategy and we've executed against it. And hopefully what you've seen is we've really positioned ourselves well. We're taking depth down. We've got this mantra of maximizing free cash flow. We've got a lot of operating leverage that we've talked extensively about not only on volumes in the Permian, but some tariff uplift as we go forward.

Got a lot of operating leverage that we've talked extensively about not only on volumes in the Permian, but let's see.

Tariff uplift as we go forward.

Speaker 3: And then we've got a pretty rich opportunity set of low cost debodalnex and continued opportunities around our existing system. So we hope you look at slides 13 and 14 because I think that really encompasses what we've been trying to do and where we're headed going forward. So with that, I'll thank you all for taking the time to spend with us this afternoon. Thank you.

And then we've got a pretty rich opportunity set of low cost debottleneck. Some continued opportunities around around our existing systems. So we hope you look at slides 13, and 14, because I think that really encompasses what we've been trying to do and where we're headed going forward. So with that I'll. Thank you all for taking the time to spend with US. This afternoon. Thank you.

Speaker 1: This concludes today's conference call. Thank you all for participating. You may now disconnect and have a day.

This concludes today's conference call. Thank you all for participating you may now disconnect and have a great day.

Okay.

[music].

Okay.

Yes.

[music].

Okay.

Yes.

Okay.

[music].

Yes.

Yes.

[music].

[music].

[music].

Speaker 1: Good day and thank you for standing by. Welcome to the PA and PA GP fourth quarter full year 2021 earnings conference call. At this time or participants on the list and only mode. After the speakers presentation, there will be a question and answer session. To ask a question during that session, you'll need to press star one on your telephone and they three require any assistance during the call. Please press star zero.

Good day, and thank you for standing by and welcome to the PAA and PAGP fourth quarter full year 2021 earnings conference call.

At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question joined that session you will need to press star one on your telephone.

If you require any assistance during the call. Please press star zero.

Speaker 1: I would now like to hand the conference over to you and speak today, Mr. Roy Lomero. Mr. Lomero, the floor is yours.

I would now like to hand, the conference over to your speak today, Mr. Roy Lamoreaux telomerase the floor is yours.

Speaker 2: Thank you, Chris. Good afternoon and welcome to Plains All-American's Fourth Quarter in a four-year 2021 earnings call. Today's slide presentation is posted on the Investor Relations website under the news and events section at Plains.com, where an audio replay will also be available following today's call. Important as closures regarding forward-looking statements and non- GAAP financial measures are provided on slide two. A condensed, consolidating balance sheet for P-A-G-P and other reference materials are located in the appendix. Today's call will be hosted by Willie Chang, Chairman and CEO , and Alcwan, and Executive Vice President and CFO . Other members of our team will be available for the Q&A session, including Harry Pafana, Sir President Chris.

Speaker 2: Thank you, Chris. Good afternoon and welcome to Plains All-American's Fourth Quarter in a full year 2021 earnings call. Today's slide presentation is posted on the investor relations website under the news and events section at Plains.com, where an audio replay will also be available following today's call.

Thank you Chris Good afternoon, and welcome to Plains, All American <unk> fourth quarter and full year 2021 earnings call. Today's slide presentation is posted on the Investor Relations website under the news and events section that plains Dot Com. We're an audio replay will also be available following today's call.

Speaker 2: Important disclosures regarding forward looking statements and non- GAAP financial measures are provided on slide two. A condensed, consolidating balance sheet for PADP and other reference materials are located in the appendix.

Important disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide to condemn.

A condensed consolidating balance sheet for PAGP and other reference materials are located in the appendix.

Speaker 2: Today's call will be hosted by Willie Chang, Chairman and CEO , and Al Swanson Executive Vice President and CFO .

Today's call will be hosted by Willie Chiang Chairman and CEO and Al Swanson Executive Vice President and CFO .

Speaker 2: Other members of our team will be available for the Q&A session, including Harry Pafana, sir president, Chris Chandler, executive vice president, chief operating officer, Jeremy Gobel, executive vice president, chief commercial officer, and Chris Herbal, senior vice president, finance and chief accounting officer. With that, I'll now turn the call over to Willie.

Other members of our team will be available for the Q&A session, including Harry <unk>, Our President, Chris Chandler Executive Vice President and Chief Operating Officer, Jeremy Goebel, Executive Vice President and Chief Commercial Officer, and Christopher Volk Senior Vice President of Finance and Chief Accounting Officer with that I'll now turn the call over to Willie.

Speaker 3: Thank you Roy, good afternoon everyone, and I want to thank you for joining us today. It's really quite remarkable what a difference a year can make. Year over year, global crude oil demand is up over 5% and back to near pre-COVID levels, and global oil prices have increased over 50%, but WTI and Brent's rating near $90 a barrel.

Thank you Roy and good afternoon, everyone and I want to thank you for joining us today.

Really quite remarkable what a difference a year can make.

Year over year global crude oil demand is up over 5% back to near pre COVID-19 levels in global oil prices have increased over 50% with WT I and Brent trading near $90 a barrel.

Speaker 3: The Permian Basin, which is key to our part of financial success, exceeded our 2021 expectations, exiting the year at roughly 5 million barrels a day, with crude oil production growth of approximately 540,000 barrels a day over year in 2020.

The Permian Basin, which is key to our financial success exceeded our 2021 expectations exiting the year at roughly 5 million barrels a day with crude oil production growth of approximately 540000 barrels a day over year end 2020.

Speaker 3: We expect the base to add approximately 600,000 barrels a day annually for the next several years. In our asset base, built over decades is well positioned to capture future growth with meaningful operating leverage and modest capital requirements.

We expect the basin to add approximately 600000 barrels a day annually for the next several years and our asset base built over decades is well positioned to capture future growth with meaningful operating leverage and modest capital requirements.

Speaker 3: We also have a significant NGL position in Canada with asset optimization and emerging energy opportunities across our foot.

We also have a significant NGL position in Canada with asset optimization and emerging energy opportunities across our footprint. All of this all of this puts us in a good position to continue improving our financial flexibility and reinforces our confidence in the long term outlook for our business.

Speaker 3: All of this puts us in a good position to continue improving our financial flexibility and reinforces our confidence in the long-term outlook for our business.

Speaker 3: This afternoon we reported fourth quarter and full year 2021 results, exceeding our expectations. Additionally, we furnished 2022 full year guidance incorporating plain share of the Permian Joint Venture and we have revised our reporting segments to create two business segments, one for each of our crewed and NGL businesses, which more consistently aligns with how we view and how we operate our business.

This afternoon, we reported fourth quarter and full year 2021 results exceeding our expectations. Additionally, we furnished 2022 full year guidance, incorporating planed share of the Permian joint venture and we have revised our reporting segments to create two business segments, one for each of our crude and NGL businesses, which more.

More consistently aligns with how we view and how we operate our business our.

Speaker 3: Our 2022 adjusted EBITDA guidance attributable to planes is 2.2 billion, which represents approximately 200 million of growth when adjusting for unique items benefiting 2021. Al will discuss these in other details during his portion of the call.

Our 2022, adjusted EBITDA guidance attributable to Plains is $2 2 billion, which represents approximately $200 million of growth when adjusting for unique items benefiting 2021 al will discuss these and other details during his portion of the call.

Speaker 3: As shown on slide four, 2021 was a year of solid execution for us in a competitive environment.

As shown on slide four 2021 was a year of solid execution for us in a competitive environment.

Speaker 3: Overall, we executed well and we achieved our goal set out in February to maximize free cash flow, complete our multi-year capital program, further optimize our portfolio, and advance our sustainability up.

Overall, we executed well and we achieved our goals set out in February to maximize free cash flow complete our multi year capital program further optimize our portfolio and advance our sustainability efforts.

Speaker 3: We generated approximately 1.65 billion of free cash flow out of distributions, exceeding our February forecast by approximately 600 million, primarily driven by asset sales that exceeded our target by 125 million, continued capital discipline with reduced capital expenditures of approximately 230 million versus our initial guidance, and further operating and commercial-

We generated approximately $1 65 billion of free cash flow after distributions exceeding our February forecast by approximately $600 million, primarily driven by asset sales that exceeded our target by $125 million continued capital discipline with reduced capital expenditures of approximately 230.

Versus our initial guidance.

And further operating and commercial optimization.

Speaker 3: We repaid a billion dollars of debt built 450 million of cash on our balance sheet. And we repurchased 175 million of our common equity bringing our cumulative repurchases to 228 million since November of 2020.

We repaid $1 billion of debt built $450 million of cash on our balance sheet, and we repurchased $175 million of our common equity, bringing our cumulative repurchases to $228 million since November of 2020.

Speaker 3: We also completed our multi-year CAFWA program with both the CAFLINE reversal and Wink to Webster projects now in service. We are also well on our way to integrating our Fermi and Assets with the ORT system. And we are confident that the JV will generate at least 50 million in consolidated run rate synergies in 2022.

We also completed our multiyear capital program with both the cap line reversal and Wink to Webster projects now in service. We are also well on our way to integrating our Permian assets with the <unk> system and we are confident that the JV will generate at least $50 million in consolidated run rate synergies in 2022.

Speaker 3: In addition, we also made meaningful progress in our sustainability efforts, including establishing a new healthy safety, environmental, and sustainability board committee for providing additional oversight and perspectives.

In addition, we also made meaningful progress in our sustainability efforts, including establishing a new health and safety environmental and sustainability Board Committee for providing additional oversight and perspectives in.

Speaker 3: In regards to our admissions profile, we have further increased the disclosure around our scope one and scope two emissions, which reflect ongoing reductions over the past three years and absolute emissions at the lower end of our peers.

And in regards to our admissions profile, we have further increased disclosure around our scope, one and scope two emissions, which reflect ongoing reductions over the past three years and absolute emissions at the lower end of our peer group.

Speaker 3: We expect to continue the improvement trajectory through the efforts of our newly established emerging energy team, which is focused on a number of capital efficiency, capital efficient opportunities to further optimize our existing assets and lower our emissions.

We expect to continue the improvement trajectory through the efforts of our newly established emerging energy team, which is focused on a number of capital efficiency capital efficient opportunities to further optimize our existing assets and lower our emissions.

Speaker 3: Operational excellence continues to be a primary focus in our sustainability efforts and we strive to continue to raise the bar and we've made tremendous progress in our key health safety and environmental metrics over the past five years. We've reduced federally reportable releases and total record total recordable injury rate by approximately 40 and 50% respect.

Operational excellence continues to be a primary focus and our sustainability efforts and we strive to continuing to raise the bar and we've made tremendous progress in our key health safety and environmental metrics over the past five years, we've reduced federally reportable releases and total recorded total recordable injury rate by.

Approximately 40% and 50% respectively.

Speaker 3: Although we missed our 20% reduction targets in 2021, the severity of incidents we had were down greater by 25% and lost time days were down more than 90%. And I'm confident in our ability to continue improving going forward.

Although we missed our 20% reduction targets in 2021, the severity of incidents we had were downgraded by 25% and loss time days were down more than 90% and I am confident in our ability to continue improving going forward.

Speaker 3: With regards to capital allocation, our goals and initiatives remain centered on maximizing free cash flow and allocating it through a balanced approach, continuing to focus on debt reduction in the near term while increasing cash returned to our equity holders over time.

With regards to capital allocation, our goals and initiatives remain centered on maximizing free cash flow and allocating it through a balanced approach continuing to focus on debt reduction in the near term, while increasing cash return to our equity holders over time based on the progress we've made to date and our expectation of.

Speaker 3: Based on the progress we've made today, and our expectation of generating meaningful cash flow over the next number of years, we intend to recommend to our board and increase in our annualized distribution of 15 cents per common unit, which based on our guidance, maintains the capacity for continued discretionary re-purchase activity.

January generating meaningful cash flow over the next number of years, we intend to recommend to our board an increase in our annualized distribution of <unk> 15 per common unit, which based on our guidance maintains the capacity for continued discretionary repurchase activity.

Speaker 3: Our expect that 2022 coverage ratio taken into account the distribution rate that we plan to recommend to our board is approximately 250%.

Our expected 2022 coverage ratio taken into account the distribution rate that we plan to recommend to our board is approximately 250%.

Speaker 3: This leads room for responsibly returning additional capital to equity holders over time. I will share additional detail on our financial strategy and our capital allocation priorities later in the call.

This leaves room for responsibly, returning additional capital to equity holders over time.

Al will share additional detail on our financial strategy and our capital allocation priorities later on the call now.

Speaker 3: Now let me share some comments on industry fundamentals that are shown on slide 5.

Now, let me share some comments on industry fundamentals that are shown on slide five.

Speaker 3: As I briefly mentioned earlier, global crude oil demand is near pre-COVID levels, with the EIA and other third parties forecasting demand growth of approximately 3 to 4 million barrels a day in 2022, and continued growth for the foreseeable future.

As I briefly mentioned earlier global crude oil demand is near pre COVID-19 levels with the EIA and other third parties forecasting demand growth of approximately three to 4 million barrels a day in 2022.

And continued growth for the foreseeable future.

Speaker 3: We expect this demand growth, combined with the multi year back-prope, back-prope reduced upstream investment and a continuation of OPEC discipline will exacerbate many of the market concerns already being experienced today. This includes tight global markets and continued commodity price volatility.

We expect this demand growth combined with the multiyear backdrop backdrop of reduced upstream investment and a continuation of OPEC discipline will exacerbate many of the market concerns already being experienced today. This.

This includes tight global markets and continued commodity price volatility.

Speaker 3: As a result, over the longer term, we expect that North American energy supply will continue to play a key role in meeting global demand growth and the Permian is positioned to drive the vast majority of U.S. production growth.

As a result over the longer term, we expect that North American energy supply will continue to play a key role in meeting global demand growth and the Permian is positioned to drive the vast majority of U S production growth.

Speaker 3: It's against this macro backdrop that we expect to generate significant cash flow on a multi-year basis supported by our integrated business model from producing regions to key market and export hubs.

Against this macro backdrop that we expect to generate significant cash flow on a multiyear basis supported by our integrated business model from producing regions to key market and export hubs.

Speaker 3: We have a very flexible asset footprint with operating leverage, particularly in the Permian and modest capital investment needs for a number of years to come. With that, I'll turn the call over to Al.

We have a very flexible asset footprint with operating leverage, particularly in the Permian and modest capital investment needs for a number of years to come with that I'll turn the call over to al.

Speaker 4: Thanks, Willie. To open my portion of the call, I will share a few comments on our new crude oil and NGL reporting segments, as well as the treatment of non-controlling interests within our reporting. Our new segments are reflective of how we view and run our integrated crude oil and NGL systems.

Thanks, Willie to open my portion of the call I will share a few comments on our new crude oil and NGL reporting segments as well as the treatment of Noncontrolling interest within our reporting our new segments are reflective of how we view and run our integrated crude oil and NGL systems AG.

Speaker 4: Aggregating supply from producers, delivering to end market demand and all the stuff in between.

<unk> supply from producers delivering to end market demand and all the steps in between.

Speaker 4: We believe the new segments will provide better visibility and transparency into the drivers of our overall business and reduce inter-sagman X.

We believe the new segments will provide better visibility and transparency into the drivers of our overall business and reduce intersegment activity <unk>.

Speaker 4: Additional information regarding the new segments will be disclosed in our 2021-10K filing. As a reference tool, we have included a number of segments specific materials within the appendix of today's presentation, including historical, financial, and operating information by corps.

Additional information regarding the new segments will be disclosed in our 2021 10-K filing.

As a reference tool we have included a number of segments specific materials within the appendix of today's presentation, including historical financial and operating information by quarter.

Speaker 4: As a reminder, our NGL segment typically generates seasonally stronger results during the winter.

As a reminder, our NGL segment typically generates seasonally stronger results during the winter months and.

Speaker 4: in regards to our red river and Permian basin JBs, both of which are consolidated into our financial.

In regard to our Red River and Permian Basin Jv's, both of which are consolidated into our financials. We are reporting adjusted EBITDA attributable to PAA, which excludes EBITDA attributable to the noncontrolling interests.

Speaker 4: We are reporting adjusted EBITDA attributable to PAA, which excludes EBITDA attributable to the non-controlling interest as our segment measure for both historical and forward looking numbers.

Our segment measure for both historical and forward looking numbers. We will also use this measure in calculating our leverage ratios as both consolidated entities are debt free the.

Speaker 4: We will also use this measure in calculating our leverage ratios as both consolidated entities are debt-free.

Speaker 4: The adjusted EBITDA attributable to the non-controlling interest in our Red River JV is $17 million for 2021. Accordingly, our full year 2021 adjusted EBITDA guidance of $2.175 billion.

The adjusted EBITDA attributable to the Noncontrolling interests in our Red River JV is $6 $17 million for 2021, Accordingly, our full year 2021, adjusted EBITDA guidance of $2 $175 billion.

Speaker 4: provided in November , corresponds to an Adjusted EBITDA attributable to all of PAA of $2.158 billion. And this compares to our 2021 actual results of 2.196 billion.

Provided in November corresponds to an adjusted EBITDA attributable to PAA of 215 $8 billion and this compares to our 2021 actual results of $2 $196 million.

Speaker 4: Moving to the quarter and overview of our fourth quarter results is illustrated on slide six. Fourth quarter, segment of just the ebada $564 million was driven by better than expected performance of our Canadian crewed in NGL businesses, as well as stronger volume throughput across our Permian pipe.

Moving to the quarter and overview of our fourth quarter results as illustrated on slide six fourth quarter segment, adjusted EBITDA of $564 million was driven by better than expected performance of our Canadian crude and NGL businesses as well as stronger volume throughput across our permit.

<unk> pipeline systems.

Speaker 4: A summary of our full year 2021 results and 2022 financial and operating guidance is included in slide seven and eight.

A summary of our full year 2021 results in 2022 financial and operating guidance is included in slide seven and eight.

Speaker 4: We've modified our guidance approach by providing annual guidance only, guiding on our expected year end leverage ratio, and including these within our quarterly earnings.

We have modified our guidance approach, but providing annual guidance only guiding on our expected year end leverage ratio and including these within our quarterly earnings slides for 2022, we expect to generate full year adjusted EBITDA of $2 $2 billion $2 one.

Speaker 4: In 2022, we expect to generate full-year adjusted EBITDA of $2.2 billion, $2.1 billion of cash flow from operations, and $1.4 billion of free cash flow. We expect to exit the year with a leverage ratio of plus or minus 4.25 times, which is further explained on the slide.

Cash flow from operations.

And one $4 billion of free cash flow and we expect to exit the year with a leverage ratio of plus or minus four to five times, which is further explained on the slide.

Speaker 4: I would also note that our cash flow from operations and free cash flow guidance incorporate reasonable assumptions for short-term working capital needs and do not factor in material unforeseen impacts.

I would also note that our cash flow from operations and free cash flow guidance incorporate reasonable assumptions for short term working capital needs and do not factor in material unforeseen impacts.

Speaker 4: We expect approximately $100 million of asset sales in 2022, including $50 million deferred from 2021, which closed in January .

We expect approximately $100 million of asset sales in 2022, including $50 million deferred from 2021, which closed in January .

Speaker 4: Now let me put our 2022 Adjusted EBITDA guidance in perspective versus 2021 results as illustrated by the EBITDA walk on slide nine. 2021 results included certain unique items totally and approximately $200 million in the aggregate. These items consist of net margin activities, including crude oil, contango profits from positions established in 2020, partially offset by improved NGL marks.

Now, let me put our 2022 adjusted EBITDA guidance in perspective versus 2021 results as illustrated by the EBITDA walk on slide nine 2021 results included certain unique items totaling approximately $200 million in the aggregate. These items consist of net margin activities, including crude oil.

Contango profits from positions established in 2020, partially offset by improved NGL margins.

Speaker 4: 2021 also included the benefit of seven months of earnings from our gas storage assets and one-time items related to winter storm early.

<unk> 2021 also included the benefit of seven months of earnings from our gas storage assets and one time items related to winter storm <unk> the.

Speaker 4: The unique items are expected to be largely offset by approximately $200 million of growth, including the benefits of Permian Volume Growth Expectations, Permian JV Synergy and recent project completion.

The unique items are expected to be largely offset by approximately $200 million of growth, including the benefits of Permian volume growth expectation.

Meehan JV synergies and recent project completions. Furthermore, we expect 2022 to benefit from resumed activities at our Fort SaaS facility and tariff escalation, which we forecast to be a modest uplift after offsetting inflationary impacts.

Speaker 4: Furthermore, we expect 2022 to benefit from resumed activities at our Fort Sask facility and tariff escalation, which we forecast to be a modest uplift after offsetting inflationary.

Speaker 4: Moving on, slides 10 and 11 provide the overviews of our financial strategy, capital allocation priorities, and current financial profile. We remain focused on maximizing pre-cash flow and allocating it through a balanced approach that reflects a continued focus on debt reduction in the near term, while increasing cash return to our equity holders over time.

Moving on slides 10, and 11 provide the overviews of our financial strategy capital allocation priorities and current financial profile, we remain focused on maximizing free cash flow and allocating it through a balanced approach that reflects our continued focus on debt reduction in the near term, while increasing cash return to our <unk>.

QWERTY holders over time.

Speaker 4: As a result of our progress today and our continued prioritization of debt reduction their term, Moody's upgraded plans to investment grade in November .

As a result of our progress today and our continued prioritization of debt reduction near term Moody's upgraded <unk> to investment grade in November .

Speaker 4: As shown on slide 11, we established a new leverage ratio which closely aligns with the rating agencies leverage calculations and we are targeting a range of 3.75 times to 4.25 times.

As shown on slide 11, we established a new leverage ratio, which closely aligns with the rating agencies leverage calculation and we are targeting a range of 375 times to four five times. Our leverage is currently above the high end of the range, which reinforces our commitment to further reduce debt.

Speaker 4: Our leverage is currently above the high end of the range, which reinforces our commitment to further reduce that. We believe the new ratio and disclosing our expected year-end 2022 leverage as part of our guidance process will provide greater clarity into our capital allocation.

We believe the new ratio and disclosing our expected year end 2022 leverage as part of our the guidance process will provide greater clarity into our capital allocation decisions.

Speaker 4: Slide 12 summarizes our capital program. With the completion of our multi-year buildout, we remain focused, disciplined and focused on must-do, no regrets, cap.

Slide 12 summarizes our capital program with the completion of our multiyear Buildout, we remain focused disciplined and focused on must do no regrets capital net to planes, we expect 2022 investment capital of plus or minus $275 million and maintenance capital of plus or minus $210 million.

Speaker 4: Net to Plains, we expect 2022 investment capital of plus or minus $275 million and maintenance capital of plus or minus $210 million, inclusive of a $35 million NGL facility turnaround. Going forward, we expect annual run rate investment and maintenance capital of $250 to $350 million and less than $200 million respect.

Inclusive of a $35 million NGL facility turnaround.

Going forward, we expect annual run rate of investment in maintenance capital of $250 million to $350 million in less than $200 million respectively. This.

Speaker 4: This includes approximately 50 million of capital related to non-controlling.

This includes approximately $50 million of capital related to Noncontrolling interests.

Speaker 4: Slide 13 shows our sources and uses of cash in 2021, our current guidance for 2022, and our directional expectations for capital allocation in 2023 and beyond.

Slide 13 shows our sources and uses of cash in 2021, our current guidance for 2022, and our directional expectations for capital allocation in 2023 and beyond.

Speaker 4: Including asset sales in 2021, we generated roughly $1.65 billion in pre-cash low-after distributions, allocating nearly 90% to debt reduction, and the balance of 175 million to common equity repurchase.

Including asset sales in 2021, we generated roughly $1 $65 billion in free cash flow after distributions allocated nearly 90% of debt reduction and the balance of $175 million to common equity repurchases. The debt reduction allocation includes $450 million in cash on the balance sheet.

Speaker 4: The debt reduction allocation includes 450 million in cash on the balance sheet at your end, a majority of which would be applied towards the early retirement of $750 million of senior notes on March 1, 2020.

At year end, the majority of which will be applied towards the early retirement of $750 million of senior notes on March one 2022.

Speaker 4: In 2022, we expect to settle into a more normalized cash flow profile driven by business performance and capital discipline versus asset sales. We forecast pre-cash flow after current distributions at plus or minus $700 million.

In 2022, we expect to settle into a more normalized cash flow profile, driven by business performance and capital discipline versus asset sales, we forecast free cash flow after current distributions at plus or minus $700 million and we intend to continue to focus on achieving our targeted leverage ratio.

Speaker 4: and we intend to continue to focus on achieving our targeted lab refrigeration by allocating approximately 75% to debt reduction with remaining 25% funding to contemplated distribution increase, as well as discretionary repercussions.

By allocating approximately 75% to debt reduction with the remaining 25% funding the contemplated distribution increase as well as discretionary.

Repurchase activity.

Speaker 4: As we expect to reach the top end of our leverage range by year end 2022, we believe we are well positioned in 2023 and beyond to further increase the percentage of free cash flow allocated to equity holders while reducing the percentage allocated to debt reduction. With that, I will turn the call back over to Will.

As we expect to reach the top end of our leverage rate range by year end 2022, we believe we are well positioned in 2023 and beyond to further increase the percentage of free cash flow allocated to equity holders, while reducing the percentage allocated to debt reduction with that I will turn the call back over to Willie.

Speaker 3: Thanks, Al. Well, 2021 was a positive year for our business, generating significant free cash flow, allowing us to reduce absolute debt levels and return cash to our equity goals.

Thanks Al.

2021 was a positive year for our business generating significant free cash flow, allowing us to reduce absolute debt levels and return cash to our equity holders. Looking ahead, we are well positioned to drive multi year free cash flow generation and unit holder returns. There are four primary levers to increase our <unk>.

Speaker 3: Looking ahead, we are well positioned to drive multi-year free cash flow generation and unit holder returns. There are four primary levers to increase our cash flow as they are reflected on slide 14. And they include first the operating leverage of our core Permian business supported by improving global fundamentals.

Flow as they are reflected on slide 14, and they include first the operating leverage of our core Permian business supported by improving global fundamentals.

Speaker 3: Second, our integrated NGO operations and the opportunities around those assets.

Our integrated NGL operations and the opportunities around those assets.

Speaker 3: Three, a continued optimization of our existing assets, including renewable opportunities, and last but not least, are improving financial profile.

Three our continued optimization of our existing assets, including renewable opportunities and last but not least our improving financial profile.

Speaker 3: Overall, we like our positioning and we are very optimistic about the future. As we discussed throughout the call, 2021 was a strong year of execution. In that regard, I would like to acknowledge our entire planes team for their dedication, perseverance, and patience through an uncertain and challenging 2021. And I want to thank them for their ongoing contributions to the partners.

Overall, we like our positioning and we are very optimistic about the future as we discussed throughout the call 2021 was a strong year of execution and in that regard I would like to acknowledge our entire plains team for their dedication and perseverance and patients through an uncertain and challenging 2021 and I want.

Thank them for their ongoing contributions to the partnership a summary of our 2022 goals and key takeaways from today's call are provided on slides 15, and 16 with that I'll turn the call over to Roy to lead us into Q&A. Thanks Willy.

Speaker 3: A summary of our 2022 goals and key takeaways from today's call are provided on the slides 15 and 16. With that, I'll turn the call over to Roy, the lead us into Q&A. Thanks, Willie.

Speaker 2: As we are the Q&A session, please limit yourself to one question and one follow-up question and return to the queue if you have additional follow-ups. This will allow us to address the top questions from as many participants as practical in our available time this afternoon. Additionally, our investor relations team plans to be available throughout the week to address additional questions. Chris, we're now ready to open the call for questions.

As we enter the Q&A session. Please limit yourself to one question and one follow up question and then return to the queue. If you have additional follow ups. This will allow us to address the top questions from as many participants as practical in our available time. This afternoon. Additionally, our investor relations team plans to be available throughout the week to address additional questions. Chris We're now ready to open the call for <unk>.

Questions. Thank.

Speaker 1: Thank you. And again, to ask a question, please press the phone on your phone to withdraw your question. Please press the phone key. Stand by as we compile the Q&A roster.

And again to ask a question. Please press star one on your telephone to withdraw your question. Please press the pound key standby as we compile the Q&A roster.

Speaker 1: How first question comes from Keith Stanley of Wolf Research. Your line is open.

Our first question comes from Keith Stanley of Wolfe Research.

Your line is open.

Speaker 13: Hi, thank you. Maybe I could start with the dividend and the 20%

Thank you.

Maybe I could start with the dividend and the 20% increase.

Speaker 6: From here, I'm assuming you're thinking annual assessment of the dividend.

From here Im assuming youre thinking annual assessment of the dividend.

Speaker 13: I guess once balance sheet objectives are fully achieved and not just the top end, how do you think about the payout ratio as a percent of free cash flow? It's still a little low versus peers. Is there any guidepost you would use to size the ultimate dividend once you hit your balance sheet target?

I guess one's balance sheet objectives are fully achieved and not just the top end.

How do you think about the payout ratio as a percent of free cash flow.

It's still a little low versus peers is there any guide posts you would use to size the ultimate dividend once you hit your balance sheet targets.

Speaker 3: Yeah, thanks Keith. Let me start by saying we've had an annual vivid policy review, distribution policy review, ongoing for a number of years. So this is not a change from that.

Yes, Thanks Keith.

Let me start by saying we've had an annual dividend policy review distribution policy review ongoing for a number of years. So this is not a change from that.

Speaker 3: and we're going to continue that going forward. And the way I would look at our allocation, it's probably a little bit of a shift. We've talked about free cash flow after distribution. And we've articulated a wedge, I call it the capital allocation wedge, where we're taking 75% of it to depth this year and targeting 25%.

And we're going to continue that going forward and the way I would look at our our allocation, it's probably it's probably a little bit of a shift we've talked about free cash flow after distribution and we've articulated a wedge and I call. It the capital allocation wedge, where we're taking 75% of it.

To that this year and targeting 25%.

Speaker 3: into the unit holder in the forms of distribution increase as well as discretionary purchase.

Until the unit holder in the forms of distribution increase as well as discretionary purchases as we go forward, obviously that free cash flow.

Speaker 3: As we go forward, obviously that free cash flow, we think it's going to stay for a number of years. And as debt comes down into 2023, the allocation will increase back to unit holders. And what we'll do is as we go forward, we'll start allocating against a percentage of free cash flow, a cash flow from operations as kind of a metric going forward. How do you want anything to that? road.

We think it's going to stay for a number of years.

That comes down.

Into 2023 of the allocation will increase back to unit holders and what we'll do is as we go forward, we will start allocating against.

Our percentage of free cash flow, our cash flow from operations as kind of a metric going forward.

Al do you want to add anything to that.

Does that help Keith.

That helps thank you.

Separate separate question just looking at the.

Speaker 13: Waterfall on slide 9.

Waterfall on slide nine.

Speaker 13: The Permian bucket, you have a number of positive drivers there that are helping.

Okay.

The Permian bucket you have a number of positive drivers there.

That are helping.

Speaker 13: The one thing, just some of the commentary on volume growth in the system, I think it's on slide 8 actually.

The one thing just some of the commentary on volume growth in the system I think it's on slide eight actually it talks.

Speaker 13: It talks about 350,000 a day of sort of core year-over-year volume growth as some of the volume shift to the Wing to Webster.

About 350000, a day of sort of core year over year volume growth as some of the volume shift to wink to Webster.

Speaker 6: Or are you, I guess my question is, are your margins on your existing long haul pipelines stepping down at all in 2022? Or are you just flagging that volume shift over to Wing2 Webster, but you know, you're kind of already at MVC levels, so there's no real hit to EBITDA if that.

Or are you or I guess my question is are your margins on your existing long haul pipelines stepping down at all in 2022 or are you just flagging that volume shift over to wink to Webster, but youre kind of already at MVC levels. So theres no real hit to EBITDA.

That makes sense.

Speaker 3: Well, keep, I've got two comments on that. One, we highlighted.

Well, Keith I've got I've got two comments on that one.

We highlighted.

Speaker 3: There is a significant shift with a new pipeline coming on. Weak to Webster clearly takes vimes that used to go on our assets and puts it into what I would call durable vimes that have the ability to ramp up. So that's a change between 2021 and 2020.

There was a significant shift with the new pipeline coming on Wink to Webster clearly takes up volumes that used to go on our assets and puts it into what I would call durable volumes that have the ability to ramp up so thats a change between 2021 and 2022.

Speaker 3: And as far as the competitive environment, I mean the way I would characterize it is we're in a very competitive environment, right? With the reset of

And as far as the competitive environment I mean, the way I would characterize it as we're in a very competitive environment right with the reset of of production, resulting from Covid.

Speaker 3: of production resulting from COVID, the long-haul lines, there's been a lot of capacity, surplus capacity in that. And over these last few years, it has been a very competitive environment. We expect that to continue over the next few years until production starts catching up with, with the stress balance.

The long haul lines, there's been a lot of capacity.

Plus capacity in that and over these last few years. It has been a very competitive environment. We expect that to continue over the next few years until production starts catching up with.

With starts balancing with capacity.

Speaker 13: Okay, but I guess I thought you were already kind of running at MVC levels in 2021 on those long haul pipes. So I guess should we think of that shift to Wynx to Webster as having a headwind on the company in 2022 or is it more of volume?

Okay, but I guess I thought you were already kind of running at MVC levels in 2021 on on those long haul pipe so I.

I guess should we think of that shift to wink to Webster as having a headwind on the company in 2022 or is it more of a volume issue.

Speaker 3: Well, one common supplement. A good example of that would be the basin pipeline, which does not have MVCs.

Well one comment upland a good example of that would be the basin pipeline, which does not have <unk> in.

Speaker 3: In 2021, we're able to capture volumes going up to pushing on that and going into 2022. We expect more of those volumes to go to the Webster. Jeremy, do you want anything to that?

In 2021, we're able to capture volumes going up to Cushing on that and going into 2022.

We expect more of those volumes to go to Wink to Webster, Jeremy do you want to add anything to that.

Speaker 6: Hey Keith, this is Jeremy Goebbled. A few things. One, you're correct, we're at NBC level.

Hey, Keith this is Jeremy Goebel.

A few things one you are correct or at MVC level, but it's not just plains assets federal and some of the MVC to Houston won't get filled as well. So I think it's a mix of pipelines across the industry because there's only a fixed amount of demand in Houston. So you can see that disproportionately impacted as well I think think of basin.

Speaker 6: But it's not just plain data that's settled. It's some of the NBC's to Houston won't get filled as well. So I think it's a mix of pipelines across the industry. Because there's only a fixed amount of demand in Houston. So you can see that disproportionately impacted as well. I think think of basin as bouncing the mid-cona when...

Balancing the mid continent, when inventories get low in Cushing like they are now youre going to start seeing a pullback on the basin system. So theres going to be ratable demand to Cushing is going to ebb and flow as you saw through the quarters last year and as Permian basin fills and Midland starts slowly and you will see that more ratable, but think of that as somewhat sicker.

Speaker 6: Inventories get low in pushing like they are now, you're gonna start seeing a pullback on the basin system. So there's gonna be rateable demand to pushing. It's gonna ebb and flow as you saw through the quarters last year. And as permeant basin fills and midland starts to weaken, you would see that more rateable. But think of that as somewhat cyclical throughout the year. So I think that mid-time of demand will largely be driven by refining runs in that area. The, as far as your question on both pipelines to the Gulf Coast,

Nickel throughout the year. So I think that mid con demand will largely be driven by refining runs in that area as.

As far as your question on wealth pipeline.

Pipelines to the Gulf Coast.

Speaker 6: largely protected by MVCs, but the spot capacity will represent what the market is. So the only part that I would say is there's two parts to that. One is based in some of the opportunistic may go away, but there'll be a portion there. The Winx Webster will be at TND levels. Cactus 2 and Cactus 1, those TNDs will be in place. That marginal spot capacity is midland and MEH has come in.

Largely protected by MVC, but the spot capacity will represent what the market is so the only part that I would say is there's two parts to that one is based on some of the opportunistic may go away, but there will be a portion there.

Western will be a T&D levels cactus II and cactus one those T&D is will be in place that marginal spot capacity at Midland and <unk> come in that part will be a different tariffs those incentive tariffs. So that will be one headwind and then maybe a portion on volume, but by and large will compete for barrels prop.

Speaker 6: That part will be a different tariff, those incentive tariff. So that will be one headwind, and then maybe a portion on volume, but by and large, we'll compete for barrels across the system and look to fill them, as we always have.

The system and look to fill them as we always have.

That's helpful. Thank you.

Thank you.

Speaker 1: Our next question comes from Michael Blahn, a well-fargo. Your line is open. Thanks.

Our next question comes from Michael Blum of Wells Fargo.

Your line is open.

Thanks, Good evening everyone.

Speaker 14: First question I want you to ask about operating leverage. Basically, how much operating leverage do you have in the Permian as volume's ramp? Let's say that's 600 a year or so.

First question I wanted to just ask about operating leverage basically how much operating leverage do you have in the Permian as volumes ramp lets say that 600, a year that you're projecting I guess put another way how does that 600, a year of growth translate into annual EBITDA growth for for PAA.

Speaker 14: I guess put another way. How does that 600 a year of growth translate into annual EBITDA?

Hi.

Speaker 6: Jeremy? Thanks for the question, Michael. So it's a little bit more nuanced than that. The first 600,000, think of the next 18 to 24 months.

Jeremy.

Thanks for the question, Michael So, it's a little bit.

More nuance to that the first 600000.

The next 18 to 24 months on a long haul basis, if that's going to fill in the CES and the ramps on wink to Webster and others. So there is leverage on the gathering system, which is somewhat market share at the existing tariff that we have that is largely dedicated barrels. So there's that one touch barrel plus anything we can do on the marketing.

Speaker 6: on a long haul basis is that's going to fill MVCs and the ramps on Wink, the Western others. So there's leverage on the gathering system, which is somewhat market share at the existing tariffs that we have to largely dedicated barrels. So there's that one touch barrel plus anything we can do on the marketing side with quality segregation pump overs, that type of business. There's a throughput component, and then there's the tariff component. But as we get to leverage,

<unk> side, what quality segregation pump overs that type of business, there's a throughput component and then there's the tariff component, but as we get to leverage let's say, it's another two years of growth consistent with last year.

Speaker 6: Let's say it's another two years of growth consistent with last year.

Speaker 6: Then you start to get leverage on increasing spreads to the golf coast into markets outside and there's also volume components of that spot volume. So it's not linear. It's going to have a certain impact this year and next year, which will be used to be competitive markets. But then it gets materially higher as you go because it's volume, it's tariff, and it's not single touch, it's multiple touch barrels. So hopefully that's...

Then you start to get leverage on increasing spreads to the Gulf coast into markets outside and there is also a volume component to that spot volume. So it's not linear it's going to have a certain impact this year and next year, which we view to be competitive market, but then it gets materially higher as you go through the volume Thats tariffs and it's not <unk>.

I'll touch it's multiple touch barrel, so hopefully thats helpful.

Speaker 14: It is, thank you. Second question on the NGL segment.

It is thank you.

Question on the NGL segment.

Speaker 14: I just wanted to confirm or clarify that the earnings coming from this segment are basically coming from the Canadian assets entirely and I wanted to ask in terms of the guidance what's driving the year-to-year improvement in the NGL segment I think the EBITDA is up like 33%.

I just want to confirm or clarify that the earnings coming from this segment are basically coming from the Canadian assets entirely and.

I wanted to ask for the in terms of the guidance, what's driving the year over year improvement in the NGL segment I think the EBITDA is up like 33% per the guidance. Thanks.

Speaker 3: Yeah, so Michael, there's a couple things. It's primarily Canada. We do have some terminals and we've got some facilities in the lower 48, but it's primarily Canada. You're correct there. And as you think about the difference between last year and this year, a big piece of that is the frax spread environment. And part of the reasons, you know, we've resegmented is I think it'll allow people to see.

Yes, so Michael there's a couple of things, it's primarily Canada, we do have some terminals and we've got some facilities.

In the lower 48, but it's primarily Canada Youre correct, there and as you think about the difference between last year and this year a big piece of that is the frac spread environment and part of the reasons. We have re segmented as I think it will allow people to see.

Speaker 3: two segments, a little more with a little more transparency as we talk about the business, it's certainly how we think about it. So, but probably the biggest driver is a difference in the fractured environment between last year and this year.

<unk>.

The two segments, a little more with a little more transparency as we talk about the business. Its certainly how we think about it so but probably the biggest driver is a difference in the frac spread environment between last year and this year.

Thank you I appreciate it.

Thank you.

Speaker 1: Next we have GN Salibary of Bernstein. Your line is open.

Next we have Ian Salisbury of Bernstein.

Your line is open hi.

Speaker 8: Hi, do you see the potential looming lack of Permian gas takeaway as a threat for Plains' grows? Post kind of 2023-2024 if Ampies don't want to flare this time around.

Do you see that potential looming lack of Permian gas takeaway is that fair plaintiff growth post 2023, 2024, if e&ps don't want a player thats turnaround.

Yes.

Speaker 3: Why can't you, Gene Ann, definitely, if there's good.

Well I can tell you Jean Ann.

Definitely.

Speaker 3: If there's people are not going to flare so there's going to be pressure on

Yes.

People are not going to flare, so theres going to be pressure on.

Speaker 3: on gas takeaway. And we don't operate long haul gas lines in the Permian, but if you hear others that are talking about that, a line sky with your two or three years, 2024, timeframe, and at that point, I think there's gonna have to be a solution. We've heard...

On gas takeaway and we don't operate long haul gas lines in the Permian, but if you hear others that are talking about that alliance kind of with your two or three years 2024 ish.

Timeframe and at that point, I think there's going to have to be a solution.

Heard about some people with a new build option and then obviously there's been a number of discussions on is our ability to repurpose align and as we've shared before it's a difficult conversation to have because <unk> got a number of parties you've got commercial contracts. That's complex. So I think it's something that we're going to have to continue to watch as we go forward, but there will be a constraint.

Speaker 3: about some people with a new build option and then obviously there's been a number of discussions on is there a ability to repurpose a line? And as we've shared before, it's a difficult conversation to add because you've got a number of parties, you've got commercial contracts that's complex. So I think it's something that we're gonna have to continue to watch as we go forward, but there will be a constraint at some point in time.

At some point in time.

Speaker 6: Okay. Just a follow on to that. I think once again, they...

Okay.

Just a follow on to that I think once again.

Speaker 6: From a long haul standpoint, there's a number of players that have firm capacity. Their growth is largely protected. So the extent, the production's coming from those, it's the undeticated component that will have more restrictions. And so when you think of customer mix and who's growing now, versus then aligning with larger customers, allows those barrels to flow. I think...

From a long haul standpoint, there is a number of players that have firm capacity their growth is largely protected so to the extent the production is coming from those SDN dedicated component that will have more restrictions and so on.

And when you think of customer mix and who's growing now versus then aligning with larger customers allows those barrels to flow I think we've considered that in our growth expectations I think gas takeaway being one I think there are some supply chain concerns we talked about we're actively talking to our customers.

Speaker 6: We've considered that in our growth expectations. I think gas take away being one, I think there are some supply chain concerns. We talked to it, we're actively talking to our customers from a regulatory standpoint on the water size.

From a regulatory standpoint on the water side. So I think we do consider those when we go through our production forecast and talk to our customers. Those issues are actively being managed but we do pay attention and monitor that I'd say on the gas takeaway side the half a bcf a day that's out there with the Whistler project that should help and maybe <unk>.

Speaker 6: We do consider those when we go through our production forecast and talk to our customers, those issues are actively being-

Speaker 6: But we do pay attention and monitor that. I'd say on the gas take away side, the half of BCA, and today that's out there with the Whittler project, that should help and maybe extend that couple quarters or so. But you're right, the clearing is something that could.

And that.

Couple of quarters, or so, but youre right. The flaring as something that could we have seen in the last six months pause intermittent disruptions in the field. They will not players where there's a problem at a processing plant. So the industry is in a good way that's from an ESG perspective people are going to lower carbon. That's one way we are seeing very actively manage on the producer.

Speaker 6: We've seen it in the last six months called intermittent disruptions in the field. They will not flare, so there's a problem at a processing plant. So the industry is in a good way. That's from an ESG perspective, people go into lower carbon.

Speaker 6: That's one way we're seeing very actively manage on the producer side.

Speaker 6: But we do take that into consideration our forecast and we're possibly optimistic and the street will come to a solution.

Your side, but.

We do take that into consideration in our forecast and we're cautiously optimistic the industry will come to a solution.

Speaker 8: Great, thank you. And then, relatedly, you all have talked about it quite a bit before, but just wanted to make sure that your latest view is that planes will not, is sort of one of the more, the less likely to convert a crew pipe to gas, just given what your foot pertains, then perhaps some other pipe ones in the basin might be.

Great. Thank you and then Relatedly you all have talked about quite a bit before but just wanted to make sure that your latest view is that plan as well not as sort of one of the more the less likely to convert at crude pipe gas just given what youre furnace than perhaps.

Perhaps some other pipelines in the basin.

Speaker 6: Gene, this is Jeremy. You know, you're gonna need a thicker wall sickness and a higher diameter pipeline than the ones we have going to market. So I think it'd be unobviously for us to convert something to a gap on it. Okay, great. That's all for me. Thanks.

Jean Ann this is Jeremy.

Youre going to need a thicker wall thickness.

A higher diameter pipeline than the ones, we have gone in the market. So I think it would be unlikely for us to convert something to gaslog.

Okay, Great. That's all for me thanks.

Thanks, Jean Ann.

Sure.

Thank you.

Speaker 1: Next we have Jeremy Tone, JP Morgan. Your line is open. Hi, good afternoon.

And next we have Jeremy Tonet of Jpmorgan.

Your line is open.

Hi, good afternoon.

Hi, Jeremy.

Speaker 9: I just want to dive into the guidance a little bit more with EBITDA and

Hi, I just wanted to dive into the guidance a little bit more with EBITDA and.

Speaker 9: If I look at just 4Q here, and I know there's a little bit of seasonality in 4Q, but if I annualize the 4 Q2 021 number, that comes up above the 2022 guide. And so I'm just wondering, does the 22 guide really have nothing on the SNL side or does resegmenting impact it? Or is it really the line fill from Wink to Webster really offsets all the Permian group? Just trying to wrap my head around better how 2022 guide is lower than 4Q.

If I look at just for Q here, and I know theres, a little bit of seasonality in <unk>, but if I annualize. The <unk> 2021 number that comes up above the 2020 guide and so I'm. Just wondering does that 'twenty. Two guide really have nothing on the SNL side or just re segmenting impacted or is it really the line fill from wind.

Webster really offsets all the Permian growth just trying to wrap my head around better how 2020 guidance lower than <unk>.

Speaker 3: Yeah Jeremy, there's a lot of volumes that shift for Q as we earlier talked about into the Winged Webster line that so it's not a clean match to do a run rate on Q4.

Yes, Jeremy there is theres a lot of volumes that shift for <unk> as we earlier talked about into.

Wink to Webster aligned so it's not a clean match.

Do a run rate on Q4.

Speaker 6: Jeremy, you got anything else to add? Yeah, just Jeremy, if you think about it from a model and standpoint.

Jeremy you got anything else to add.

Jeremy as you think about it from a modeling standpoint.

Speaker 6: The seasonality in the business, the NGO business, I think it's in the appendix shows the NGO business generating 140 million of EBITDA.

The seasonality in the business the NGL business I think it's in the appendix shows the NGL business generated 140 million of EBITDA, but if you deduct that from the total and annualize that on an accrued basis, that's give or take a $425 million per quarter run rate. What we have forecasted for crude this year is close to 455.

Speaker 6: But if you deduct that from the total and annualize that on a crude basis, at Skiver take a $425 million dollar report to run rate.

Speaker 6: What we have forecasted for crude this year is close to $455 million run rate. So there was just some timing of some sales in the NGL sign settlement of some NBC's. But by and large, the crude segment's growing on a run rate basis, $120 million, $140 million or $130 million over the year, and the NGL business is going to more normalize cooler.

Run rate. So there was just some timing of some sales and the NGL side of that settlement is some NBC, but by and large the crude segment is growing on a run rate basis, 120, $140 million or $130 million over the year and the NGL business is going to a more normalized quarters.

Speaker 3: That's a good point on the, uh, the ingenuity of the NGL. Definitely has an impact.

That's a good point on the seasonality of the NGL definitely has an impact.

Got it thanks for that.

Speaker 9: And as far as capital allocation is concerned, you provided a lot of thoughts today, but just wondering if I could dive in a little bit more. It seems like the catbacks this upcoming year, 2022 is a little bit higher than your run rate. And I'm guessing that's just associated with the synergies with Orics or initial projects there. And that's the key driver there. And it'll come down in future years. And then I guess buybacks versus dividend.

And as far as capital allocation is concerned you provided a lot of thoughts today, but just wondering if I could dive in a little bit more it seems like the capex. This upcoming year 2022 is a little bit higher than your run rate.

Guessing that's just associated with.

The synergies with orix or initial projects there and that's the key driver there and it will come down in future years, and then I guess buybacks versus dividend, we were kind of thinking that the buybacks might be tilted a little bit more than the 21% dividend increase as planes trains at one of the lowest valuations in the space. So even really just buybacks versus dividend growth.

Speaker 9: We were kind of thinking that the buybacks might be tilted a little bit more than a 21% dividend increase has claims trade that one of the lowest valuations in the space. So even really just buybacks versus dividend growth if you could help us with how you view that going forward.

If you could help us with.

How you view that going forward.

Al why don't you take a shot at this.

Speaker 4: Yeah, yeah, sure. We look at between the way we all allocate capital back to equity holders as a balance between the two, between distributions and...

Yes, yes, sure we look at.

Between the.

The way, we all allocate capital back to the equity holders is the balance between the two between distributions.

Speaker 4: and repurchase activity. As an MLP, I think the primary approach for returning capital to our shareholders would be through distributions. So we think we can balance in...

<unk>.

Repurchase activity.

As an MLP.

I think the primary approach for returning capital to our shareholders would be through through distributions. So we think we can balance.

Speaker 4: and accomplish both, so to speak. I think the capital is pretty much in line. I think this year we're showing a quote consolidated of investment capital of about 330 million net 275. So it's right on top of, I think, where we kind of expect.

<unk>.

Our accomplish both so to speak I think the capital is pretty much.

In line I think this year, we're showing a quote consolidated of investment capital of about $330 million net 275. So.

It's right on top of I think where we kind of expect to be that consolidated number is up because of the added at a JV.

Speaker 4: That consolidated number is out because of the added JB. You know, we show a net number on our guidance slide on page seven. But that's pretty close to where we expect them to run. Maintenance capital is the one this year that's a little higher due to the one turnaround. That's more of a 10 year type of turnaround. I wanted a big unit up in Canada.

We show a net number on our on our guidance slide on page seven.

But that's pretty close to where we expect them to run maintenance capital is the one this year, that's a little higher due to the the <unk> turnaround thats more of a 10 year type of a turnaround on one of the big Big units up in Canada.

Speaker 4: prospectively we'll be more talking cap acts on a gross or consolidated base.

Prospectively, we will be more talking capex on a grocer consolidated basis.

Speaker 3: Jeremy, let me just add to that a little bit. You know, I think everything outside is right. I just wanted to reinforce.

Yes, Jeremy.

Jeremy Let me just add to that a little bit I think everything else that is right I just wanted to reinforce.

Speaker 3: We've got a lot of free cash flow going forward. And what I would take away from the recommendation of the $0.15 annualized is really the conviction that we have in our cash flow stream going forward. And to Owl's point, we don't see it as one or the other. We think we can do both.

We've got a lot of free cash flow going forward and what I would take away from the recommendation of the 15th annualized is really the conviction that we have in our cash flow stream going forward and to Al's point, we don't see it as one or the other we think we can do both.

Speaker 3: And we've proven that we can buy back shares as we demonstrated over the last year plus. And this was a signal really to say, we've got plenty of capacity as far as coverage. It was a nice step up recommendation that we'll make to the board on distribution and still leaves us enough capital to be able to buy back some shares at the appropriate time.

And we've proven that we can we can buy back shares as we demonstrated over the last.

A year plus and this was a segment all really to say.

Got plenty of capacity as far as coverage.

It was a nice step up recommendation that will make to the board on on distribution and still leaves us enough.

Capital to be able to buy back some shares at the appropriate time.

Got it I'll leave it there thank you.

Jeremy.

Thank you.

Speaker 1: Next we have Christian Richardson, a truth securities. Your line is open.

Next we have Jason Richardson.

<unk> Your line is open.

Speaker 10: Hey, good evening guys. Appreciate all the comments on the new segments. And I know it's not a perfect metric, but you guys used to talk about guidance and express a metric as sort of an EBITDA, per transport barrel. But if I just look at 22 crude segment volume guidance against the crude segment EBITDA suggests sort of that.

Hey, good evening guys. Appreciate all the comments on the new segments.

Just.

I know, it's not a perfect metric but.

You guys used to talk about guidance in express and metric is sort of an EBITDA.

Per transport barrel, but if I just look at 'twenty two crude segment volume guidance against the crude segment EBITDA suggests sort of that.

Speaker 10: evid.perbaral from a less than maybe what you guys have talked about under the previous segments. Should we just think that this is sort of an eight eighth volumes versus a net EBITDA to PAA comparison or but you know we also would have thought there would have been some marketing activity in that EBITDA number. Could you maybe just talk about that a little bit just in the context of hey guys used to talk about evid.perbaral.

EBITDA per barrel somewhat less than maybe what you guys have talked about under the previous segments should we just think about this as sort of an.

<unk> volumes versus the net EBITDA to PAA comparison, or but we also would've thought that would've been some marketing activity in that EBITDA number could you maybe just talk about that a little bit just in the context of hey, guys used to talk about EBITDA per barrel.

Speaker 4: Yeah, this is all, I'll pick a shot. Yeah, as we collapsed all of the crude business in the one segment, and we had been reporting crude activity under three.

Yes. This is al I'll take a shot.

Collapsed all of the crude business and the one segment and we have been reporting crude activity under three.

Speaker 4: As we looked at it, we didn't believe that we should necessarily try to choose one or two, quote, volume metrics to calculate the per unit.

We looked at it.

Didn't believe that we should necessarily try to choose one or two.

<unk> volume metrics to calculate.

The per unit because ultimately there are there are variations to it what we did historically wasn't perfect either over time with changed volumes. When we thought there was one was more of a driver or less of a driver et cetera.

Speaker 4: because ultimately there are variations to it. What we did historically wasn't perfect either. Over time we had changed volumes when we thought there was one was more of a driver or less of a driver, et cetera.

Speaker 4: Clearly today, what we showed in the volumes is pipelines, the commercial capacity that we use and lease out, as well as our lease purchase activity. But it's hard to say that all those barrels are necessarily equal as how they drive them across our...

Clearly today, what we showed in the volumes as pipelines the commercial capacity that we use and lease out.

As well as our lease purchase activity, but.

But it's hard to say that all those barrels are necessarily equal is how they drive them across our our cash flow stream and Thats why we chose to not actually do the calculation.

Speaker 4: cash flow stream and that's why we chose to not actually do the calculation for it. And again, it's the pipelines are probably the bigger driver, but the least volumes that we purchase and move through our assets effectively are kind of double counted. So anyway, we recognize it's not perfect, but that's why we chose not to because as we put it all together, we didn't think there was one way to do it that was really reflective of

For it.

And again it's.

The pipelines are probably the bigger driver, but the lease volumes that we purchase and move through our assets effectively are kind of double counted.

So anyway, we recognize it's not perfect, but thats why we chosen not to because as we put it altogether. We didn't think there was one way to do it that was really reflective of.

Speaker 15: the waiter show it. And similarly on the NGO.

The way to show it and similarly on the NGL side.

Okay I appreciate it thanks Al and then I guess, just you talked about kind of priorities for Capex and maintenance Capex.

Speaker 10: appreciate it, thanks Alan. And then I guess just you know you talked about kind of priorities for CAPEX and maintenance CAPEX really being connected, you know, well connected focus. You also talked about asset optimization, that be brownfield expansion, all men JVs.

Really being connected.

Well connect focused.

You also talked about asset optimization b.

Would be brownfield expansion.

<unk>.

Speaker 10: Do you give a sense of maybe examples of what that might look like or potential projects on the horizon that we kind of fit under that optimization category?

Could you give us a sense of maybe examples of what that might look like or.

Potential projects on the horizon that would kind of fit under that optimization category.

Speaker 4: Chris, what's yours? Yeah, Chris and his Chris camera. I'm looking at a number of opportunities around optimization. Some of the ones that are maybe further along than others are around our Canadian assets and our fractionating facilities. It looks like we have some low cost expansions available there that would enable additional food, but additional in general production and or fee based service up there. And then along the ESG lines, we fundamentally believe that...

Chris Harris.

First and as Chris handler, I'm looking at a number of opportunities around the optimization some of the.

Ones that are maybe further along than others are around our Canadian assets and our fractionated facilities. It looks like we have some low cost expansions available there that would enable additional throughput and additional NGL production <unk> fee based service up there and then along the ESG lines.

Fundamentally believe that.

Speaker 4: Energy efficiency at the end of the day is also a good business. So we're looking at opportunities to reduce energy consumption and increase energy efficiency at some of our assets that are large energy consumers. And we see some opportunities there as well that will look to fund if they meet our returns.

Energy efficiency at the end of the day is also a good business. So we're looking at opportunities to reduce energy consumption and increased energy efficiency at some of our assets.

Our large energy consumers and we see some opportunities there as well.

We will look to fund if they meet our return thresholds.

Speaker 3: Hey Tristan, just to add to it, you know, when you think about our NGL business, we've got large complex.

Hey, Tristan just just to add to it when you think about our NGL business, we've got large complexes.

Speaker 3: that are straddle plants, slash, a fractionation facilities.

Our straddle plants slash fractionation facilities. So what we've been doing over the last few years is if you think about our Empress facility. Just as an example here is <unk> one through six and the way that.

Speaker 3: So what we've been doing over the last few years is if you think about our Empress facility just as an example, here's Empress 1 through 6.

Speaker 3: And the way that that system at facility has been set up is we've had multiple owners, joint venture partners.

System at facility has been set up as we've had multiple owners joint venture partners.

Speaker 3: And what we're doing now is we go, we're called, we swapped our milk river asset for portions of that by being able to clean up, if you will, the ownership structure, both the commercial side and operating side is there's a number of optimization opportunities to run the sixth Empress 1 through 6, more of a system versus being constrained with each one with different owners.

And what we're doing now as we grow recall, we swapped our milk river asset for proportions of that by being able to.

To clean up if you will the ownership structure.

The commercial side and operating side is there is a number of optimization opportunities to run around six <unk>.

<unk> one through six more of a system versus being constrained with each one with different owners. So that's something we've been working on for some time and that offers us the ability to be able to optimize that whole complex. That's probably another very good example of what we're trying to do.

Speaker 3: So that's something we've been working on for some time and that offers the stability to be able to optimize that whole complex. That's probably another very good example of what we're trying to do. Willie Chris.

Appreciate it really Chris Thank you guys.

Thanks Kristen.

Yes.

Thank you.

Speaker 1: And next we have Becca Follow-Will of US Capital Advisors. Your line is open.

And next we have Becca Followill of U S capital Advisors. Your line is open.

Speaker 11: Hi guys, thanks for taking my call. I think you talked about earlier about $150 million of synergies for orgs if I'm correct that you expect to realize in 2022. Where specifically should we look for those synergies to occur in terms of line items?

Hi, guys. Thanks for taking my call.

I think you talked about earlier about $150 million of synergies for Orix, If I'm correct that you expect to realize in 2022.

Where specifically should we look for those synergies to occur in terms of line items.

Speaker 3: So back to the, we never quoted 150 in 2022. It was 50 million in 2022, eight days, growing to 100 million longer term. And so those are both eight days number. And Jeremy, do you want to articulate where they, because you might see some of the synergy numbers? Sure, Becca, I think it's all the above. I'd say roughly half of that is probably going to be in lower CAPX. It'll create.

So back to the.

We never reported $1 50 in 2020 was $50 million in 2022, <unk> growing to $100 million longer term.

And so.

Those are both <unk> number and.

Jeremy do you want to articulate where you might see some of the synergy numbers sure Becca I think it's all of the above.

I'd say roughly half of that is probably going to be and lower capex it'll create.

Speaker 6: We had capital in our standalone plan to capture some opportunities, which required capital.

We had capital at our Standalone plan to capture some opportunities which will require capital.

Speaker 6: having the ORX system merged with the plane system eliminate that, having the ability to connect dedications from one system to the other to short laterals is part of that. So let's call that path of the capital centers in spite of inflation able to reduce that 50 million by roughly half. And then operating side is probably at say 60% of the remaining number and 40% is just on the commercial side optimizations that we're able to do between.

Having the oryx system merged with the <unk> system, the limitation eliminate that having the ability to connect dedications from one system to the other to short laterals as part of that so let's call that half of the capital centers in spite of inflation able to reduce that $50 billion by roughly half and then operating side is probably.

I'd say, 60% of the remaining number and 40% is just on the commercial side optimizations that we're able to do between the two systems and our goal is obviously to beat that but thats, what we staff our hands on today and feel like we can capture some of its cost some of it.

Speaker 6: And our goal is obviously to beat that, but that's what we stack our hands on today and feel like we can capture some of its cost, some of its capital, some of its...

Capital some of it.

Speaker 6: commercial and we think we'll step into more as we get to know the system. We've had it for three months. Over time, leases go away, operating agreements with others go away. There's more commercial opportunities across the system, more options to offer customers, more throughput, that will all grow with the system. So we're excited about it and as Willie said in the beginning, we're comfortable with the 50 million and we'll look to grow.

Commercial and we think we will step into more as we get to know the system. We've had it for three months.

Overtime leases go away operating agreements with others go away.

More commercial opportunities across the system more options to offer customers more throughput that will all grow with the system. So we're excited about it and as Willie said in the beginning we're comfortable with the $50 million and we'll look to grow from there.

Speaker 11: Thank you. And then to following up on my complaints question on the NGL segment guidance, you talked about a big piece of the fractured environment. Can you talk specifically about what has changed in the fractured environment?

Thank you and then just following up on Michael <unk> question on the NGL segment guidance, you talked about a big piece of the crack spread environment can you talk specifically about what has changed is the frac spread environment.

Speaker 6: Jeremy, you want to take that? Sure. Thank you. It was a fracked spread exposure being buying acogas and selling culture minus the nickel mock belt you type basis on the NGL side and it's C3 plus.

Jeremy you want to take that sure think of the frac spread exposure being buying eco gas and selling plus or minus a nickel Mont belvieu type basis on the NGL side and the C III plus.

Speaker 6: and it's cost-reinversement for essay and it's basic structure to think about. So as you think of the run in liquid prices relative to natural gas, the fracks spread has increased materially. Some of the Fred's, head just put on last year were done in earlier in the year or in late 2020. So...

And it's cost reimbursement for ethane is basic structure to think about though as you think of the run they run in liquids prices relative to natural gas the frac spread.

Increased materially some of the Fred hedges put on last year were done in earlier in the year or.

In late 2020 so.

Speaker 6: That step changed from an overall fracks spread in the 50s to north of 70 cents is what you're thinking about. So 15 plus cents and fracks spread across the whole program is largely driving that exposure. There's also a portion of volume, the colder weather in the northeast, northeast is driving incremental demand through our travel plants, which is increasing volume. So it's some volume, some margin, but by and large, it's the commodity exposure in that portion of the business.

Step change from an overall frac spread in the fifties to north of 70.

What youre thinking about so 15, plus and frac spread across the whole program.

Largely driving that exposure. There is also a portion of that volume the colder weather in the North Sea northeast is driving incremental demand through our straddle plants, which is increasing volume. So some volume some margin, but by and large it's a.

Our commodity exposure in that portion of the business.

Great. Thank you.

Thanks Becca.

Speaker 12: Thank you.

Thank you.

Speaker 1: Next we have micro-lippies of GF. Your line is open.

Next we have Michael <unk> of GFS your.

Your line is open.

Speaker 5: Hey guys, thank you for taking my question. I actually have a couple of them. Just I want to see and I need to check one thing. I'm looking at both fourth quarter volumes and the Permian at about 5.2, 5.3 million barrels a day. So your guidance for 22 basically assumes that you're going to be flat relative to the fourth quarter actual. And I think it about that right.

Hey, guys. Thank you for taking my question actually I have a couple of them just I wanted to seen any check one thing im looking at the fourth quarter volumes in the Permian at about five to $5 3 million barrels a day.

Your guidance for 'twenty to basically assume that youre going to be flat relative to the fourth quarter actuals and my thinking about that right.

Speaker 6: This is Jeremy Gible. Yes, and part of that is a reduction in longer haul volumes, but it's a little bit more nuanced than that. Volumes that go on Wink to Webster, 16% type volumes. Volumes that went on our legacy systems are 88% to 100%. So total growth volumes are up, but net to our interest they're down, but you've seen any reduction there, you're saying offset by increased growth on the gathering.

This is Jeremy Goebel, yes, and part of that is.

A reduction in longer haul volumes, but it's a little bit more nuanced than that volumes that go on wink to Webster, 16% type volumes volumes at one of our legacy systems are 88% to 100%. So total gross volumes are up but net to our interests. They are down but <unk> seen any reduction there youre seeing offset by increased growth.

The gathering system and as we said before this is consistent with what we would expect to see in 'twenty, two and potentially part of 'twenty three at the growth projections. We have but then you can see that amplify as more volume.

Speaker 6: And as we said before, this is consistent with what we'd expect to see in 22 and potentially part of 23 at the growth projections we have, but then you can see that amplify as more volumes on. It's not a one-for-one on volume growth, but NBC's get full on pipelines you start to see a multiplier effect on Gatton.

It's not a one for one on volume growth as Mdc's get full on pipelines as you start to see a multiplier effect on gathered volumes.

Speaker 5: understood benefit of it should compound over time. The other...

Understood that's benefit up it should compound over time.

The other question I had I'm just curious how you are.

Speaker 5: I'm just curious how you're, you know, when we think about both WENT Webster and Tapline, how long should we think about the timeline is for each of those to ramp up into kind of a normalized EBITDA run rate? Like is there a staggering, can you remind us? Is there a staggering of when the contracts go into effect and when's kind of that year where they're all in effect? Or are they all start to be in a fully in effect for both lines?

When we think about both wink to Webster in topline.

How long should we think about the timeline is for each of those to ramp up into kind of a normalized EBITDA run rate is there a stack can you remind us is there a staggering of when the contracts go into effect and wins kind of that year, where they're all in a factory. They all start to be fully in effect for both plants.

Speaker 6: Sure, when to Webster, think of it as significant portions of volume kicked in in February of T&E's and then think about it over the next two years, rateable increases from there to get to full. So maybe two years from now, you'll largely be fully ramped up in MVC.

Sure.

Webster or think of it as a significant portion of the volume kicked in in February <unk>, and then thinking about it over the next two years ratable increases from there to get to full so maybe two years from now you will largely be.

Fully ramped up and Nbc's as for Caf one it started at where we have the MVC levels, but were actively marketing additional capacity, we have roughly 100000 barrels a day of additional capacity to offer with no capital and we're in active discussions with shippers and we'll update you at the appropriate time.

Speaker 6: That's for CatFon. It started at where we have the NBC levels, but we're actively marketing additional capacity. We have roughly $100,000 a day of additional capacity to offer with no capital. We're in active discussions with shippers and we'll update you at the appropriate.

Speaker 5: Got it. Okay. Thank you much appreciated guys. Thanks Michael.

Got it okay. Thank you much appreciate it guys. Thanks.

Thanks, Michael.

Thank you.

Speaker 1: Next we have Chase Motil of Bank of America. Your line is open.

Next we have chase Mulvehill of Bank of America. Your line is open.

Speaker 7: Hey, thanks for squeezing me in here. A couple of kind of questions. I mean, so this is been discussed, but just want to dig a little bit deeper. But could you talk about, you know, what Permian oil production levels you would need to see before you really see a pickup in volumes to corpus, which is basically cactus for you. And then, you know, the follow up is the same question, you know, what does Permian oil production volumes, what do they need to get to see kind of a pickup in cushion volume?

Hey, Thanks for squeezing me in here.

A couple of kind of questions.

But just want to dig a little bit deeper.

But could you talk about what Permian oil production levels, you would need to see before you really see a pickup in volumes to corpus.

Taxes for you.

And then the follow up is the same question.

How what does Permian oil production volumes, what do they need to get to see kind of a pickup in Cushing volumes.

Speaker 3: So Chase, I'll start, I do want Jeremy to talk about this because he lives with 24-7. When you think about our system, we get a lot of questions on why barrels aren't flowing and what one way versus the other. The thing I would reinforce is we've got a flexible system that allows barrels to go where markets are.

So Jason I'll start I do want Jeremy to talk about it because he lives was 24, 7%. When you think about our system, we get a lot of questions on why barrels arent flowing in one way versus the other the thing I would reinforce is we've got a flexible system that allows barrels to go where markets are.

Speaker 3: So I view that as a positive. Even though we've maybe taken some volumes off of a certain system to go to cushing instead of the Gulf Coast, we think that's a benefit. But there's a unique situation going on right now with the

So I view that as a positive even though it may be taken some volumes off of a certain system to go to Cushing instead of the Gulf Coast, We think Thats a benefit but there is a unique situation going on right now with with the.

Speaker 6: with spare capacity and spot tariffs and in MVCs and production, Jeremy, would you kind of share your thoughts on that? Sure, the way I think about it simply is that this year's production growth will go to Philadelphia and from the MVCs on Wing2Webster plus a little bit. And then next year's production growth will fill Wing2Webster plus any shorts in the market today. So you basically get back to an environment where people are not remarketing space.

With spare capacity and spot tariffs and Nbc's production, Jeremy would you kind of share your thoughts on that sure.

The way I would think about it simply is that this year's production growth will go to fill the incremental mpc's linked.

Wink to Webster, plus a little bit and then next year's production growth fulfill linked web surplus any shorts in the market. Today. So you basically get back to an environment, where people are not remarketing space within the next two years based on what I would say industry standard production growth is and at that point type.

Speaker 6: within the next two years of based on what I'd say industry standard production growth.

Speaker 6: And at that point, pipeline tariffs, you start to ship at incremental clock tariffs first.

Wine tariffs you start to ship it incremental spot tariffs versus shipping at some marketed discounted level just to fill space and so that probably answers all of your questions, but thats just the way we're looking at the market. So it's going to be a competitive market for the next 18 to 24 months at current production forecast and at that point.

Speaker 6: shipping at some market at this kind of level, just to fill space. And so that probably answers all of your questions, but that's just the way we're looking at the market. So it's gonna be a competitive market for the next 18 to 24 months at current production forecasts. And at that point, you filled all existing MVCs, you have spot barrels, which changes the dynamic. And also, when you think about that, if Midland is short,

<unk> fills all existing Nbc's, you have spot barrels, which changes the dynamic and then also when you think about that Midland is short.

Speaker 6: It starts to price it a premium and it makes it difficult to go to other locations.

Darts to price at a premium and it makes it difficult to go to other located locations, but as production grows and you get to the point, where youre filling nbc's now that marginal barrel sets the spot price. It makes all markets competitive for the incremental Midland weakens relative to the other markets and so Cushing becomes more.

Speaker 6: But as production grows and you get to the point where you're filling NBC's, now that marginal barrel sets the spot price, it makes all markets competitive for the incremental about midland weekends relative to the other markets. And so pushing becomes more competitive all markets. So it is a dynamic market, it doesn't sit still, but hopefully that gives you enough to run.

Competitive all market. So it is a dynamic market it doesn't sit still but hopefully that gives you enough to run with.

Speaker 7: Yeah, I mean, if I kind of connect the dots on what you said and what you said earlier in the call, if you said 600 kind of exit and similar growth next year in the Permian. And, you know, so basically what I'm hearing is you got about 1.2 million barrels a day of Permian oil production growth where you really start seeing some kind of significant operating leverage or cost the long haul pipes. Is that a fair assumption? I think at this point it is, but remember that dynamic, is it? What you're hearing is especially with this, I mean to get a different brand new alternative pigs. That. dynamite wine.

Yes.

If I kind of connect the dots on what you said, what you said earlier in the call. I think you said 600 kind of exit to exit and similar growth next year.

Permian.

And so basically what I'm hearing is you got about $1 2 million.

Dollars barrels a day of Permian oil production growth when you really start seeing some kind of significant operating leverage or calls the long haul pipes.

I think at this point it is but remember that dynamic as well.

Yes.

Other pipelines and that number gets smaller so it doesn't have to stay that way forever right. It's just us MVC roll off on other pipelines, we control substantial bells and fill space. So it's dynamic but in this 30 seconds, yes that would be our system.

Speaker 6: then that number gets smaller. So it doesn't have to stay that way forever, right? It's just as NBC's rolled off another pipeline, we control substantial bells and fill space. So it's dynamic, but in this 30 seconds, yes, that would be our system. Okay, great, that's all I had. I'll turn it back over.

Okay, Alright, Thats, all I had I'll turn it back over thanks.

Thanks Chase.

Thank you.

Speaker 1: Actually we have Brian Reynolds of UBS. Your line is open.

Because we have Brian Brennan of UBS. Your line is open.

Speaker 13: Hi, good evening, everyone. Start off on capital allocation as I follow up some of the previous questions. Talk about a balance between buybacks and distribution rays.

Hi, good evening everyone.

To start off on capital allocation as a follow up on the previous question you talked about a balance between buybacks and distribution raise.

Speaker 13: Given the previous benchmark of 25% of three cash will go in towards the turn of capital, it seems like that's roughly a 50-50 split between distributions and potentially buybacks. Is that a fair way to think about buybacks this year around that $90 million mark? I'm just kind of curious as we go forward and reduce that further, just wondering if more free cash flow could go towards distributions or buybacks beyond $22.

Just given the previous benchmark of 25% of free cash flow going towards return of capital. It seems like that's roughly a 50 50 split between distributions and potentially buybacks.

A fair way to think about buybacks this year around that $90 million, Mark and just kind of curious as we go forward and reduce that further I'm just wondering if more free cash flow could go towards the more distributions or no buybacks beyond 2002.

Speaker 3: Yeah, so Brian , I think your map is pretty close. You know, if I take you back to the slide that we show this on a 13. Um...

Yes, so Brian I think your math is pretty close if I take you back to the slide that we show this on 13.

Speaker 3: You know, again, the free cash flow after distributions, this would be reflected for any increase this year.

Again, the free cash flow after distributions this would be reflected for any increase this year.

Speaker 3: There's two points. One, the point you made, which is the allocation of the 25% to the equity holders, which as we get as leverage comes down, it will shift and increase. But the real point I want you to take away from this is

There is two points one point, you made which is the allocation of the 25% to the equity holders, which is we get.

Leverage comes down it will shift an increase but the real point I want you to take away from this is we've got significant free cash flow going forward and if you think about this balloon what's circled in the yellow.

Speaker 3: We've got significant free cash flow going forward. And if you think about this balloon, what's circled in the yellow, our goal is to get our leverage down, but once that happens, it gives a significant amount of capacity to return to unit holders. And that's that at the point we really...

Our goal is.

Together get our leverage down but once that happens it gives a significant amount of capacity to return to unit holders and Thats. The point, we really want you to takeaway.

Speaker 13: Great, that's helpful. And then as a follow up on some of the previous Permian guidance questions as well, just wanna clarify, it seems like 22 is filling the link to Webster, MDCs, et cetera. Well on 23 is that where we could see volumes moving above MDCs on the legacy claims by chance by two months, no material earnings up with.

Great.

Helpful and then as a follow up on some of the previous Permian guidance questions as well.

Just wanted to clarify it seems like 'twenty, two is filling wink to Webster <unk> et cetera.

23 is that where we could see volumes moving above MVC is on the legacy claims pipes and starts to.

Material uplift.

Speaker 6: I think that was, it's very consistent with the last question.

I think that it's very consistent with the last question. So.

Speaker 6: That's the starting point. We're gonna look to continue to attract incremental spot barrels, but we're not gonna overpay because your market limit at this point is a midlet MEH-Fred 20 to 30 cents. There's no sense in...

That's the starting point, we're going to look to continue to attract incremental spot barrels, but we're not going to overpay because your market limited at this point the Midland EMEA spreads, 20% to 30, there's no sense in.

Speaker 6: If we can get a 10-10 premium selling at Midland versus consuming 15 cents of power and taking the risk of marketing barrels, it's better to sell at Midland. So your market's limited today and it's saying keep the barrels in the basin. As that changes will opportunistically move, as pushing inventory is fall, we're opportunistically gonna move barrels to pushing. So it's

If we can get a tencent premium selling at Midland versus consuming 15 center power in May and taking the risk of marketing barrels, it's better to sell at the Midland So youre market limited today, and saying keep the barrels in the basin as that changes, we'll opportunistically move as Cushing inventories fall, where opportunistically going to move barrels.

Cushing so.

Speaker 6: But to your point on the balances, there are some limitations on that. And so sometime in the, as I said, 18 to 24 months from now, we're from the beginning of this year, you end up in a period where we think that starts to rebound.

But to your point on the balances there are some limitations on that and so some time and as I said 18 to 24 months from now from the beginning of this year you end up in a period, where we think that starts to rebound.

Speaker 2: Great, appreciate the colors. Have a great evening, everyone. Thanks, Brian . Chris, I think we have time for one more, one more set of analyst questions. So we'll take this next set of questions and then call the class.

Great I appreciate the color and have a great evening everyone.

Thanks, Brian Hey, Chris I think we have time for one more.

One more set of analyst question. So.

We'll take this this next set of questions and then call the call yes.

Speaker 1: I guess thank you. All right. Our last question comes from 10th matter of city. Your line is open.

Yes. Thank you.

Last question comes from Timm Schneider of Citi. Your line is open.

Speaker 7: Hey, thank you. Well, quick. So if I back into the 150 million or so of a well connect for 2022, how should we think about the cycle time of that cap X, meaning could some of that show up in ebita in 22 or is that longer dated?

Hey, Thank you real quick so if I add back the 150 million or so.

Well connects for 2022, how should we think about the cycle time of that capex, meaning could some of that show up in EBITDA in 'twenty, two or is that longer data chair.

Speaker 6: German, I would think of that as a continuous program and that's a gross number of 150 million. So think of that as a hundred million net to plane.

Jeremy I would think of that as a continuous program.

That's a gross number of $150 million, so think of that as a $100 million net to plains.

Speaker 6: and returns on that it's going to be like the clients in wells. So it's going to be continuous every month. We're connecting a rateable amount largely. And so you think that cycle is largely continuous. So the cycle of the project, whether it's four to six...

Returns on that it's going to be like declines in wells. So it's going to be continuous every month, we're connecting a ratable amount largely and so you think that cycle is largely continuous so the cycle of the projects, whether it's four to six months realistically, we have that as a continuous program.

Speaker 6: Realistically, we have, that is a continuous program. So every month, four to six month projects are finishing. It's not, don't view that as a large pipeline where it starts 18 month later, you capital. That is a continuous piece of capital that's maintaining cash flow and generating substantial returns associated with.

Every month four to six month projects are finishing its not don't view that as.

A large pipeline, where it starts and 18 months later you need capital that is a continuous piece of capital thats maintaining cash flow generating.

Substantial returns associated on a standalone basis.

Speaker 6: Okay, got it. And then the shifting gears to Warbeck that Warwick. So you said capital to energy is 50 million going to 100. But what's the actual EBITDA contribution that you're forecasting that the planes of Warwick since 2022? Sure, that's an eight eighth number. So if you take 65% of that and then like I said the contribution in 2022 is half capital half.

Okay got it and then shifting gears to or back to orix instead.

Total synergies $50 million going to 100, but what's the actual EBITDA contribution that you are forecasting that the plans of <unk> in 2022.

Sure that's an eight as number so if you take 65% of that and then like I said the contribution in 2022 is half capital App.

Speaker 6: half capital half, EBITDA generating concepts. So think about net to planes is 65% of the 50 million and half of that would be EBITDA half of that would be reduced capital, the total 65% would go to free cash flow, which is largely how we're looking at our business.

Half capital half EBITDA generating concepts, so think about it net to plains is 65% of the $50 million and half of that would be EBITDA half of that would be reduced capital.

The total of 65% will go to free cash flow, which is largely how we're looking at our business.

Okay got it and then.

Speaker 6: Sorry, go ahead. I was just thinking. Anything that reduces sustaining capital to us is free cash flow generating. So that's how we're looking.

Sorry go ahead.

Okay.

Anything that reduces sustaining capital to us is free cash flow generating and so that's how we're looking at the business.

Speaker 2: Okay, understood. And then the 600,000 barrel a day increase. Is that just to clarify? Is that an exit, the exit number?

Okay understood and then the 600000 barrel a day increase is that just to clarify is that an exit to exit number.

Speaker 6: It isn't in this year, it's actually somewhat the same, but yeah, Texas is how it was in Canada. All right, thank you.

It is in this year, it's actually somewhat.

Same but yes exit to exit.

Alright, thank you.

Thanks, Tim.

Thank you.

Speaker 1: Okay, turn the conference back over to Willie Tang for closing remarks.

What was that.

Ill turn the conference back over to Willie Chiang.

Closing remarks, Hey, Thanks, Chris Hey, I, just wanted to make a couple of comments hopefully came through in our presentation. We've worked very hard on this strategy and we've executed against it and hopefully what you've seen is we've really positioned ourselves well, we're taking that down we've got this mantra of maximizing free cash flow.

Speaker 3: Hey, thanks, Chris. Hey, I just wanted to make a couple of comments. Hopefully it came through in our presentation. We worked very hard on this strategy and we've executed against it. And hopefully what you've seen is we've really positioned ourselves well. We're taking depth down. We've got the semantra maximizing free cash flow. We've got a lot of operating leverage that we've talked extensively about, not only on volumes in the Permian, but some tariff uplift as we go forward.

Got a lot of operating leverage that we've talked extensively about not only on volumes in the Permian, but let some tariff uplift as we go forward.

Speaker 3: And then we've got a pretty rich opportunity set of low cost debodalnex and continued opportunities around our existing system. So we hope you look at slides 13 and 14 because I think that really encompasses what we've been trying to do and where we're headed going forward. So with that, I'll thank you all for taking the time to spend with us this afternoon. Thank you.

And then we've got a pretty rich opportunity set of low cost <unk>.

The bottlenecks and continued opportunities around around our existing system. So we hope you look at slides 13, and 14, because I think that really encompasses what we've been trying to do and where we're headed going forward. So with that I'll. Thank you all for taking the time to spend with US. This afternoon. Thank you.

Speaker 1: This concludes today's conference call. Thank you all for participating. You may now disconnect and have a day.

This concludes today's conference call. Thank you all for participating you may now disconnect and have a good day.