Q1 2022 Sempra Energy and Oncor Electric Delivery Company LLC Earnings Call

May 5, 2022

Good day, ladies and gentlemen, and welcome to the temporary first quarter earnings call. Today's conference is being recorded.

At this time I'd like to turn the conference over to Mr. Donovan. Please go ahead.

Good morning, everyone and welcome to <unk> first quarter 2022 earnings call a live webcast of this teleconference and slide presentation is available on our website in the investors section.

We have several members of our management team with us today, including Jeff Martin Chairman and Chief Executive Officer drove.

Trevor Mihalik Executive Vice President and Chief Financial Officer.

Recent Alexander Senior Vice President Corporate Affairs, and Chief Sustainability Officer.

Justin Bird Chief Executive Officer of Sempra infrastructure.

Civil Con senior Vice President and Chief Financial Officer of simpler infrastructure.

Allen Nye, Chief Executive Officer of Encore.

Kevin Cigar executive Vice President and group, President and Peter Wall, Senior Vice President Controller, and Chief Accounting Officer.

Before starting I would like to remind everyone that we'll be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.

Actual results may differ materially from those projected in any forward looking statements we make today.

The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q filed with the SEC.

All of the earnings per share amounts in our presentation are shown on a diluted basis, and we will be discussing certain non-GAAP financial measures.

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

We also encourage you to review our 10-Q for the quarter ended March 31.

[music].

I'd now like to briefly highlight some of the key strategic advantages of our T&D portfolio.

Separate three growth platforms are strategically positioned in highly attractive in contiguous markets in North America, and certainly one of the largest utility consumer bases in the United States.

Our strong position helps create momentum for critical investments in advance in safety reliability and cleaner energy as the global energy market continues to evolve. We also believe our platform will play an important role in building the energy systems of the future.

Please turn to the next slide where I'll turn the call over to Lisa to provide an update on our sustainable business practices.

I am pleased to share that we recently issued our annual corporate sustainability report for the 14th consecutive year sustainability is central to our strategy capital allocation and sustained performance.

I report, you'll see examples of our sustainable business practices, including how we have aligned our portfolio with long term macroeconomic market and policy trends.

Among other factors our corporate strategy is focused on enhancing safety climate resilience and affordability and capturing new investments in infrastructure that support increasingly diversified and cleaner forms of energy.

One of the key improvements to their report is our enhanced ESG reporting to address the evolving needs of our stakeholders in light of a constantly changing environment. We appreciate the collaboration and continue to align our reporting to track and deliver on key ESG metrics. A couple of other highlights from the report are reflected on this slide.

Recently <unk> issued its de carbonization roadmap for California, the path to net zero, which demonstrates our position as a leader in helping the state reach its goal of carbon neutrality by 2045.

It's also important to note that safety is foundational to our business, while continuing the essential work of helping ensure employee and contractor safety and operational excellence for example, ACA LNG recently surpassed 1 million hours worked without a lost time injury.

Additionally, customer affordability is another top priority and we're investing in the necessary infrastructure to help mitigate operating risks and enable at just energy transition.

This approach of investing in our business, while striving to maintain affordability underscores our values and doing the right thing championing people and our unwavering commitment to safety across our operations.

Finally, we have a demonstrated history of sound corporate governance and oversight by our board of directors.

The report highlights our board skills and experience and among other areas cyber security energy transition and operational excellence.

Our strength and sustainable business practices has been recognized by experts in this sector, including the Dow Jones sustainability World Index.

And we have been named to the less for four consecutive years, notably we are the only north American utility company to be so recognized I'm very proud of the collective effort from each of our businesses and our shared work with all our stakeholders with sustainability at the heart of our corporate strategy. It provides a clear sense of purpose.

For our 20000 employees.

Please turn to the next slide where I'll hand, the call over to Trevor to provide business and financial update.

Thanks Lisa.

We made solid progress in the first quarter with a number of positive developments at each of our operating companies.

Beginning with California.

We're excited about <unk> completion of the Cleveland National Forest fire hardening and safety project.

Which is an example of <unk> commitment to making its electric system safer and more reliable.

Next I'd like to remind you of an important decision issued by the CPUC in February establishing a statewide renewable natural gas procurement standard with procurement targets for California's investor owned gas utilities in 2025 and 2030.

This decision reaffirms the role of renewable natural gas in the state and we view it as a significant step toward the future of cleaner fuels in California.

Against that backdrop Socal gas continues to execute on its own goal of 20% renewable natural gas delivery to its core customers by 2030.

In April both <unk> and Socal gas filed their cost of capital applications to update each of their authorized rates of return, which.

Which would be effective for 2023 through 2025.

We expect a decision by year end.

Regarding <unk> off cycle cost of capital application for 2022.

We expect a decision later this year.

For more information on the cost of capital filings. Please refer to the appendix.

Additionally, both utilities plan to file the general rate cases, with the CPUC in the coming weeks to update their authorized revenue requirement for 2024 through 2027.

Other considerations our filings, we'll focus on safety and reliability investments, while also looking to advance the state's clean energy goals.

We look forward to working with the commission and all of our stakeholders on these important regulatory proceedings.

Shifting to Texas, it's important to note that in 2021. It was a record year for encore in terms of the new and active requests for transmission interconnections, highlighting the rapid economic growth and its service territory.

This growth has continued in the first quarter of 2022 with a 78% increase in new interconnection requests compared to the first quarter of 2021.

On core service territory continues to experience strong new commercial development and population increases as demonstrated by oncor connecting approximately 16000, new premises in the first quarter.

Additionally, last month Encores Board of directors approved an update to its 2022 capital plan from $2 8 billion to $3 billion.

While encores board typically approves the annual capital plan in October this off cycle approval is another example of the robust economic growth in Texas driving investments to support transmission and distribution expansion.

Also in March Oncor received approval of its transmission cost of service filing for the recovery of its 2021 capital investments.

<unk> also plans to file its rate case with the public Utilities Commission of Texas later this month.

Now, let's shift to Sempra infrastructure, which is focused on making critical new investments that support the energy transition.

As part of this strategy separate infrastructure is working to export LNG directly from the Gulf and Pacific Coast to customers in Europe and Asia.

Furthermore, our U S. Mexico Cross border infrastructure business supports the growing integration of North American energy markets.

As part of our effort to develop Cameron LNG phase II. We've successfully reached a number of important commercial and permitting milestones and are now progressing towards the engineering stage of the project as a reminder, in January we filed our amendment with the FERC to transition from gas turbines to.

Drives if approved this would result in a more capital efficient single train with an estimated 44% reduction in greenhouse gas emissions compared to the previous design.

Also last month, we signed project development agreements and an HOA with the Cameron LNG partners to advance phase II of the project.

These arrangements provide the commercial framework for the development of a fourth train as well as increased production capacity through debottlenecking activities from the existing three trains.

Separate infrastructure contemplates, taking its share of the off take and selling it under long term sale and purchase agreements to third parties in summary under the under the proposed arrangement Cameron LNG phase III will be fully contracted prior to reaching a final investment decision.

In addition, we selected to feed contractors to run a competitive process, which is intended to culminate in a fixed price turnkey EPC contract.

Feed process is expected to conclude in the summer of 2023, which would allow us to evaluate taking.

Thereafter.

We believe we have a strong plan of execution and Thats detailed in a rigorous feed process.

Will result in better scope definition cost and schedule for the project.

Next as we continue to advance our dual market strategy, we broadened our alliance with total energies to advance the Fiesta Pacific LNG project and to explore renewable opportunities in North America.

The Mou to develop Vista Pacific LNG contemplates that total energies would receive one third of the project offtake and potentially participate in the project equity.

Given the increasing demand for LNG projects, we're continuing to have active discussions with market participants around port Arthur LNG.

As a reminder, the proposed facility at Port Arthur has advanced permitting and design work and is targeted to have total capacity of approximately $13 five MTA.

Lastly at San for infrastructure, we continue to expect the sale of a 10% interest to audio for approximately $1 $8 billion to close in the second quarter subject to customary closing adjustments and conditions. Please turn to the next slide.

Earlier. This morning, we reported first quarter 2020 to GAAP earnings of $612 million or $1 93 per share.

This compares to first quarter 2021, GAAP earnings of $874 million or $2 87 per share.

On an adjusted basis first quarter 2022 earnings were $924 million or $2 91 per share.

This compares to our first quarter 2021 adjusted earnings of $900 million.

Our $2 95 per share please turn to the next slide.

The variance in the first quarter 2022, adjusted earnings compared to the same period last year can be explained by the following key items.

$42 million of lower earnings at Sempra infrastructure attributable to higher Noncontrolling interest consisting of $24 million increase as a result of the decrease in our ownership interest of Sempra infrastructure partners net of an increase in our ownership interest in the Nova and $18 million primarily.

Due to an increase in Sempra infrastructure partners subsidiaries net income.

This was offset by $27 million of higher equity earnings at Sempra, Texas utilities, primarily due to the increased revenues from the rate updates to reflect increases in invested capital higher customer consumption and customer growth.

$25 billion of higher transportation and terminal earnings at Sempra infrastructure, and $22 million of higher CPUC base operating margin net of operating expenses at SD G&A.

Please turn to the next slide two.

To summarize we've continued to invest in our record capital plan to help build the energy networks of the future. We're pleased about the strength of our financial performance. This quarter and we will remain highly focused on executing our strategy and capital program throughout the remainder of the year.

With that this concludes our prepared remarks, we'll now stop and take your questions.

Thank you, ladies and gentlemen, if you would like to ask a question you may do so by pressing star one on your telephone keypad. Please make sure. Your speaker phone is turned off so your signal can be read by our equipment start wanted to ask a question, we'll pause just a moment to give everyone an opportunity to signal for questions.

We will take our first question from Shar <unk> with Guggenheim Partners. Please go ahead.

Hey, guys good morning.

Okay.

Sure.

Just starting off with the LNG updates today can you just maybe further elaborate on the camera and for timing updates obviously part of the limiting element was the engineering piece.

Latest update potential eliminate some of the future timeline risk is this kind of the last stuff you delay we should expect.

Alright. Thank you for the question Ive got some feedback from some other investors. It may have been portions of the script that I need to make sure that we read just give me one second to clean up the script and we'll come back to your question Okay.

The part that I would like to review for the investment community is against the backdrop of a challenging economic environment. Our company remains focused on executing our T&D investment strategy in our core markets separate California's preparing to submit <unk> filings at both <unk> and Socal gas later this month focused.

Providing safe reliable and cleaner energy to its 26 million consumers turning to Texas Oncor is executing on its record five year capital plan focused on critical T&D infrastructure investments across its service territory to support strong demographic growth and plans to file its right.

Case later this month.

At Sempra infrastructure, they're developing a platform that is uniquely positioned to export LNG directly from the Gulf and Pacific Coast to customers in Europe and Asia. The recent tragic events unfolded in Ukraine have highlighted the need for secure access to reliable sources of cleaner energy and separate infrastructure is well.

<unk> to be part of the solution.

Our strategy of investing in T&D infrastructure to expand and modernize north America's energy systems across each of our three growth platforms is continuing to drive a record 36 billion five year capital plan and it has helped us deliver another quarter of very.

Our strong financial results also in April we completed $250 million of share repurchases under our existing board authorization.

Now in the last six months, we've returned $750 million of capital to our shareholders in the form of share repurchases, which taken together with our dividend program demonstrates our commitment to returning value to our owners, while remaining focused on investing in and growing our businesses as part of a disciplined.

<unk> allocation strategy.

Shifting to our quarter results earlier. This morning, we reported first quarter 2022 adjusted earnings per share of $2 91.

We're also affirming our full year adjusted EPS guidance range for 2022, and our EPS guidance range for 2023. So these remarks should be read together with the remarks, we made earlier this morning, and turning back to use our.

Based on the nature of your question I want to agree with you look we're very excited about the Cameron phase II project. There was a flurry of activity in the first quarter that I think gives us a lot more confidence today about that project's ability to move forward.

Have estimated about putting together two competitive EPC contractors that additional time, we will improve the scope it will improve the definitive detail around the engineering and help us have a better project in the long run and oftentimes use and what is probably a poor metaphor shar.

The goal is not to play 18 rounds of golf and two hours. The goal is to basically shoot the lowest possible score and we've been in this business for just over 15 years and when it comes to execute on the LNG project. All the planning upfront makes a tremendous amount of difference so right now we're estimating that.

APC work will come together in the summer of 2023 and soon thereafter, we will take so I think the key takeaway really is as you described.

We've added a lot more detail to our execution plans and the probability that this project go forward has increased significantly in the last quarter.

Perfect Perfect and then just Chuck just lastly can you maybe just address the project development pipeline. This optionality means that our viewpoint more now than it ever has given sort of <unk> issues you highlighted.

Turning overseas in your prepared remarks, right, maybe starting off with sort of the ability to deliver more capacity is there demand for Vista Pacific.

And more importantly for Port Arthur is the engineering and permitting relatively advanced stages, given the history of the projects I mean would you be able to move faster to address the market demand in terms of setting future.

Thanks.

Yes, it's a great question, let me try to take a couple of pieces here I'll start at the very top and say that we're one of the few developers in the U S. LNG community that has a shot at delivering up to 30 million tons per annum of new capacity to the marketplace and what I'd like to do short. So let me just give you a quick overview of what we're seeing in the macro environment.

For LNG, and then I'll pass it to Justin and Justin I think it would be helpful. If you just start on slide 13, and walk the audience through your entire development pipeline.

For those of you who have been following our company for the last three to five years, we've often discussed our forecast of a second wave of U S. LNG development that would be necessary by the middle of this decade, and when you have properly functioning markets. They tend to pull forward, both risk and opportunity and I think that's what we're seeing today in this case with the tragic war.

Crane, the sanctions against Russia highlight several considerations first today Europe benefits from about 18 billion cubic feet per day of Russian gas.

We're being asked to replace all of that and you convert that to capacity that would be 127 million tonnes per annum of new capacity is required.

Supply Europe that would be more than double all of the existing plans are on the table in the United States LNG community. So a couple of highlights as I've thought about it as well.

Clear takeaway is energy security as a foundational component to transitioning toward a clean energy future. The second takeaway as European markets are clearly net short LNG in the near and medium term and is clearly showing up in our records strip of foreign prices.

Forward prices all across the curve and finally strong growth continues in Asia and over the long term I want to emphasize that Asia remains the number one growth market for U S. LNG.

With these considerations in mind I believe the U S. LNG community is in the best position to respond to the needs of both markets and Thats why we are actively pursuing commercial arrangements with both European and Asian buyers and that's why we've had a high number of market announcements in the last quarter and just and if you don't mind, let's just walk through slide 13.

And give a comprehensive overview of the development we have underway.

Thank you Jeff.

Thanks Shar.

First off.

Jeff's thoughts, we're very pleased with the significant progress we've made on our LNG projects.

The last quarter.

Cameron phase one.

Is in operations and we're proud to say is.

Producing over 100% of the volumes that we expected at this time.

Echo phase one.

<unk> 3 million tonnes per annum brownfield located just south of San Diego only project to take.

In 2020.

That project is on time and on budget.

<unk> is doing a great job there as Lisa mentioned in her prepared remarks, we have achieved over 1 million work hours.

Without a recordable safety incident, we're very proud of our safety record.

And we remain on track to begin producing LNG by the end of 2024.

Turning next to phase II at Cameron again, very exciting brownfield expansion project.

A real cost advantage in the market.

Talk about an additional approximate seven MTP, one of which comes from the Debottlenecking and approximately six comes from the additional trains.

We have made progress on all three.

The milestones that I've mentioned in prior calls on the permitting front FERC has published a schedule that shows they expect to issue an environmental assessment in December which would hopefully get us the permit in the first quarter of 2023 on the commercial side, we announced a project.

Agreement and an HOA with our partners.

We are making progress on marketing those volumes that we will take and we should expect progress in that in the next quarter.

On the engineering side as Jeff mentioned.

We're running a competitive feed process.

And we do expect that to be completed in the summer and as Jeff mentioned, we think that process will ensure that we have enough scope definition and engineering work.

Take care.

Moving next to Vista Pacific Co.

Here, we're targeting up to 4 million tonnes per annum, and we recently signed the Mou with Cfe and supported the project and announced.

Broadening of our strategic alliance with total who is.

Looking at one third of the projects offtake and potentially a minority equity stake.

Still an early stage project, but it has a strong competitive advantage as the Pacific outlet to use natural gas to Asia.

Port Arthur again, the largest project in our portfolio with $13 5 million tonnes per annum in phase one.

As you mentioned because of its scale and advanced permitting status, we're seeing a significant renewed interest in port Arthur and we're advancing commercial discussions with a number of partners and key off takers.

Also on the list, which again is not included in the close to 30 million tons that Jeff talked about is that got phase. Two we think this is a project that will make sense.

And we're working on.

Looking at opportunities there to bring in gas and to optimize the design of that project. So again I think it's been a tremendous quarter. We have made tremendous progress on LNG I'm very proud of that business line and what they have achieved.

Okay terrific. Thank you guys more than addressed my question appreciate it thanks, Jeff Hi, guys. Thanks, a lot sure. Thank you.

Yeah.

We will take our next question from <unk> Chopra with Evercore ISI. Please go ahead.

Hey, good morning.

Jeff. Thank you. Good morning question, Hey, just just.

Obviously, a robust pipeline of.

LNG projects here.

Maybe just.

Maybe this is probably an coverage bucket.

But as we think about financing of these projects.

Should we be thinking about project debt minority equity interest.

And minimum equity at the <unk> level.

Part one of my question.

And then part two would you consider further sell down of the.

The USA.

Our stake in order to fund this kind of robust opportunity, which is where the multiples of billions of dollars over the next few years. Thank you.

Thank you Jerry gas now I'll start with part one of your question first I think if you go back over the last four or five years, we've been successful in growing our earnings per share at a CAGR of 11% and to do that we really reshuffling our portfolio. So down non core assets and then the last 18 months <unk> seen as consol.

Data at our unregulated business under one platform and the reason we formed separate infrastructure was we thought there was an opportunity to do three things simplify the business model consolidates those cash flows and create an investment grade balance sheet and bring in and diversify the capital structure with a view toward.

Highlighting value for owners, so we've not that in the audio transaction that roughly an $18 billion equity value in terms of sell downs I'd like to get the audio deal done first before we consider that but right now we have such a wonderful slate of growth in front of US we're very happy with our current three platforms and we're <unk>.

Very happy to own 70% of that business going forward as we go forward in time, we'll always work with our board of directors to look at opportunities to continue to optimize that business, but in terms of financing one of the benefits of consolidating the <unk> platform with LNG and established an investment grade balance sheet is that businesses.

<unk> self funded and I thought it would be helpful sizable as the CFO of separate infrastructure. If perhaps you could give them. An example of how you're thinking about financing these projects on your own balance sheet.

Yes sure. Thanks, Thanks, Jeff and good morning to rush, So I think you'll recall in the past we've talked about sort of all the potential sort of levers are sources of capital that we can pull in to finance. These projects. So first and foremost project finance is one of the key areas. We look at it as we're signing these 20 year contracts with high credit worthy Counterparties I mean PFS.

Basically supplied 50% to 60% of the capital we need a partner.

Partner capital, you've talked about that you've seen us execute on that with Cameron and at at acre. So if you think about 10% to 30% of an equity sell down some of these projects that pulls in.

Slug of capital and then when you think about what Jeff just talked about our retained cash flow as we have strong cash flows off our existing existing assets. Those retained earnings definitely can be can be plowed.

Slide back into the into the equity needs for the project. We also have the ability to work with our partners <unk> capital calls. So I think we have a lot of diverse sources of capital to pull in to these projects. The other thing just to give you. An example of how we're looking at at Cameron. So if you think about financing that project with our partners.

Cameron has this amortizing debt capacity at the project and so that in itself is creating balance sheet capacity as we go through each year, so roughly call. It almost half a billion dollars of that is being amortized on a proportional basis to us so that gives us the ability to to go in and.

Create that capacity, there and finance the expansion. So that just gives you. An example, but suffice to say we've got a lot of different areas that could pull capital out and still maintain sempra at 70% ownership.

Infrastructure.

Faisal.

Thanks, a lot for that detailed response partisan. Thank you just one quick follow up.

Mou with total.

You guys talked about pursuing like renewable opportunities, including offshore.

Just can you talk to that a little bit the reason why I ask that question. Obviously is one of your peers utilities has been in the market for.

For sort of dropping their offshore projects. So just just curious as to whats youre targeting there is that international offshore domestic offshore and any other color you could provide thank you.

Sure I'll frame this for you and pass its adjustment for the specific response, but you recall that we built roughly a 3000 megawatt gross portfolio of renewables that we transacted on in 2018 in 2019 and this is a business we know very very well our focus in the renewable <unk>.

<unk> is on selective market opportunities, where we think we can produce the right types of hurdle rates. This is a very very margin constrained business from <unk> perspective, So as we think about a $36 billion capital program, our $1st go into funding our utility growth and inside Justin's business will be very selective about the.

Our renewable opportunities that we do pursue and making sure we do it in a capital efficient way with partners, but maybe just then you could talk about your clean power business and while the total Mou as a positive opportunity for US yes. Thank you and thanks for the questions guys.

Yes, the Mou with total and again there were two one covered Vista Pacific the other covered looking at certain renewable opportunities in North America really covers two aspects. One is total its potential participation in some of our future renewed.

Renewable projects in Mexico that could service Cal ISO as well as total asking us to look at their opportunity for offshore wind that would service, California. So.

As part of our broad strategic alliance with Tal.

Look it's a great relationship we hope to expand it beyond LNG and other areas and really these are the first opportunities we're looking at so clearly.

We would look to them to potentially partner in Mexico, and I think they see the value that we can bring in a renewable project into California.

Got it sounds like this is more.

There's more California and Mexico.

Okay. Thank you so much guys much appreciate it.

Okay.

No I was going to say, thank you that your summary, thats accurate.

California, Mexico focus.

Got it. Thank you so much guys I appreciate you, taking the time and answering my questions.

Thank you.

Yeah.

We will take our next question from Steve Fleishman with Wolfe Research. Please go ahead.

Yes. Thank you I appreciate it.

Good morning, Steve I wanted to ask you to go through all the LNG I wanted to ask you to go through all of the LNG projects again.

Yes.

Just a follow up.

Just a follow up on Cameron.

So in terms of realistic time lines for both the for firstly Debottlenecking.

And then the full expansion what are realistic.

Timelines for startup.

Sure I'll pass that suggested you can.

Badger response, yeah. So.

Thanks, Steve So on the Debottlenecking, we are working through the engineering.

<unk> with our partners.

And remember Debottlenecking, maybe a series of changes that we make over time, so that engineering, we're working through that we expect that to really continue kind of through late summer fall and then we'll figure out.

The timeline for bringing those things aren't really that is about one optimizing.

The existing production not interfering with that and then finding cost effective ways to increase that capacity to that approximate one or perhaps perhaps more in terms of train four.

I think we gave a detailed outline as we move towards <unk>.

And then when we get to the construction period.

Going to be the typical periods that you see kind of that four to five year period.

And then.

That's where we are for Cameron phase two as Jeff mentioned the work, we're doing and why the feed process, we're definitely going to let that run its course to the summer is that we do think we will get increased.

Increased.

Certainty on execution plans better sense of the scope of work the timing of the work and frankly reduce costs, though I would point to that would clarify for you. Steve to is that these projects tend to have something in the neighborhood of a 48 months to 15 months window for construction. So once you take care.

And secondly, just.

Convey that accurately the debottlenecking because it will be a series of ongoing projects, which are conducted concurrent with construction you would expect to see the benefit of that 1 million ton per annum that we're targeting start to show up across multiple periods between 2020 for 2025 and 2026.

Thank you.

Just on.

The buyback update.

Update.

No.

How should I think about the buybacks have been done relative to okay.

I think on the last call you had kind of a $1 billion placeholder.

In 2023, some of those just moving.

Forward some of that.

Okay.

Yeah sure I would say, taking you back Steve to the Q4 call you'll recall that we had completed about $500 million of share repurchases in December of 2021 and in January of 2022, and as part of that we committed to our long term EPS growth rate of 6%, 6% to 8%.

Outside of that earlier on the call that over the last five years, we've grown at roughly 11% in terms of our EPS. So I'm quite comfortable reaffirming our expectation that we are quite comfortable ROE in this business long term between 6% to 8%, but we indicated on the Q4 call that we would complete a $1 billion share repurchase before the.

End of 2023, and I would just say at this point nothing's changed as it relates to that forecast, we've simply brought forward $250 million of that targeted amount.

The key takeaway from my perspective, and from travelers perspective is we're excited to be executing our $36 billion capital program and we view our dividend program, Steve together with these periodic share repurchases as a great way to return value to our shareholders along the way.

That's great and just one.

Follow up to that question. So when you look at your buybacks.

You bought a lot of stock.

Lower price.

Which is great.

And then this last $250 million actually was.

Even done it done at a higher price.

Is there any messaging to take from that.

Hey, even at $160 million you have a certain view of the stock value or was it just more you have the cash sitting around or just wondering if there's any message from that.

No I think.

There is a very clear message and you recall back when our stock was trading at a different price in Q2 Q3 Q4 of last year, we've been fairly consistent about our view of <unk>.

Our ability to grow this business at a rate faster than our peers and in combination. We think we have a very unique growth and income story. We thought that we were undervalued in Q4 and Thats one of the reasons, we put some dollars to work in the share repurchase program.

If you look at where we were trading relative to the peer group in Q4 of last year were just as deeply discounted at this moment in time to our peer group as we were back in Q4. So there is a strong deal and this management team that this drop this stock should trade.

<unk> with the peer group or better and Thats one of the reasons, we're very comfortable going in the marketplace to continue our share repurchase program.

Yeah.

Thank you very much.

Thank you Steve.

We will take our next question from Nicholas Campanella with Credit Suisse. Please go ahead.

Hey, How's everyone doing thanks for taking the time.

Good morning.

Hey, good morning, good morning.

I hate to just belabor it on the LNG stuff I just wanted to just make sure. We had the project priorities right and just in terms of you have a lot out there.

<unk> seen some of your competitors.

Tiny various purchase agreements and I know youre working through multiple projects and cameras prioritize, but where do you feel that you have the best momentum right now and where should we be looking at what products should we be looking out for for further announcements in the near term. Thanks.

Yes. Thank you for the question and we don't mind provide additional color I think that.

I think I just wanted to convey that we've been in this business for close to two decades.

And we understand what it takes to get a project done and very pleased that we got <unk> phase one moving forward in Q4 of 2020.

We've made a lot of progress recently on all of our projects, but the ones that I would focus on is number one it's really really important to this management team and our board of directors that we execute our existing capital campaign and our largest project today is underway at eco phase one so our top priority is to execute on the existing side.

We took on that project.

Secondly, we've spent a lot of airtime in the last three or four earnings calls talking about Cameron expansion.

Truly has a cost advantage in the marketplace. So the ability to basically add one train and effectively with Debottlenecking 7 million tonnes per annum is a remarkable opportunity against the backdrop of the world being short LNG, particularly at this moment in time in Europe , and then beyond that we are clearly looking at all the.

Opportunities around this the Pacifica and port Arthur but I think the thing I always wanted to convey is we are very very disciplined and I gave a poor golf analogy earlier, but from our standpoint, it's not always a race, we think theres a lot of value and there is a lot of customers in the marketplace that want to work with a company that has a strong.

<unk> balance sheet and a strong record track record and is focused on doing things the right way. So we think we have a unique position in the marketplace. We don't think about it from a speed perspective, but we think about it from executing with deliberation and the right the right values to make sure that we can deliver the best risk adjusted.

<unk> cash flows to our investors. So right now the focus is making sure we execute on our existing construction program and that we run headlong toward Cameron expansion with a great group of partners and as Justin indicated earlier, we expect to have that project fully contracted.

Or substantially so by the end of Q2.

Got it okay. Thank you very much that's helpful.

I guess just like Jeff.

Broader kind of business mix and strategy question you took over three years to four years ago, you talked a lot about re pivoting the company to North American infrastructure that now it seems like it's complete.

The stocks responded.

And I guess, just how are you thinking about the portfolio today are there businesses that you want to be bigger in.

And from an inorganic perspective, specifically thank you.

Sure I think made.

I made a comment earlier that we feel very good about our three growth platforms and I'll tell you one of the observations that we've had in our strategy discussions with our board of directors was very early in the first half of the pandemic 2020, we realize the value in this sector of scale right. So as you think about the clean energy transition do you think about.

The <unk> programs that are going forward and in our company here in California, and Texas. There is no question that putting <unk> together with LNG and had circling some EBITDA figure of around $2 billion was the right move with an investment grade balance sheet. So I think one of the things we're benefiting from right now is we're in the best mall.

<unk> that are experiencing tremendous growth and we've been able to put together three businesses at scale. So when we came out with our 6% to 8% long term growth rate, we have a very bullish view of what we can accomplish that it's really around the market position and scale that we have across all three of these areas and right now as you think about it.

Organic opportunities I think we can effectively take those off the table, we've got a $36 billion capital program and our job is to execute that with discipline and I think we're going to be in a position to outperform.

Thanks, a lot.

Thank you.

We will take our next question from Jeremy Tonet with.

With Jpmorgan. Please go ahead.

Hi, good morning.

Good morning, Jeremy.

I just wanted to come back to the LNG side, a little bit more if I could.

Just wanted to get your thoughts I guess on the depth of the long term.

Contract market out there we've seen Cheniere global venture recent months kind of sign. These 15 to 20 year contracts, we saw energy transfer get over four MTA in past month or so here in kind of that same Zip code.

Is that.

Do you see the depth of that market improving versus where it was before given what we're seeing for energy security needs as you outlined there just wondering.

Is the market there for the contract length that you guys want and the risk profile that you want.

How do you see the market today there.

Yes, I'll make just a quick comment then I'll pass it suggests that it may be just and you can update them on the type of conversations you are seeing in terms of contract tenure, but I just returned to one of the things I've said in my earlier remarks, which is there is no question that everyone. Now can see what we've been forecasting which is this net short position in Europe and the magnitude of importance.

Required to back out 8 billion cubic feet per day of gas is a significant number of new capacity that will exceed even what the U S. LNG community can provide but Asia is a larger opportunity. So I think if you look at the opportunity in both markets, there's going to be a real demand near term and long.

Term for more LNG facilities, and that impacts the pricing environment and the opportunity to have longer tenured contracts that Justin maybe you can provide a little bit of color on what the conversations youre, having yeah, yeah. Thanks, Jeff.

Yes, Jeremy yes, the conversations we're having are around the types of contracts that we look for at Sempra, which again to your point is long term with credit worthy Counterparties. I think you are accurate there has been a dramatic shift in the <unk>.

Market.

In the recent days, specifically, we've seen a significant amount of long term contracts.

You saw well I think one in February I think there's around seven in March and most recently there's been one in April .

So yes, you are seeing a lot of parties given the volatility in both TTS and J Cam.

And frankly, the high forwards you are seeing a definite renewed interest in parties willing to go long term and those are the conversations that we're having.

Got it that's helpful. So the type of contracts, we're seeing signs out there those are the types that would be sufficient for you guys to underpin I guess.

Sure.

Moving forward with the project at this point.

Yes, that's correct.

Got it okay.

And then maybe just wanted to pivot towards the offshore win for a moment here just how to think about that how that fits into the portfolio youre queue of projects.

Just wanted to see how high of a priority that is at this point.

I would say, it's one of our lowest priorities.

Got it.

That's helpful. Thanks.

Just a last one if I could thinking about the state's RMG goals. They are also ongoing key pump efforts.

Seemingly some competition here just wondering how you think about the balance of electrification versus versus RMG in Decarbonize Decarbonize in California at this point.

Yes, great question and I will tell you that we've got a lot of folks inside of our company that are but focus on both opportunities around green molecules in green Kw's, but I think what we view is theres going to be a requirement that we transition in an orderly way toward increasing claims resources and we're very very bullish on it.

Vacation I hope, we get the chance for al and not to update you on some of the really large scale electrification has taken place in the Texas marketplace, but I would also tell you. There are some hard to decarbonize areas in American society, largely as heavy industry heavy transportation some of the maritime and aviation uses of <unk>.

So in California, there is growing recognition by the regulator across all market participants. There is there are going to be a strong trend toward electrification, but theres really a convergence between the need for green molecules to power some of that electrification and to help decarbonize. So I think the commission deserves a tremendous amount of credit.

We're taking a forward looking view on renewable natural gas as an example, you may recall that over three years ago, we set a target for 2030 or 20% of our core customers being served by RMG and that was well before this ever came on the radar screen for a regulator and now that they've adopted targets that progress over time up to <unk>.

Mostly it's a 12% we feel like we're in a great position I think we came out at around 4% penetration in our core customers at the end of 2021, and we continue to be optimistic about executing against some of the expectations of our regulators. So we firmly believe there is a role both for cleaner molecules and four.

Cleaner electrification and we expect to see both of those work in tandem going forward.

Got it that's very helpful I'll leave it there thanks.

Thank you very much.

We will take our next question from Anthony Credo.

With Mizuho. Please go ahead.

Good morning, Good morning, Jeff Good morning Forever.

Good morning.

Hopefully so easy ones. One is I just want to make sure I understand it fully.

Is the LNG growth platform funding.

Even though projects maybe you had been accelerated a potential accelerated is that still a self funding model. So the LNG growth platform.

It sure is a self funding model and I think it goes back to a couple of comments that stitch together. This morning, which was we think one of the great lessons from the Covid economic environment was the importance of scale and scale will be even more important when we think about what we need to accomplish across all three platforms and.

Putting together those two businesses with an <unk> balance sheet, our clear intention was to make sure. It's a self funded platform and sizeable gave some examples of how we expect to do that using project level equity internally generated cash flows and project finance.

Great and then just lastly, I hopefully easy follow up.

If I think of all of our questions are most of the questions I just say on the call Theyre, probably mostly related to even the smallest piece of <unk> overall business Center infrastructure.

Is that a good or bad thing is it.

The work that management has done over the last two years, where there were more questions on maybe the core business like central California, or San for taxes that his transition to the smaller business you would view that as a good or bad thing.

No I think I think it's a positive that may explain why roughly.

Roughly 80% of our earnings mix comes from what we think are some of the best utility platforms in the United States right. So our ability to basically grow rate base.

Also have a $42 billion number at the end of last year at 9% going forward in our five year plan is a remarkable opportunity, but our ability to basically exceed expectations and grow this business faster than we forecasted really turns to our ability to how we grow separate infrastructure right. So we're at a mall.

And time, where across all three platforms inside of Justin's business, that's the LNG and net zero solutions business clean power in our energy network business that has the chance to provide some really unique additive growth to our portfolio. So we've talked a lot about our growth in the past we've got a very strong portfolio of <unk>.

<unk> like returns from our California platform, and our Texas platform, but our opportunity to exceed People's expectations as go rely a lot on how they execute across your portfolio and separate infrastructure.

Great and then just lastly, I think Jeff when you describe the transition of companies over the years selling South America.

Sempra, Texas, you mentioned that were contiguous how important is that towards the central platform going forward.

You may remember.

<unk> 15, or 20 years ago, a lot of M&A in our sector was limited to businesses that were actually contiguous that's no longer a requirement, but one of the things. We think about from our strategy is how do we extract synergies and efficiencies across all three platforms and et cetera, the value of the parent company as we focus on people process and tech.

<unk> to help drive the results across all three platforms and having a contiguous platform is really helpful and I will tell you that the way I view it as a lot of people broadly diversify their businesses. They are in different markets in different jurisdictions, but they fail to have the discipline to make sure theyre extracting the benefits of <unk>.

First vacation in our case, we think the best way to manage risk is to go deeper in the markets that are most important. So when you think about California is the fifth largest economy in the world.

Texas has moved from number 10 to number nine in Mexico is currently number 15 and forecasted by $2040 number seven in the world, but we want to do is we want to have great regulatory relationships in those marketplaces, we want to understand all the market fundamentals and we will make sure that we're putting together our capital allocation strategy that allows us.

To extract the best risk adjusted opportunities in those markets. So one of the things I've talked about before as we've grown this business over the last two decades at a 7% EPS CAGR and an industry that has grown over the same period of time at 3% and.

And thats not just because we're better managers, it's because we're in the right market said this focus on being deep and committed to extracting efficiencies in each of our core markets and continuity as part of that is part of our winning part of our winning strategy we believe.

Great. Thanks for taking my questions and congrats on a good quarter.

Thanks, a lot I appreciate it.

We will take our next question from Ryan Levine with Bank with Citi. Please go ahead.

Good morning, guys. Thanks for taking my question.

What factors influence this gal and sizing of the Pacifica from an empty day perspective.

Thank you.

I would just say that we're really excited about both eco phase one which is under construction and Vista Pacifica. They both really leverage the same common resource of Permian gas and we have a straight shot through two different pipeline systems to support the Pacifica I had the opportunity to have dinner with the president of Mexico, and John Kerry a couple of weeks ago.

In Mexico City, and the topic of that conversation Ryan was how we can move this the pacifica along at a faster pace in Mexico, they understand the value of being able to export some of their natural resources, particularly high sulfur oil, but they also want to make sure that they raise their marquee status as an export of LNG.

I am pleased with the type of support we have across the government inside of Mexico to support that project going forward, but just maybe you could talk about how youre thinking about the capacity at the Pacifica, yes.

Ryan.

As Jeff mentioned.

Really Vista Pacifica will source gas from the Permian.

Some of the sizing revolves around how much gas can be delivered at what rate. There. We're also looking at clearly optimizing the design and the economics it could be that we do it in two phases as we get additional gas transportation capacity, but again early stage development, we will optimize the size for.

Talking about across the enterprise Ryan.

More within SAP, but to the extent there is yes sure.

And the other divisions that'd be helpful.

Sure <unk>.

Take that yeah, sure Hey, Ryan so.

Looking at sort of proportional debt across sempra infrastructure of close to roughly $9 billion a lot of it is fixed rate debt and some of the debt.

That was floating rate, we've swapped to fixed but we don't actually don't have a tremendous amount of floating rate exposure, so and I think.

As you've seen the move in interest rates, we haven't really seen a big impact to the bottom line. So I mean.

I think as we move forward with our projects, we will look to see what the balances between floating and fixed but right now we feel like we're in a pretty good position.

Yeah.

Okay.

Thank you I think some of those.

<unk> gotten rate hedges expire in the next few years.

To continue to.

To do swaps to lock in the fixed rate.

I think so what we have is we have a lot of amortizing debt at San for infrastructure as I mentioned kamran on a proportional basis. We also have our our pipelines in Mexico. The ones that we have joint venture agreements with those also have amortizing debt. So naturally what's going to happen is that as that debt rolls off of swaps expire. So that's kind of probably what youre seeing.

But other than that there's we don't have any sort of floating rate debt. That's not swapped during the for the tenor of the tenor of the of the security.

I appreciate the color. Thank you.

Thank you Ryan.

We will take our next question from Julien Dumoulin Smith with Bank of America. Please go ahead.

Hey afternoon morning, how are you guys.

Hi, Julien.

Okay excellent.

Just a quick question going back to Port Arthur just focused on that how do you think about the opportunity on permitting to pivot to electric or not I mean basically the thought there is.

Is it desirable to go back and look at that from an electric perspective, just given the ghd benefits and sort of what that means from a contracting perspective.

Cognizant of your other decisions here and maybe you could speak a little bit to the timeline on that asset as well considering where you stand.

Right.

Paul just by way of analogy at Cameron one of the things we did in concert with our partners was look at opportunities for us to lower our overall greenhouse gas footprint at Cameron and that caused us to shift our filings to move to an electric drive for <unk>.

Cameron Phase two we're looking at things very similarly at Port Arthur I think one of the unique advantages Port Arthur has is number one is the scale and the degree that it's fully permitted across almost every aspect of the development. Currently so I think the expectation would be that electric will probably be part of phase two at port Arthur LNG.

Given the level of interest we have in phase one we would proceed as we've currently filed.

Got it and considering that you don't need the updates on the FERC side.

Timeline, there obviously, you're you've got this engineering work with before pushing.

Three in any kind of similar.

Timeline that you would like to offer them on Port Arthur Phase one week.

We currently Havent put out.

Expectation for <unk> at Port Arthur I would say that we are having.

Conversations with more than 20 different counterparties related to that project and the interest is very high but again I think I've said it two or three times on this call. We're really committed internally to take a measured approach and be very disciplined and if we can get that project in a box with really really solid risk adjusted cash flows. It's the type of projects that could move forward in our <unk>.

Lynn.

Sorry, Jeff I didn't made a question right now we're on top of that.

Perforated <unk> I got it.

Quick last question seriously.

Real quick last little detail, if I could vote in the oncor, we haven't talked about it enough here.

Prospects on settlement of your pre settling however, you want to talk about that in the context of filing later. This month you all have done remarkably well there over the years.

Sure I think this might be an opportunity. If you allow me I think we can comment on the rate case, and maybe give a little bit of visibility into the growth. We're seeing there I know Alan had a remarkably positive press release, they put out the attract a lot of that let me just start by saying before I pass it to Allen Trevor and I were in Dallas last week for the Oncor Board meeting, we could not have been more pleased.

<unk> with the comprehensive nature of the growth they're seeing on their system as you know in the market. They say the comment about don't fight the tape and there is a strong tape in Texas towards further growth.

Raised their capital program from 2022 from $2 8 billion to $3 billion and al and maybe perhaps we could do two things maybe you could walk folks through some of the growth you're seeing on the system. Because I think your examples will be helpful to people and then get right to Julians question about how we think about settlement.

Which has been the tradition at encore as you look at regulatory filings like this.

Yeah sure glad to Julian Thanks for the question.

Jeff from a growth perspective.

I think you described it well.

What we're seeing we put it out in our press release, and then Trevor talked about it early on today, but still kind of 2% premise grow 16000, new premise this quarter.

The real growth that we're seeing right now is transmission.

Which is we put in our press release, but.

50% increase in active request.

78% increase in new request.

So just really strong transmission point of interconnection growth that we're seeing across our system right now.

Well, we haven't talked about yet and you mentioned it Jeff a little bit about the electrification is what we're continuing to see in West Texas.

Which continues to be very strong.

We've talked about our Culberson loop, which is our transmission system that we serve the Delaware on.

In December of 2021, and peaked at 800 megawatts and in March we were already at 845.

Far West, Texas, whether zone every month in 2022 has exceeded the demand.

For the corresponding months in 'twenty, one and then kind of a new thing where C&I Havent I don't think talk to you. All before is we have another loop out there known as the Stanton loop.

Which serves the Midland Basin, and we're also seeing really strong demand.

Demand on that loop right now as well so.

A lot of that is electrification of existing facilities I think the next phase on that will be many of our customers are looking at.

Electrifying really their entire processes.

And so that's out there and still coming that that really strong growth Geoff to your point.

What's driving this $200 million additional capex that you and the board and Trevor did.

With us a couple of weeks ago.

We're still at 15 over five on our five year plan. We have added 200 million to that that's not pull forward. That's 200 in addition.

But we're not changing our five year capex outlook until we get to our board in October .

But thank.

Thank you can extrapolate out if you think about the growth we're seeing here, which has been fairly consistent over a number of years now and even increasing that that theres. Some theres some upward pressure on that on that capex number or opportunities.

Going into October is that in addition to the fact that we like other utilities in Texas around the country I think we're taking a really hard look at resiliency and hardening and there may be some.

We have on that coming in coming out of October as well, so thats kind of the background on the growth and the Capex story that we're seeing to Julian to your question.

Specifically I appreciate comments I couldnt agree more.

I've been around this business for about 30 years, now and we have a history and almost a tradition of being able to work with these parties down here and with our commission.

And I think we will do everything we can to do that again. This year, we are going to file this case.

Around may 11th.

Which is our I think in our Q, we said unless we settle early that puts us in new rates kind of at the end of the third quarter or in the fourth quarter I'm, sorry, beginning of first quarter.

I think we have a very strong case I think we haven't really good story.

We're a good company we work with the state we do it were asked to we have safe to safe operations reliable operations and we are the low cost provider in the state from an IOU perspective.

And we have very strong relationships with our stakeholders and I think a very very good reputation with our regulators.

And so all of those things are going to give us opportunities to do what we've done in the past, which is work with these parties and.

And try to.

Reach something amicable that works for us and benefit the state in your comp market.

And we're doing that now we've had some discussions already with some parties. Obviously, we haven't filed our case yet.

So we will see who all intervenes in our case people will have to have a time for discovery as they always do and then.

You always try and settle these things to the extent you can around the time of intervenor testimony.

Obviously before hearing but.

It's a good case I believe it's a strong case, we're looking forward to presenting it.

And as history is a guide I think you know, we'll try and do and we'll work with the parties and see what we can come up with and I'm optimistic, but we'll have to see who intervenes and what positions they take.

Thank you Alan.

You bet.

Excellent guys. Thank you so much have a great one.

Thanks, a lot Julien.

We will take our next question from Michael Lapidus with Goldman Sachs. Please go ahead.

Hey, guys. Thanks for taking my question and congrats on a good start to the year.

On Cameron Q2.

<unk> there just on having that kind of re up a redo of reevaluate the feed study and getting a response back middle of next year. Just curious how much certainty do you think you have at this point in time in terms of what Cameron.

Spansion is going to actually cost and I would say that given the updated feed study, but honestly given all the things happening in the macro environment with both labor inflation commodity goods inflation materials et cetera.

Yes, Michael we usually have a seven limit question for LNG on our call, but we're going to take your question just because of our longstanding relationship okay.

It sounds great I'll take it.

I'm joking with you but.

Okay.

We've done a lot of work on Cameron This isn't something we started in the last 12 months. We've got a lot of definitive work. That's been done in fact Cameron has benefited from a lot of the work that was done at port Arthur over the last several years. So we're in great shape in terms of our understanding of the cost structure of that business I think what you're seeing US do is make sure there's a competitive.

Process, we want to make sure that we've got a clear understanding of the schedule all the key milestones that we need to have in place. So that we can execute well I think we had the shot to execute Cameron phase III exceedingly better than how we executed Cameron phase one and this additional detailed work as part of our desire to have a really clean exit.

Fusion plants, so the way I would read into it is and I made this comment earlier, our confidence level in the detail of this project and the commercial viability of the project has gone up dramatically in the last four or five months and this additional work I think only adds more value to the schedule and more importantly, more value to the project.

Got it and then one for Alan.

Actually it maybe one and a half questions for Alan Alan just curious in your teams.

Planning kind of reliability planning system planning, what do you think kind of the multi year demand growth projection is that that's baked into that planning by our team.

Sorry, Michael.

Multi year demand growth is what youre asking yes, yes, yes.

Yes about one 5% consumption.

Got it okay.

Just curious if there's any interesting docket underway are proceeding I don't know what to call. It at ERCOT right now.

I'm talking about what's happening with both data centers and even in even crypto mining and that it <unk>.

Five to six Gigawatts in a 70 something gigawatt market of incremental demand.

In front of the meter some behind the meter.

In the next 24 months just curious how you think that ripples through both that one 5% demand projection, but also just broader market reliability system needs regulation et cetera.

Yes, Michael its a really good question and I will tell you we spend a lot of time on it and I can tell you. We are seeing what you would expect we see with those type of numbers being thrown around.

I'm glad I'm encouraged that ERCOT and the commission probably is going to look at this because it's a very interesting load right now.

I like load I like new customers and are like big customers and so that's a good thing how those customers integrate and operate on the system and the amount of.

Generation they require electrons they require I think is an important issue for the state.

But we are seeing a high level of.

Of large customers right I mean, some of those have been publicly announced the Ti plant in Sherman, the Samsung plant and Taylor, which are different obviously, not crypto or data center related but we're also seeing a large number of.

5100, 200 megawatt customers coming to us and wanting to get online very rapidly and a lot of that is reflected in some of our transmission line numbers and a lot of that hasnt been reflected yet is still to come.

But it will it will if it manifest result, and obviously discussions we have with our board going into October on Capex, depending on what we actually see coming out of those and again I think it's great that the state is looking at it I think it's very interesting load because it can manifest very rapidly right. It's not like building a manufacturing facility.

Can you can put up a crypto facility very quickly.

And so that impacts our ability to get to you quickly and then you can also potentially move quickly if market conditions change.

And so I think it's an important issue for the state and I'm glad they are looking at it and we're obviously looking at it very closely as well from not only a <unk>.

Capex in operation perspective, but what it would do overall.

ERCOT.

Got it thank you Allen.

Michael I would also add to that that we go back and think about the last time Alan settled a rate case, which was in November of 2017 at that time. They had a forward five year capital program of $7 5 billion and in the last four years, it's doubled to 15 and based upon what Trevor and I saw it.

Last week's board meeting and some of the feedback that Alan's given us. This has all been done around the idea of meeting new load growth, but today that load growth is continuing and we're now looking at the prospect of adding in what Alan described earlier, which is more spending around resiliency and obsolescence to make sure that we can integrate.

All of these different load. So my basic thesis here Michael is being in the right markets really good markets with good regulatory jurisdictions and solid growth is a great way to outperform your peers in Oncor is a great example, and I will tell you Alan and his team are running a great program and I think as we get toward October not only they'd be prosecuting there.

Rate case, and hoping that that will be settled I think we're going to be looking at increased capital spending is one of the reasons they've been running their equity layer at around 45% instead of 42, 5% heading into this rate case.

Got it thank you Jeff Thanks, Alan much appreciate it.

Thank you Michael.

We will take our next question from Paul Patterson <unk> Associates. Please go ahead.

Good morning, Paul morning, guys Hey.

So I have a.

Sort of a big picture question.

You guys talked about it but I missed it but as you know perennially theres. This.

There's this concern that's raised by manufacturers about the price of natural gas and LNG as potential impact on it and given this robust.

Outlook for LNG exports and also you guys fill up natural gas and obviously you guys look at this as a pretty big way pretty detailed way I'm sure. So.

So there's the potential for supply increases et cetera.

Patients are places so I was just wondering when you see all this opportunity.

And do you see domestic needs and everything in supply what do you what do you think the.

The impact would be.

What's the long term sort of outlook you guys have on natural gas prices in the U S. Given this LNG robust LNG outlook that you see.

Hello, Matt.

Look Paul it's a great question, and obviously theres been a lot of moving forces go into cost of supply and demand marketplace, both for oil and natural gas and even in electricity in some markets markets like Europe , you have a lot of gas on the margin markets for electricity.

But I would say that you've got about a six five to seven five Bcf per day marketplace that we export to Mexico and you've also got this 11 or 12 Bcf marketplaces, we export LNG around the world. So that's about 12 towards about 20 Bcf per day and whats interesting is on a relative base.

This is Henry hub has been has not had a lot of price volatility relative to the markers you usually see for natural gas in Europe at TTS for JK M. So long term member there hasnt been a lot of investments over the last five years from the oil and gas sector and new sources of delivery.

Thank you you're going to continue to see market forces continue to come back in and raise the rates of production as necessary to meet demand. So I can't give you a definitive forecast, it's something that we follow it closely but we're very confident about the level of natural gas resources in the United States and the United States being best positioned to meet the growing demand for both Asia.

And for.

And for Europe , there is.

The study that I would refer you to and in the daily analysis, They talk about the United States ability to supply these different markets over the next 20 years and that might be a good resource for you to reference.

I think I've seen it maybe just was wondering if you thought that that you think that those those assumptions and everything's still apply given I haven't looked at it in a while I think but.

If it's the same when we're talking about but do you think those things if I understand you correctly pretty much pretty much intact, even with this more robust potential outlook that you see I think that's fair and I would also I think thats fair and I'd also remind folks that because we're T&D focused as we look at launching these various LNG projects you remember Cameron was the <unk>.

Totally in project Eagle.

<unk> phase one is a project, where we don't take any commodity risk because youre buying at an index and youre selling at an index in terms of shielding our projects. The way you do that is you make sure you got long term contracts with good credit Counterparties and you make sure youre not taking commodity risk, but in terms of the larger macroeconomic.

A picture I would refer you to that dose study, which tends to indicate the conclusions you just described.

Okay. Thanks, so much I appreciate it. Thank you for joining thank you for joining the call Paul.

Ladies and gentlemen. This concludes today's question and answer session. At this time I'd like to turn the conference back to Mr. Martin for any additional or closing remarks.

Look I just wanted to stop and thank everyone for joining today's call. We look forward to seeing you all at the upcoming <unk> Conference in Florida. Later, this month feel free per custom to reach out to our IR team with any additional questions and this concludes today's call.

Yes.

Ladies and gentlemen. This concludes today's conference. We appreciate your participation you may now disconnect.

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Thanks.

Yes.

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Thanks.

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Thanks.

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No.

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Thanks.

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Right.

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Yes.

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Yes.

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Yes.

Sure.

Okay.

Yes.

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