Q3 2022 Plains GP Holdings LP Earnings Call

November 2, 2022

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Oh.

Hello, and thank you for standing by.

Welcome to the PAA and PAGP third quarter earnings call.

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

After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one one on your telephone you'll hear an automated message advising you that your hand is right.

Please be advised that today's conference is being recorded.

I'd like to hand, the conference over to your Speaker Ray Lamar Ho, Vice President Investor Relations Communications and government relations.

Thank you <unk> good afternoon, and welcome to Plains, All American <unk> third quarter 2022 earnings call. Today's slide presentation is posted on the Investor Relations website under the news and events section of planes Dot com.

Audio replay will also be available following today's call important disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide two.

An overview of today's call is provided on slide three the condensed consolidated balance sheet for PAGP and other reference materials are located in the appendix.

Today's call will be hosted by Willie Chiang Chairman and CEO announced once the executive Vice President and Chief Financial Officer.

Other members of our team will be available for Q&A, including Harry <unk>, President, Chris Chatter Chandler Executive Vice President and Chief Operating Officer, Jeremy Goebel, Executive Vice President and Chief Commercial Officer, and Christopher Hurdle Senior Vice President of Finance and Chief Accounting Officer with that I will now turn the call over to Willy. Thank you Roy.

You everyone for joining us this afternoon.

Today, we announced strong third quarter results above our expectations, reflecting continued execution of our long term goals and initiatives and our strong performance in both of our crude oil and NGL segments in summary, third quarter adjusted EBITDA attributable to PAA was $623 million.

We increased our full year 2022, adjusted EBITDA guidance by 75 million to $2 $4 5 billion, which is $250 million above our initial February guidance the.

The year to year increase was driven by outperformance in both our crude oil and NGL segments due to the capture of additional volumes higher commodity prices and favorable margin based opportunities.

Additionally, today, we announced and closed an 85 million acquisition of an additional 5% and the cactus II pipeline, bringing our total ownership to 70%.

Importantly, we ended the quarter with a leverage of three seven X and expect to end the year at three eight X both below the midpoint of our targeted leverage range. This supports increasing returns of capital to our equity holders as.

As such within todays earnings release, we laid out a multi year capital allocation and financial framework, which I will discuss shortly.

Before that I wanted to reiterate our views on why we remain constructive on long term industry fundamentals.

Notwithstanding global economic uncertainty and continued volatility in the commodity markets. We continue to expect global energy supply and demand to remain tight.

On slide four for the past number of years and for a number of reasons. There has been a lower level of investment in the upstream sector, reducing resource development.

At the same time energy demand continues to grow while historical supply buffers in the form of OPEC, plus spare capacity and global inventories are greatly reduced and had been further impacted by recent geopolitical events.

Year to date, we have seen U S strategic petroleum reserve draws of approximately 190 million barrels and commercial inventories remain or at below historic levels over the same timeframe.

Global markets remained tight and the world needs needs short cycle, North American production growth.

As summarized on slide five we've made meaningful progress on our long term goals and initiatives and as such 2022 is a positive inflection point for planes for the last several years, we have focused on deleveraging by maximizing free cash flow and reducing absolute debt. The success of this effort when combined with <unk>.

Solid operating commercial and financial performance enabled us to achieve our leverage objectives, well ahead of our initial expectations and to accelerate returns to equity holders, while providing greater clarity on our multi year capital allocation framework.

As described in our press release. This afternoon, we provided updates to our capital allocation and financial framework as follows. We currently intend to recommend to the board.

<unk> per unit annualized increase of our quarterly distribution payable in February 2023.

Beyond 'twenty three as part of our annual budget review process with the board, we anticipate targeting annualized distribution increases of approximately <unk> 15 per unit each year until reaching a targeted common unit distribution coverage ratio of approximately 160%.

We anticipate leverage migrating below the low end of our targeted range of $3 75 to four five times in 2023, and consistent with our objective in achieving and maintaining our mid triple B and equivalent credit ratings.

Additionally, opportunistic unit repurchases will remain a component of our capital allocation framework, which will be a dynamic assessment of business outlook market environment and capital allocation options.

As we look forward, we remain focused on driving shareholder value and improving the resilience of our earnings by leveraging our existing crude oil and Ngls infrastructure. This.

This includes capital efficient brownfield expansions and debottlenecking opportunities underpinned by contractual commitments potential bolt on acquisitions, such as the advantaged JV and the acquisition of additional interest in Cactus II.

And the optimization and alignment of existing assets with emerging energy opportunities.

In Canada, we recently completed a win win noncash transaction to gain full ownership of our existing Empress facilities in exchange for a long term process seeking path.

Processing capacity lease at the facility, allowing us to further optimize and operate the assets more efficiently over time.

Additionally, we continue to evaluate capital efficient debottlenecking and expansion projects around our four Saskatchewan facilities and hope to be able to share additional details over the next coming quarters with that I will turn the call over to al.

Thanks Willie.

We reported third quarter adjusted EBITDA of $623 million, which includes the benefit of increased volumes across our systems, primarily within the Permian higher commodity prices as well as Canadian margin based opportunities slide 17, and 18 in today's appendix contain quarter over quarter and year over.

<unk> segment, adjusted EBITDA walks, which provide more detail on our third quarter performance.

A summary of our progress on our goals a key financial and operating metrics in 2020 guidance is located on slide six through nine we've increased our full year 2022, adjusted EBITDA guidance by $75 million to plus or minus two $4 5 billion, primarily driven by our <unk>.

Strong third quarter performance.

<unk> six shows our key 2022 financial metrics and reflects strong distribution coverage of 265% and free cash flow after distributions of $670 million.

Which provides ample capacity supporting our multi year capital allocation framework.

I would note that we have left our asset sale target at $200 million, but as a result of current volatility in capital markets. The remaining $140 million that hasnt closed could shift into the first half of 2023.

Additionally, going forward cactus II will be consolidated into <unk> future financial statements similar to the.

Permian JV volumes will be reported on a consolidated basis and earnings on a proportional basis.

Before providing more detail on today's capital allocation announcements I wanted to share a few directional comments on 2023.

With formal guidance to come early next year, we continue to expect growth in our crude oil business, primarily driven by our Permian operating leverage and improving margins on short term contracted long haul opportunities.

For our NGL segment, we currently anticipate lower C. Three plus spec sales volumes due to third party facility turnaround and absent of 2022 weather benefits. Furthermore, current forward markets indicate lower year over year Frac spreads.

Combination of these could lower 2023, NGL segment, adjusted EBITDA by roughly $100 million versus 2022 guidance.

In regard to capital allocation, our proposed long term capital allocation framework and financial strategy are summarized on slides 10 through 13, we are focused on generating meaningful multi year free cash flow and improving shareholder returns by increasing returns of capital to equity holders, making disciplined accretive.

Investments and insurance balance sheet flexibility.

With respect to increasing returns of capital to our equity holders and a long term sustainable manner as shown on slide 11, and detailed in our earnings press release, we intend to recommend to our board an annualized increase of <unk> 20 per common unit for our quarterly distribution to be paid in February which is one quarter early.

Air than we would normally implement a change to our quarterly distribution.

Beyond 2023, we will continue to evaluate our capital allocation program financial positioning investment opportunities and business outlook with our board of directors as part of our annual budgeting process.

Subject to that process. We currently anticipate targeting annualized distribution increases of 15 <unk> per unit per year.

Until reaching a targeted common unit distribution coverage ratio of approximately 160%.

Upon reaching our target coverage subsequent distribution increases will be driven by future DCF growth and evaluated as part of our annual budgeting process.

Opportunistic equity repurchases will remain a component of our long term capital allocation program since the inception of the program, we have repurchased $300 million of our $500 million authorization or approximately 4% of our common units outstanding.

With respect to capital investments going forward as summarized on slide 12, we will continue our disciplined approach focusing on high return expansion and debottlenecking opportunities that leverage <unk> leverage our existing crude oil and NGL infrastructure.

Longer term, we continue to expect to self fund.

Annual routine investment capital through our excess cash flow and coverage.

Regarding our balance sheet as described on slide 13, we have achieved our leverage goals and anticipate migrating leverage below the low end of our target range of $3 75 to four five times in 2023.

We will take a prudent long term approach focusing on increasing cash return to equity holders, while maintaining and improving financial flexibility.

<unk> with our objective of achieving and maintaining a mid triple b equivalent rating.

Before I turn the call back to Willie I wanted to provide a brief update on potential changes to the pricing of our series a and series B preferred equity securities.

The series a security issued in 2016 currently has a yield of 8% and contains a onetime option for holders to reprice. The security based on the 10 year U S treasury rate plus 585%.

The holders will have the opportunity to reprice the security during a 30 day period beginning in late January 2023.

If the REIT is exercised we would anticipate the yield increasing to approximately 10% based on current treasury rates. After repricing, we will obtain a call right at 110% of par.

To be security issued in 2017 has a fixed yield of 612, 5% for the first five years shifting to floating on November 15th 2022 at a new rate of three month, LIBOR plus $4 one 1%.

Upon the shift to floating the security becomes callable at 100% of par.

Both were to reprice at current market conditions total annual preferred dividends would increase by approximately $55 million a year to approximately $255 million per year.

Even with the potential increase we still have ample financial flexibility to continue lowering leverage and increasing returns of capital to common equity holders in a manner consistent with what we have described on today's call with that I will turn the call back to Willy. Thanks Al today's results reflect another solid quarter.

Performance and execution.

Although we are monitoring current macro and geopolitical events, we believe long term fundamentals remain constructive.

And that our business will continue to perform well in the current and the longer term environment, we've made steady progress reducing leverage and creating additional financial flexibility, which has positioned us to provide additional clarity on our multi year capital allocation framework.

We will continue to take a long term disciplined approach to our business and the execution of our capital allocation priorities. We appreciate your continued interest and support and we look forward to providing further updates along with our formal 2023 guidance on our earnings call in February summary of the key takeaways from today's call as provided on slide 14.

With that I'll turn the call over to Roy and lead us through Q&A.

Thanks, Willie 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 for as many as our 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 treats were now ready to open the call for questions.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Please standby, while we compile the Q&A roster.

Our first question is from Michael Blum from Wells Fargo Michael.

Thanks, Good afternoon, everyone.

Yeah, maybe I'll start with distribution.

Announcements here.

Really tilt the scales towards distributions out of a buyback. So I'm wondering if you could just kind of talk through that.

The thought process there.

Sure Michael Thanks for the question.

We have and the reason for that is as we think about our capital allocation process.

It's a pretty dynamic matrix that we look at with a number of things and the goal is to really help improve the value of the company and the ability to be able to.

Have additional cash flow, which we can distribute back to to unit holders and as we think about that we think the distribution is the most efficient way to do that as far as returns get returns back to.

Getting back to unit holders versus buybacks and it's really for that reason and the progress that we've made so far that we've articulated this multi year strategy.

Yeah.

Got it thanks for that.

I also just wanted to ask about Permian growth I would love to get your latest thoughts on where things are trending both for this year and.

Into 2023 I'm sure you saw some of the comments from some of the majors.

Perhaps a slight slowdown so answer.

Later Atlanta Thanks.

Well, Michael let me I'll give you. Some comments we are going to wait until 2023 February to give detailed guidance, but where it stands right now it's really in lock step with what we've expected.

Year end of year end growth in 'twenty, two is going to be roughly 650000 barrels a day, we premise roughly.

A 10% increase in rigs are running about 150 to 160 rigs next year and that's what we'll have to kind of validate as we go through the next number of months and talking to the producers.

But I will highlight that the what that growth. If you take a look at the market capture of our volumes, we've been very successful in being able to capture volumes into our gathering joint venture, which ultimately feeds the rest of the business.

Great. Thanks Kelly.

Thanks, Michael.

Thank you Michael.

Our next question will be coming from Keith Stanley with Wolfe Research.

Yes.

Hi, Thank you.

I guess sticking with the distribution.

Can you explain a little more how you came to the 160% minimum coverage threshold using DCF for future dividend growth and I also.

Wanted to ask you talked about perhaps going to variable rates, which as you know.

Pretty expensive source of capital. So how did you balance what's a very robust dividend growth plan against.

Turning to abuses like trying to pay down debt.

That preferred equity.

Yes, Keith.

Mr. Stanley, Let me, let me take that and I'll, let al talk about the press on the.

160% coverage, what we're driving for there is as you know we're funding capex.

From cash flow and as we put this multi year trajectory out on the increase the 160% target is really kind of a governor to make sure that we've got adequate.

Adequate coverage and cash flow to be able to cover our routine capex expectations, our annual program as well as a little bit of extra dry powder to be able to further take our leverage down and be prepared for anything that might present itself. So the 160 is really.

Make sure that we're conservative and can.

And fund our Capex.

In the future going forward.

Al you want to take a breath, yes, I'll take a shot at the perhaps between the two the one.

If those reprice today would be about 10%, we view that right now on a 50 50 basis.

How the equity component of that it's less than our cost of capital today.

Trade it what a DCF yield probably.

18% 10 year money today is probably 7% 50 50 would be 13, 5%.

So while it's more expensive, it's still not more expensive when you look at the components of it relative to our cost of capital were two new into just having hit and got to our leverage objective.

To use a deleveraging.

Our our leveraging excuse me I E.

To take to take that out in the near term clearly our objective that you heard in our comments is to continue to.

Move leverage down so at some point, we may have the capacity to deal with that but today.

We don't believe that would be prudent.

Leveraging transaction to try to reduce that cost that's actually pretty manageable relative to what the current capital markets are providing and we surely don't want to use equity common equity to trends take it out at this point.

But all of that could be on the table a year or two down the road.

And the important thing is we do we do see call options coming our way with this so so we do control our destiny, a little bit when we get into a position to be able to deal with it.

Got it.

The.

If I could just clarify a second question on.

Your your expectation to be below the low end of the leverage range in 'twenty three.

You gave some puts and takes on next year.

Is that assuming that you repay.

That you're continuing to repay debt with some of your free cash flow through 2023.

Yes, our intent again, if you think of what we are mentioning with the distribution.

And being capital disciplined on investments, we will still have very strong cash flow after distributions and our intent will be to continue to reduce debt. We do when we look into the future I believe we will have cash flow growth as well.

<unk>.

But but bottom line is we do expect to continue to pay down debt and reduce debt and increase the flexibility we don't want to get to the point of setting a new range now.

We intend to migrate below and then operate there for a while and we can reevaluate that in the future.

Thank you.

Our next question comes from Brian <unk>.

UBS Brian your.

Your line is open.

Hi, Good afternoon, maybe just to quickly follow up on some of the capital allocation.

Allocation questions, you've got $2 2 billion and perhaps.

That can convert.

Next year, but you also have about $1 one.

Long term debt can be refinanced in 'twenty three.

Kind of just curious as you entered the year like what are your priorities just given the equity credit for that perhaps is that your priority to refinance that debt and I guess kind of a follow up question can you just remind us of your liquidity, particularly the cash cost of the revolver and your ability to use that.

Manage essentially.

A reduction in rates call it a year.

Brian This is al.

We have three <unk> as of the end of September we had $3 3 billion of liquidity.

Which included $600 million of cash on the balance sheet.

The cash is earning more than the first note that matures early next year or are we would've taken it out before end of the year. It became where we could take it out at par here just yesterday, but we'll take it out next year, our intent would be to take and retire the $1 1 billion next year.

And not access the market and that'll be part of our deleveraging.

We would fully expect the prefs to remain out again.

While the rates are going up.

And obviously, we don't know where the fed will stop.

The one that floats may become an issue, but we would not intend to be looking at retiring those next year.

Great. Thanks for the clarification and then maybe just a simple operational question it seems like.

Pad two movements were a little noisy, particularly with some refinery refinery movements just kind of curious if you can talk about the central.

Intra basin volumes during the quarter and if that's something that could be.

The trend that could continue into 2023 or do you think that's more of a.

Singular event for the quarter.

Hey, Jeremy once you take that one hi, Brian This is Jeremy.

The pad two movements low inventories at Cushing and you haven't seen a ton of growth in the Rockies and you've even seen some.

Sure.

Facilities offline in Canada, which yields higher movement up based on what the crack spreads you're seeing specifically on the diesel side. So we would expect that to continue as long as we're finding friends in refining demand remains strong.

That we would expect to continue the intra basin movements are a function of production growth in the Permian Basin and you can almost looking at the gathering volumes grow in the intra basin volumes grow Accordingly, you would expect that to continue as well.

And Brian .

Okay, just reinforcing our point that we always like to talk about when you think about our system, there's a lot of flexibility and access to multiple markets. So I'll just remind you that.

Barrels could be going to the coast, but if it if the markets are such that they want to go to Cushing and we have the capability to do that so thats kind of the benefit of flexibility.

Great Fair enough I'll jump back in the queue I appreciate the color.

Thanks, Brian .

Thank you.

Our next question is from Jeremy Tonet.

Tony.

J P Morgan Securities.

Hi, Jeremy.

Army.

Good afternoon.

Just wanted to dive in real quick here, a little bit more on the guidance.

I think for crude oil was $80 90 in August and there was $19 55, now and just wondering if you could provide a bit more.

Color on what changed between August and now to drive that up Kris uptick.

Yes.

The majority of it is third quarter performance and some of the margin opportunities we've seen.

Primarily up in Canada, where we are.

Likely the bulk of it we also.

<unk> seen some kind of temporary spot movements on our assets, but the margin opportunities where the majority of them.

Got it thanks, and then pivoting over to Cam.

<unk> just wondering if you could provide some color with regards to acquisition multiple or accretion expected just trying to see.

How that fits in there versus other opportunities.

Jeremy Let me take this one.

That was a win win deal. It was it was a good deal for everybody.

The way we look at this as west was Westwood.

<unk> was interested in selling it was a negotiated deal. It allows now both enbridge and us allows us to strengthen our relationship.

And I think the way it's set up is if you think about our assets we're stronger on the gathering side.

And if you think about Enbridge theyre stronger on the downstream side. So it really fits as far as integration and our expectation is that the joint venture will be able to.

Extract some more synergies and additional volumes as we go forward I'll, probably leave it at that and not get into multiple discussion.

Got it I'll leave it there thank you.

Thank you.

Our next question from.

Jean Salisbury from Bernstein.

Hi.

I just wanted to make sure I understand what's driving the crude pipeline EBIT. This year on slide 17, you'll have a helpful bridge at the crude segment.

Last quarter and kind of call out.

Increased volume and then also MVC payment.

Does that mean that people are effectively paying NBC is on pipe.

But don't guide should be in that Gulf coast from the Permian, but then get over year, MVC level and getting spot rates.

The pipelines that are going to take off and is that like a sustainable.

Yes. This is Jeremy.

Yes, we are receiving some nbc's, but we're also replacing with some incentive there we expect that to go away as the shippers start to shift to the MVC levels, which we fully expect that to happen. Shortly so I'd say that that has been temporarily as the spreads have been in but spreads widen you would expect that to.

To be different and so the Cushing that's not on Nbc's. There are some component that is in from a re contracting standpoint, we continue to add more on a term basis across both the Cushing corridor as well as the corridor to corpus. So there's plenty of demand for capacity to the coast at increasing levels.

Okay that makes sense.

And then I was just wondering if there's been any update on the fast expansion should we be assuming any capex for that.

Hey.

Yes, we're still developing the project Jean Ann and we don't have anything specific to talk about I would leave that to our.

Hopefully in February .

On our February call, we'll have a little more.

Following that we'll share at that point.

Okay. Okay. Thank you.

Thank you.

Thank you James.

Okay.

Our next question.

Thanks from Neel Mitra from Bank of America.

Yes.

Hi, good afternoon guys.

Just wanted to.

Look at the distribution in light of your commodity and volumetric exposure.

Obviously benefit this year from the Frac spread in Canada.

You're gathering rate.

Some volumetric exposure as well.

Are you looking to term up some of the long haul pipeline to be able to.

Be able to maintain that fixed increase every year.

Are you looking at that exposure.

Well, we are absolutely looking at.

How do you firm up additional volumes I made a comment earlier about.

Taken some of the volatility out and getting kind of quick fix volumes. So we're working on that every single day.

But I don't know if you had a specific question in areas there.

Yes.

Yes, I think.

I was just asking kind of.

How are you looking at all it's kind of the commodity exposure when you evaluated.

The fixed distribution increase.

Portable with a certain run rate.

With the Canadian assets or just volumetric growth in the Permian.

I got your question, maybe you could take a look at nine if I understand your question.

We think about the higher prices are definitely benefits us.

Primarily in PLO and Frac spreads and if you look at where we started the year at we had a more modest expectations of crude oil environment, roughly $75 and for the year were probably going to average close to 95.

So there is a piece of that is related to.

Oil price.

We think as we go forward and we're going to be able to capture some of that and that's all been factored in as we think about our distribution coverage going forward.

Got it and then my second question.

In regards.

Cactus, one and two and near.

Corpus Christi exposure, we have.

<unk> had record exports out of the Gulf Coast for.

Two quarters in a row.

Corpus Christi disproportionately benefited.

So I was wondering how sustainable you think that growth is.

Going to Corpus Christi, and why the exports and then the SEC.

Second part of that would be how should we think about.

And we see impact of the second round of minimum volume commitments.

<unk>.

Jeremy you want to make sure on the Corpus Christi.

Okay.

Thank you.

The depth and channels.

The benefit all of the dots. So theres plenty of capacity to export pipelines are filling up but the rates are going up for the marginal capacity, which benefits the pipeline unorthodox owners. So there's substantial expansion capacity to expand right now it's got the best logistics and the highest price, which is yielding why there's twice as.

Any exports out of there is any other court there was used for exports across the Gulf coast at Corpus Christi, and we would expect to continue to receive.

A significant portion of those so I think that answers. Your first question the second one on <unk>.

But at minimum volume commitments.

Oh on Wink to Webster.

That's consistent with what we said in February they ramp in February of next year and production growth. This year has absorbed those NBC from this year and next year. We would expect the same thing and so growth is on pace with where we thought there might be some bumps due to natural gas takeaway or others, but longer term, we fully expect that.

Take place.

<unk>.

The larger impact from there is felt in Houston as you have length of western shippers moving their lease book back to Midland. So it doesn't necessarily impact the barrels that are.

For export because thats all priced into the forward. This differential in of all being priced into our guidance. So we fully expect to be fold to the coast and our pipeline for next year.

But for the margins to heal over time, you'll need some of them.

<unk> to be absorbed by production growth.

Yes, there Neil.

Yes. Thanks.

Does that answer your question.

It did it did.

Sure.

But fundamentally our view is global.

<unk> is going to continue for <unk>.

Crude oil and if you think about the export and the sources of that.

We think it is coming from North America. So we think it's a pretty constructive environment.

Exports from the U S.

Got it got it.

Yes.

Thank you Neil.

Our next question is coming from Michael Cusimano from Pickering Energy partners.

Thanks, Hey, good afternoon, everyone.

Hey, good afternoon, everyone.

I just wanted to go back to a comment you made earlier on year over year crude growth.

I guess first can you can you elaborate if you're specifically talking about volumes or EBITDA or both.

I'm sorry.

The numbers I was giving you award <unk>.

Volumes from year end to year end 'twenty, two 'twenty three of roughly 650.

<unk> barrels a day and just to make sure I communicated effectively when.

When we talked about checking 2023, the rig count the horizontal rig count in the Permian Our assumption was roughly 350 to 360 rigs we're running about 330 right now.

Okay, and I think I might have missed it but maybe I thought you made a comment about growing the crude segment and 23.

And I was curious if that was explicitly about volumes or earnings.

No we didnt give the I didn't give you any guidance on overall crude volumes. Jeremy did you have something you wanted to add to that yes. I think he has commented in the script. So I think it was from al actually was that we would expect year over year growth in so remember our gathering system benefits from production growth in the field. So I think it was just a comment to say the same type of growth we saw this.

Year, we would expect to see that on the gathering side with some incremental growth due to increased volumes and increased margins on our long haul business as well as the step up in Mpc's ongoing Western project.

I think that was the comment.

Okay, and then I guess do you think.

As my follow on do you think that would the growth that you would expect would outweigh any maybe like conservatism on the.

The price deck that you would assume from.

Any pipeline loss allowance uplift or things like that.

Michael This is Jeremy we were just trying to get some directional indication of the impact of Frac spreads since it's been so significant.

Intent was not to provide guidance for next year, we will update everybody on our guidance.

For the crude oil NGL business in February .

The other piece on that we wanted to give you a heads up on is theres. Some theres. Some planned outages that you probably wouldn't have insight into so we wanted to give a heads up that there will be an impact on that as well so.

On the NGL business.

Got it and then on the NGL business is.

Is the is the downtime related to the smaller expansion that you had mentioned last quarter and if so what's the timing look like for when that <unk>.

<unk> are resolved.

Yes, im not going to give you specifics on it only because it's a third party.

Supplier.

So third party straddle plant that that impacts our <unk> SaaS business, so I'll hold off on that.

And at the end of the project that you referenced.

Okay understood.

That's all for me I appreciate the help.

Thank you very much.

And our final question comes from Sunil Sibal from Seaport Global.

Hi, good afternoon everybody.

So staying on the NGL segment.

Could you give us a sense of how much NGL exposure.

Three years has said the final claim.

So Neal we're not going to we're not going to share that at this point, we will share more in February .

Alright.

Then if I look at the.

The metrics that you laid out on slide six with regard to the corner you're going into guidance a bit so it seems like.

Adjusted EBITDA is moving up by $75 million the implied DCF to comment.

Flat versus your guidance. So I was just curious.

What's the difference.

The Bcf flat.

Yes. This is al I'll take a shot at it.

One Canadian taxes to some of the timing around distributions and earnings on beef.

Being different on.

Unconsolidated entities as well as.

On our.

Yes.

Noncontrolling interest distributions to Noncontrolling interest and then the last one is just we probably should have rounded down.

Last quarter, we have been trying to keep those numbers kind of.

Brown.

So.

No one thing.

A number of different things.

But good question.

But your free cash flow is still going up.

So so you kind of recoup some of all these factors when you look at the free cash flow.

Correct.

Okay.

For that.

Thanks Danielle.

Thank you Neil.

And at this time I'd like to turn it back over to the company for their closing remarks.

Great. Thanks, <unk>, thanks to everyone for joining us and for your questions.

And your interest in our company, we will look forward to giving you updates have a nice evening.

You may now disconnect have a good evening.

The conference will begin shortly.

As Johan during Q&A, you can dial one one.

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Hello, and thank you for standing by and welcome to the PAA and PAGP third quarter earnings call. At this time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

To ask a question. During this session you will need to press star one one on your telephone.

Darren automatic method advising you that your hand is right.

Please be advised that today's conference is being recorded.

Okay. Thanks to hand, the conference over to your speaker.

Hey, Mario Vice President Investor Relations Communications and government relations.

<unk> replay will also be available following today's call important disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide two.

An overview of today's call. It is provided on slide three the condensed consolidated balance sheet for PAGP and other reference materials are located in the appendix.

Today's call will be hosted by Willie Chiang Chairman and CEO and Al Swanson, Executive Vice President and Chief Financial Officer.

Other members of our team will be available for Q&A, including Harry <unk>, Our President, Chris Chandler Chandler Executive Vice President and Chief Operating Officer, Jeremy Goebel, Executive Vice President and Chief Commercial Officer, and Chris Herbold, Senior Vice President of Finance and Chief Accounting Officer with that I will now turn the call over to Willy. Thank you Roy and thank.

You everyone for joining us. This afternoon today, we announced strong third quarter results above our expectations, reflecting continued execution of our long term goals and initiatives and our strong performance in both of our crude oil and NGL segments in summary, third quarter adjusted EBITDA attributable to PAA was 620 <unk>.

3 million.

We increased our full year 2022, adjusted EBITDA guidance by 75 million to $2 $4 5 billion, which is $250 million above our initial February guidance the year to year increase was driven by outperformance in both our crude oil and NGL segments due to the capture of additional volumes higher.

Commodity prices and favorable margin based opportunities.

Additionally, today, we announced and closed an 85 million acquisition of an additional 5% in the cactus II pipeline, bringing our total ownership to 70%.

As such within todays earnings release, we laid out a multi year capital allocation and financial framework, which I will discuss shortly.

Before that I wanted to reiterate our views on why we remain constructive on long term industry fundamentals.

Notwithstanding global economic uncertainty and continued volatility in the commodity markets. We continue to expect global energy supply and demand to remain tight.

As shown on slide four for the past number of years and for a number of reasons. There has been a lower level of investment in the upstream sector, reducing resource development at.

Year to date, we have seen U S strategic petroleum reserve draws of approximately 190 million barrels and commercial inventories remain or at below historic levels over the same timeframe.

Global markets remained tight in the world niche needs short cycle, North American production growth.

As summarized on slide five we've made meaningful progress on our long term goals and initiatives and as such 2022 was a positive inflection point for planes for the last several years, we have focused on deleveraging by maximizing free cash flow and reducing absolute debt. The success of this effort when combined with <unk>.

Operating commercial and financial performance enabled us to achieve our leverage objectives, well ahead of our initial expectations and to accelerate returns to equity holders, while providing greater clarity on our multi year capital allocation framework.

As described in our press release. This afternoon, we provided updates to our capital allocation and financial framework as follows. We currently intend to recommend to the board.

Our <unk> per unit annualized increase of our quarterly distribution payable in February 2023.

Beyond 'twenty three as part of our annual budget review process with the board, we anticipate targeting annualized distribution increases of approximately 15 per unit each year until reaching a targeted common unit distribution coverage ratio of approximately 160%.

Capital allocation framework, which will be a dynamic assessment of business outlook market environment and capital allocation options.

As we look forward, we remain focused on driving shareholder value and improving the resilience of our earnings by leveraging our existing crude oil and Ngls infrastructure. This.

And the optimization and alignment of existing assets with emerging energy opportunities.

In Canada, we recently completed a win win noncash transaction to gain full ownership of our existing Empress facilities in exchange for a long term process.

<unk> capacity lease at the facility, allowing us to further optimize and operate the assets more efficiently over time.

Thanks Willie.

We reported third quarter, adjusted EBITDA of $623 million.

Which includes the benefit of increased volumes across our systems, primarily within the Permian higher commodity prices as well as Canadian margin based opportunities.

Slide 17, and 18 in today's appendix contain quarter over quarter and year over year segment, adjusted EBITDA walks, which provide more detail on our third quarter performance.

A summary of our progress on our goals key financial and operating metrics in 2022 guidance is located on slide six through nine we've increased our full year 2022, adjusted EBITDA guidance by $75 million to plus or minus 245 billion, primarily driven by our <unk>.

<unk> third quarter performance slide.

Slide six shows our key 2022 financial metrics and reflects strong distribution coverage of 265% and free cash flow after distributions of $670 million, which.

<unk> ample capacity supporting our multi year capital allocation framework.

I would note that we have left our asset sale target at $200 million.

But as a result of current volatility in capital markets. The remaining $140 million that hasnt closed could shift into the first half of 2023.

Additionally, going forward cactus II will be consolidated into <unk> future financial statements similar to the.

Permian JV volumes will be reported on a consolidated basis and earnings on a proportional basis.

Before providing more detail on today's capital allocation announcement I wanted to share a few directional comments on 2023.

Combination of these could lower 2023, NGL segment, adjusted EBITDA by roughly $100 million versus 2022 guidance.

Investments in ensuring about balance sheet flexibility.

Here than we would normally implement a change to our quarterly distribution.

Subject to that process. We currently anticipate targeting annualized distribution increases of 15 <unk> per unit per year.

Until reaching a targeted common unit distribution coverage ratio of approximately 160%.

Upon reaching our target coverage subsequent distribution increases will be driven by future DCF growth and evaluated as part of our annual budgeting process.

Longer term, we continue to expect to self fund.

Annual routine investment capital through our excess cash flow and coverage.

Regarding our balance sheet as described on slide 13, we have achieved our leverage goals and anticipate migrating leverage below the low end of our target range of $3 75 to four five times in 2023.

We will take a prudent long term approach focusing on increasing cash return to equity holders, while maintaining and improving financial flexibility consistent with our objective of achieving and maintaining a mid triple b equivalent rating.

Before I turn the call back to Willie I wanted to provide a brief update on potential changes to the pricing of our series a and series B preferred equity securities.

The series a security issued in 2016 currently has a yield of 8% and contains a onetime option for holders to reprice. The security based on the 10 year U S treasury rate plus 585%.

The holders will have the opportunity to reprice the security during the 30 day period beginning in late January 2023.

If the REIT is exercised we would anticipate the yield increasing to approximately 10% based on current treasury rates. After repricing, we will obtain a call right at 110% of par.

<unk> B security issued in 2017 has a fixed yield of 612, 5% for the first five years shifting to floating on November 15th 2022 at a new rate of three month, LIBOR plus $4 one 1%.

Upon the shift to floating the security becomes callable at 100% of par.

Both were to re price at current market conditions total annual preferred dividends would increase by approximately $55 million a year to approximately $255 million per year.

Even with the potential increase we still have ample financial flexibility to continue lowering leverage and increasing returns of capital to common equity holders.

Manner consistent with what we have described on today's call with that I will turn the call back to Willy. Thanks Al today's results reflect another solid quarter of performance and execution.

Although we are monitoring current macro and geopolitical events, we believe long term fundamentals remain constructive.

And that our business will continue to perform well in the current and longer term environment, we've made steady progress reducing leverage and creating additional financial flexibility, which has positioned us to provide additional clarity on our multi year capital allocation framework.

With that I'll turn the call over to Roy and lead us through Q&A.

Additionally, our investor relations team plans to be available throughout the week to address additional questions treats were now ready to open the call for questions.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced please.

Please standby, while we compile the Q&A roster.

Our first question is from Michael Blum from Wells Fargo Michael.

Thanks, Good afternoon, everyone.

Yeah, maybe I'll start with distribution.

Gross announcements here.

Really silicon of the scales towards distribution growth over buyback. So I'm wondering if you could just.

Kind of talk through that.

The thought process there.

Sure Michael Thanks for the question.

We have and the reason for that is as we think about our capital allocation process.

It's a pretty dynamic matrix that we look at with a number of things and the goal is to really help improve the value of the company and the ability to be able to.

Have additional cash flow, which we can distribute back to unit holders and as we think about that we think the distribution is the most efficient way to do that as far as returns get returns back to.

Getting back to unit holders versus buybacks and it's really for that reason and the progress that we've made so far that we've articulated this multi year strategy.

Got it thanks for that.

I also just wanted to ask about Permian growth I would love to get your latest thoughts on where things are trending both for this year end.

Into 2023 I'm sure you saw some of the comments from some of the majors.

Perhaps a slight slowdown so answer later Atlanta.

<unk>.

Well, Michael let me I'll give you some comments.

We're going to wait till 2023 February to give detailed guidance, but where it stands right now is its really in lockstep with what we've expected.

Year end of year end growth in 'twenty, two is going to be roughly 650000 barrels a day, we premise roughly.

10% increase in rigs are running about 150 to 160 rigs next year and that's what we'll have to kind of validate as we go through the next number of months and talking to the producers, but I will highlight that the what that growth. If you take a look at the market capture of our volumes, we've been very successful in being able to capture volumes into our gathering.

Joint venture, which ultimately feeds the rest of the business.

Great. Thanks.

Thanks Robert.

Thanks, Michael.

Thank you Micah.

Our next question will be coming from Keith Stanley with Wolfe Research.

Yes.

Hi, Thank you.

I guess sticking with the distribution.

Can you explain a little more how you came to the 160%.

Coverage threshold using DCF for future dividend growth.

I also.

Wanted to ask you talked about the perhaps going to variable rates, which is.

Pretty expensive source of capital. So how did you balance what is a very robust dividend growth plan against.

Alternative uses like trying to pay down.

That preferred equity.

Yes, Keith.

Mr. Stanley, Let me, let me take that and I'll, let al talk about the press.

The 160% coverage, what we're driving for there is as you know we're funding capex.

Cash flow and as we put this multiyear trajectory out on the increase the 160% target is really kind of a governor to make sure that we've got adequate.

Adequate coverage and cash flow to be able to cover our routine capex expectations our annual program.

As well as a little bit of extra dry powder to be able to further take our leverage down and be prepared for for anything that might present itself. So the 160 is really.

To make sure that we're conservative.

And fund our Capex.

In the future going forward.

Al you want to take a breath, yes, I'll take a shot at the perhaps between the two the one.

If those reprice today would be about 10%, we view that right now on a 50 50 basis.

And how the equity component of that it's less than our cost of capital today.

Trade it what a DCF yield probably.

18% 10 year money today is probably 7% 50 50 would be 13, 5%.

So while it's more expensive, it's still not more expensive when you look at the components of it relative to our cost of capital were two new into just having hit and got to our leverage objective to use a deleveraging.

Our our leveraging excuse me I E.

To take to take that out in the near term clearly our objective that you heard in our comments is to continue to move leverage down. So at some point, we may have the capacity to deal with that but today.

We don't believe that would be prudent.

Leveraging transaction to try to reduce that cost that's actually pretty manageable relative to what.

Current capital markets are providing and we surely don't want to use equity common equity to trends take it out at this point.

But all of that could be on the table a year or two down the road.

And the important thing is we do we do see call options coming our way with this so so we do control our destiny, a little bit when we get into a position to be able to deal with them.

Got it thanks.

If I could just clarify a second question on.

Your your expectation to be below the low end of the leverage range in 'twenty three and you gave some puts and takes on next year.

Is that assuming that you repay.

You continue to repay debt with some of your free cash flow through 2023.

Yes, our intent again, if you think of what we are mentioning with the distribution.

But but bottom line is we do expect to continue to pay down debt and reduce debt and increase the flexibility we don't want to get to the point of setting a new range now.

We intend to migrate below and then operate there for a while and we can reevaluate that in the future.

Okay.

Thank you.

Our next question comes from Brian Reno.

UBS Brian your.

Your line is open.

Hi, good afternoon.

Just a quickly follow up on some of the capital allocation question, you got $2 2 billion and perhaps.

That can convert.

Next year, but you also have the $1, one and long term debt can be refinanced in 'twenty three.

Kind of just curious as you entered the year like what are your priorities just given the equity credit for that perhaps is it your priority to refinance that debt and I guess kind of a follow up question can you just remind us of your liquidity, particularly the cash cost of the revolver and your ability to use that.

Manage essentially.

A reduction in rates call it a year from now.

Brian This is al.

We have three <unk> as of the end of September we had $3 3 billion of liquidity.

Which included $600 million of cash on the balance sheet.

The cash is earning more than the first note that matures early next year or we would have taken it out before end of the year. It became where we could take it out at par here just yesterday, but we'll take it out next year, our intent would be to take and retire the $1 1 billion next year.

And not access the market and that'll be part of our deleveraging.

We would fully expect the prefs to remain out again.

While the rates are going up.

And obviously, we don't know where the fed will stop.

The one that floats may become an issue, but we would not intend to be looking at retiring those next year.

Great. Thanks for the clarification and then maybe just a simple operational question it seems like.

Pad two movements were a little noisy, particularly with some refinery refinery movements just kind of curious if you can talk about the.

Intra basin volumes during the quarter and if thats something that could be.

A trend that could continue into 2023% or do you think thats more of a singular event in the quarter. Thanks.

Hey, Jeremy why don't you take that one hi, Brian This is Jeremy.

The pad two movements low inventories at Cushing and you haven't seen a ton of growth in the Rockies and you've even seen some.

Facilities offline in Canada, which yield higher movement up basin with the crack spreads you're seeing specifically on the diesel side. So we would expect that to continue as long as we're finding friends and.

Refining demand remains strong so that we would expect to continue the intra basin movements are a function of production growth in the Permian Basin and you can almost looking at the gathering volumes grow in the intra basin volumes grow Accordingly, we would expect that to continue as well.

And Brian This is Jay.

Okay, just reinforcing our point that we always like to talk about when you think about our system, there's a lot of flexibility and access to multiple markets. So I'll just remind you that.

Barrels could be going to the coast, but if it if the markets are such that they want to go to Cushing and we have the capability to do that so thats kind of the benefit of flexibility.

Great Fair enough I'll jump back in the queue I appreciate the color.

Thanks, Brian .

Thank you.

Our next.

Question is from Jeremy Tonet JP.

J P Morgan Securities.

Hi, Jeremy.

Jeremy.

Good afternoon.

Just wanted to dive in real quick here, a little bit more on the guidance.

I think for our crude oil was $80 90 in August and there was $19 55, now and just wondering if you could provide a bit more.

Color on what changed between August and now to drive that up Chris uptick.

Yes.

The majority of it is third quarter performance and some of the margin opportunities we've seen.

Primarily up in Canada, where we're likely the bulk of it we also.

Seen some just kind of temporary spot movements on our assets, but the margin opportunities where the majority of them.

Got it thanks, and then pivoting over to Ken.

<unk> just wondering if you could provide some color with regards to acquisition multiple or accretion expected just trying to see.

How that fits in there versus other opportunities.

Jeremy Let me take this one.

That was a win win deal. It was it was a good deal for everybody.

The way we look at this as west was Westwood.

I was interested in selling and it was a negotiated deal. It allows now both enbridge and us it allows us to strengthen our relationship.

And I think the way it's set up is if you think about our assets we're stronger on the gathering side.

And if you think about Enbridge theyre stronger on the downstream side. So it really fits as far as integration and our expectation is that the joint venture will be able to.

Extract some more synergies and additional volumes as we go forward I'll, probably leave it at that and not get into multiple discussion.

Got it I'll leave it there thank you.

Thank you.

Our next question Scott.

Jean Salisbury from Bernstein.

Hi.

I just wanted to make sure I understand what's driving the crude pipeline EBIT. This year on slide 17, you have a helpful bridge of the crude segment.

Last quarter and kind of call out.

Increased volume and then also in the payment.

Does that mean that people are effectively paying NBC on pipelines that don't guide you'd see in that Gulf coast from the Permian, but then get over year MVC level and getting spot rates on the pipeline that are getting clinical okay and is that like a sustainable at that.

Jean Ann this is Jeremy.

Yes, we are receiving some MVC, but we're also replacing with some incentive there we expect that to go away as the shippers start to shift to their MVC levels, which we fully expect that to happen. Shortly so I'd say that.

Has been temporarily as the spreads have been in but spreads widen you would expect that to be different.

So pushing thats not on NBC. There are some component that is in from a re contracting standpoint, we continue to add more on a term basis across both the Cushing corridor as well as the corridor to corpus. So there's plenty of demand for capacity to the coast at increasing levels.

Got it that makes sense and then I was just wondering if there's been any update on that expansion should we be assuming any capex for that.

Yes, we're still developing the project Jean Ann we don't have anything specific to talk about I would leave that to our.

Hopefully in February .

On our February call, we'll have a little more.

Following that we will share it at that point.

Okay. Okay. Thank you.

Thank you.

Thank you James.

Our next question.

Thanks from Neel Mitra from Bank of America.

Sure.

Hi, good afternoon guys.

Wanted to.

Look at the distribution in light of your.

<unk> and volumetric exposure.

Obviously benefit this year from the Frac spread in Canada.

You are gathering rate.

Some volumetric exposure as well.

Are you looking to term up some of the long haul pipeline to be able to.

Be able to maintain that fixed increase every year.

Are you looking at that exposure.

Well, we are absolutely looking at.

How do you firm up additional volumes I made a comment earlier about.

Taking some of the volatility out and getting kind of VIX volume. So we're working on that every single day.

But I don't know if I get a specific question in areas there.

Yes.

Yes, I think.

I was just asking kind of.

How are you looking at all the kind of the commodity exposure one year evaluated.

The fixed distribution increase or are you comfortable with a certain run rate.

With the Canadian assets or just volumetric growth in the Permian.

I got your question, maybe you could take a look at nine if I understand your question.

We think about the higher prices it definitely benefits us.

Primarily in PLE and Frac spreads and if you look at where we started the year at we had a more modest expectations of crude oil environment, roughly $75 and for the year were probably going to average close to 95.

So there is a piece of that is related to.

Oil price.

We think as we go forward and we're going to be able to capture some of that and that's all been factored in as we think about our distribution coverage going forward.

Got it and then my second question.

In regards.

Cactus, one and two in.

Corpus Christi exposure, we have.

<unk> had record export side of the Gulf Coast for.

Two quarters in a row.

Corpus Christi disproportionately benefited.

So I was wondering how sustainable you think that growth is.

Going to Corpus Christi in light of the exports and then the second part of that would be how should we think about.

The MVC impact of the second round of minimum volume commitments from Webster.

Jeremy you want to take that one sure on the corpus.

Okay.

<unk> continued to expand.

The depth and channel.

Will benefit all of the dots. So theres plenty of capacity to export pipelines are filling up but the rates are going up for the marginal capacity, which benefits the pipeline honors. The doctor owners. So there's substantial expansion capacity to expand right now it's got the best logistics and the highest price which is yielding why there's twice.

As many exports out of there is any other court there is used for exports across the Gulf coast at Corpus Christi, and we would expect to continue to receive.

A significant portion of those so I think that answers. Your first question the second one on <unk>.

But at minimum volume commitments.

Our cluster Alan Wink to Webster.

That's consistent with what we said in February of a ramp in February of next year and production growth. This year has absorbed those nbc's from this year and next year. We would expect the same thing and so growth is on pace with where we thought there might be some bumps due to natural gas takeaway or others, but longer term will fully expect that to.

Take place.

And.

The larger impact from there is felt in Houston as you have linked the western shippers moving their lease book back to Midland.

Doesn't necessarily import barrels that are.

For export because thats all priced into the forward this differential and have all been priced into our guidance. So we fully expect to be full to the coast and our pipeline for next year.

But for the margins to heal over time, you will need some of them.

<unk> to be absorbed by production growth.

Yes, there Neil.

Yes, hi, thanks.

Does that answer your question.

It did it did.

Sure.

But fundamentally our view is global.

<unk> is going to continue for <unk>.

Crude oil and if you think about the export and the sources of that.

We think it is coming from North America. So we think it's a pretty constructive environment.

Exports from the U S.

Got it got it.

Yes.

Thank you Neil.

Our next question is coming from Michael Cusumano from Pickering Energy partners.

Thanks, Hey, good afternoon, everyone.

Hey, good afternoon, everyone.

Just wanted to go back to a comment you made earlier on year over year crude growth.

I guess first can you can you elaborate if you're specifically talking about volumes or EBITDA or both.

I'm sorry.

<unk>.

The numbers I was giving you award volumes from year end to year end 'twenty two to 'twenty three of roughly 650.

<unk> barrels a day and just to make sure I communicated effectively when.

When we talked about checking 2023, the rig count the horizontal rig count in the Permian Our assumption was roughly 350 to 360 rigs we're running about 330 right now.

Okay, and I think I might've missed it but maybe I thought you made a comment about growing the crude segment in 'twenty three.

And I was curious if that was explicitly about volumes or earnings.

No we didnt give the I didn't give you any guidance on overall crude volumes. Jeremy did you have something you wanted to add to that yes, I think as commented in the script I think it was from al actually was that we would expect year over year growth and so remember our gathering system benefits from production growth in the field. So I think it was just a comment to say the same type of growth we saw.

This year, we would expect to see that on the gathering side with some incremental growth due to increased volumes and increase margins on the long haul business as well as the step up in Mpc's ongoing Western project I think that was the comment.

Okay, and then I guess do you think.

As my follow on do you think that would.

Growth that you would expect would outweigh any maybe like conservatism on the.

The price deck that you would assume from.

Any pipeline loss allowance uplift or things like that.

Hey, Michael This is Jeremy we were just trying to get some directional indication of the impact of Frac spreads since it's been so significant.

The intent was not to provide guidance for next year, we will update everybody on our guidance.

For the crude oil NGL business in February .

On the NGL business.

Okay.

Got it and then on the NGL business.

Is the downtime related to the smaller expansion that you had mentioned last quarter in <unk>.

So what's the timing look like for wind.

Completed are resolved.

Yes, im not going to give you specifics on it only because it's a third party.

<unk> supplier.

So the third party straddle plant that that impacts our <unk> SaaS business, so I'll hold off on that.

And it is.

The project that you referenced.

Okay understood.

Got it that's all for me I appreciate the help.

Thank you very much.

And our final question comes from Danielle <unk>.

From Seaport global.

Hi, good afternoon everybody.

So staying on the NGL segment.

Could you give us a sense of how much NGL exposure.

'twenty three is hedged at this point of time.

So Neal we're not going to we're not going to share that at this point, we will share more in February .

Alright.

Then if I look at the.

The metrics that you laid out on slide six with regard to the court.

Are you going to <unk> guidance update so things like that.

Adjusted EBITDA is moving up by $75 million Oliver the implied DCF to comment.

Is flat versus the August guidance. So I was just curious.

What's the difference.

The Bcf flat.

Yes. This is al I'll take a shot at it.

One Canadian taxes to some of the timing around distributions and earnings on.

Being different on.

Unconsolidated entities as well as.

On our.

Yes.

Non controlling interest distributions to Noncontrolling interest and then the last one is just we probably should have rounded down.

Last quarter, we have been trying to keep those numbers kind of.

Graham.

So.

No one thing.

A number of different things.

But good question.

But your free cash flow is still going up.

So you kind of recoup some of all these factors when you look at the free cash flow.

Correct.

Okay.

Thanks for that.

Thanks Neil.

Thank you and at this time I'd like to turn it back over to the company for their closing remarks.

Great. Thanks, <unk>, thanks to everyone for joining us and for your questions.

And your interest in our company, we will look forward to giving you updates have a nice evening.

You may now disconnect have a good day.

Evening.

Q3 2022 Plains GP Holdings LP Earnings Call

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