Q4 2022 EnLink Midstream LLC Earnings Call
Greetings and welcome to the fourth quarter 2020 to Enlink Midstream earnings conference call and webcast.
At this time, all participants are in listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero from your telephone keypad. Please.
Please note this conference is being recorded.
At this time I'll turn the conference over to Brian Burkhart Director of Investor Relations. Mr. Burkhart, you may now begin.
Thank you and good morning, everyone.
Welcome to Enlink fourth quarter of 2022 earnings call participating on the call today are Jesse Air Nevis, Chief Executive Officer, and Ben Lamb, Executive Vice President and Chief Financial Officer, Walter Pinto Executive Vice President and Chief Operating Officer is also in the room to answer any questions during the Q&A session.
Our earnings release and presentation. After the markets closed yesterday and those materials are on our website. A replay of today's call will also be made available on our website at www Dot Enlink dot com.
Today's discussion will include forward looking statements, including expectations and predictions within the meaning of the federal Securities laws.
Forward looking statements speak only as of the date of this call and we undertake no obligation to update or revise.
Actual results may differ materially from our projections and a discussion of factors that could cause actual results to differ can be found in our press release presentation and <unk> SEC files.
This call also includes discussion pertaining to certain non-GAAP financial measures.
Definitions of these measures as well as reconciliations of comparable GAAP measures are available in our press release and the appendix of our presentation.
We encourage you to review the cautionary statements and other disclosures made in our press release, and our SEC filings, including those under the heading risk factors.
We will start today's call with a set of brief prepared remarks by Jessie and Ben and then leave the remainder of the call open for question and answers.
With that I would now like to turn the call over to Chelsea are any of those.
Thank you, Brian and good morning, everyone and thank you for joining us today to discuss our fourth quarter and record full year 'twenty two results.
We will also discuss our 2023 outlook, which looks like it will be another record year.
In short we remain focus on executing the same game plan that worked in 2022.
Driving sustainable value through investing in higher return projects, returning capital to investors and executing on our first mover advantage in Ccs.
Looking back at 2022, we achieved a lot of Enlink Records last night, we reported fourth quarter adjusted EBITDA of $337 million in 2022, adjusted EBITDA of one point to eight $5 billion.
This is mark both a record for annual adjusted EBITDA, and our strongest ever year over year growth of 22%.
We achieved these results despite December headwinds severe winter weather throughout Texas, and Oklahoma, along with unscheduled downtime after an earthquake in the Permian had a negative impact on adjusted EBITDA of approximately $11 million in the fourth quarter of 2022.
The strong cash flow generation drove robust free cash flow after distributions of $312 million.
This represents the third consecutive year of generating at least $300 million in free cash flow after distributions.
We use this robust cash flow generation and part to increase the returns to our investors Derisk recently announced and annualized.
Increase the distribution of 11% to 50 cents per unit.
Additionally, we completed the board authorized $200 million unit repurchase program in 2022.
And the board has already authorized an additional $200 million program for 2023.
Okay.
Importantly, these returns to our investors who were made while we simultaneously strengthened our balance sheet.
In August we refinanced most of our senior notes due 2024 at a portion of our senior notes due 2025 with an upsized offering of our senior notes due 2030.
As a result, we have no meaningful near term debt maturities.
We exited the fourth quarter with leverage of three four times.
And subsequent to the end of the quarter Fitch recognize our improving balance sheet when they upgraded us to investment grade with a triple B minus credit rating.
We remain one notch below investment grade by Moody's and S&P with a positive outlook at S&P.
Shifting to 2023.
We look for this momentum to continue and expect another record year with adjusted EBIT EBITDA generation of $1.355 billion at the mid point of our guidance, we issued last night.
In particular, we forecast our largest segment the Permian to continue to exhibit solid growth.
During the fourth quarter. We also continued the execution of our bolt on acquisition strategy with the acquisition of a small neighbor in G&P system in central Oklahoma.
This is another example of our low risk consolidation strategy, which is designed to yield attractive returns in any market environment.
We remain focused on maintaining a balanced capital allocation approach and we continue to find very attractive opportunities to invest in high return projects, including the continuation of our capital efficient strategy of relocating valuable assets.
Last night, we announced our third plant relocation to the Permian and the first to the Delaware.
Which represents a savings of approximately 50% over comparable newbuild cost.
As we look to 2024 and beyond our assets are well positioned for the structurally supported natural gas market and the wave of LNG capacity coming online along the Gulf Coast.
We generate approximately 90% of our gross margin from natural gas and Ngls and we operate three dominant G&P systems in the Permian, Oklahoma and North Texas.
While natural gas prices currently lower in 2023 and May remain so for a period of time long term, we see a significant call on North American natural gas and our systems are very well positioned to benefit.
On the supply side, our Oklahoma and North, Texas assets are the perfect gas weighted complement to our Permian position.
And on the demand side, we have a louisiana footprint that can't be replicated.
Which will enable us to participate in supplying gas to the growing demand centers, including LNG terminals.
In addition, we have taken advantage of those assets in the ground to create a differentiated future for enlink by building a market, leading Ccs business complementing our diverse traditional midstream business.
Last year, we executed on our first mover advantage with the first definitive transportation agreement for <unk> addressing current industrial emissions in Louisiana.
We expect to sign additional definitive agreements beyond Exxonmobil in 2023 and beyond as we become the Sidoti transporter of choice.
Because of the extent of our assets in the ground. We can do this without cannibalizing our existing gas business.
Next week, we plan to provide additional details around this unique opportunity and the evolving Ccs business at our Investor day in Dallas.
With that I will turn it over to Ben to provide an overview of our operations and our financial results.
Thanks, Jessie and good morning, everyone.
I'd like to start by thanking all of our team members out in the field. They not only operated in tough conditions to close out the year with winter weather, but more importantly, they did so in a safe manner.
Enlink followed up a record safety performance in 2021 with another record in 2022.
Our 2022 total recordable injury rate came in at 0.26.
This is a testament to the actions we take to operate our assets with excellence, while never compromising on safety.
Let me walk through our assets, which drove record results for 2022, and then wrap up with some comments about our outlook for 2023.
Let's start with our largest segment the Permian where segment profit for the fourth quarter of 2022 came in at $89 million.
Segment profit in the quarter included approximately $11 7 million of operating expenses tied to the relocation of the Phantom plant and zero point $6 million of unrealized derivative gains.
Excluding plant relocation opex and unrealized derivative activity segment profit in the fourth quarter of 2022 decreased 15% sequentially, but increased over 27% from the prior year quarter.
The fourth quarter results were adversely impacted by approximately $6 million as a result of unplanned plant downtime from an earthquake and severe winter weather.
Average natural gas gathering volumes for the quarter were approximately 1% lower compared to the third quarter of 2022, driven by the unplanned events.
Producer activity across our footprint has remained robust from the fourth quarter of 2022 into early 2023.
To meet our producers plans on the Delaware side, We recently announced project Tiger two.
This will be our third plant relocation to the Permian, which will move our recently acquired plant from North Texas.
The relocation will add 150 million cubic feet per day of processing capacity at roughly half the cost of a newbuild and is expected to be online in the second quarter of 2024.
Turning now to Louisiana, we experienced favorable market conditions in the gas segment and normal seasonality in the NGL segment in the fourth quarter.
Segment profit for the fourth quarter of 2022 came in at $97 $8 million segment profit included unrealized derivative losses of $2 $5 million.
Excluding the impact of unrealized derivative activity segment profit in the fourth quarter of 2022 increased approximately 8% sequentially and 9% from the prior year quarter.
We continue to see robust demand for natural gas and Ngls in Louisiana.
With the tightness in the NGL market, we agreed with our partners to restart Gulf Coast Fractionator 145000 barrel per day NGL fractionation facility in Mont Belvieu, Texas. The facility is expected to restart in the first half of 2024.
Moving up to Oklahoma, We delivered segment profit of $98 $8 million for the fourth quarter of 2022.
Segment profit in the quarter included unrealized derivative losses of approximately $5 million.
Excluding plant relocation opex and unrealized derivative activity segment profit in the fourth quarter of 2022 grew 8% sequentially and nearly 13% from the prior year quarter.
We achieved these results despite an impact of over $3 million from the severe winter weather in December .
Yeah.
Average natural gas gathering volumes increased 5% sequentially and 3% compared to the prior year quarter.
At the end of the fourth quarter, we closed an acquisition of a neighboring gathering and processing system.
The acquisition is expected to generate approximately $19 million in EBITDA for 2023 and comes with attractive economics similar to those of our North Texas acquisition earlier in 2022.
Like that acquisition, our investment case assumed no incremental customer drilling activity and is driven by operational and capital synergies.
The acquired assets include processing capacity of 280 million cubic feet per day, which is significantly under utilized and will be available to support potential future volume growth on our systems.
Wrapping up with North, Texas segment profit for the quarter was $84 $3 million, including unrealized derivative gains of $8 $7 million excluding.
Unrealized derivative activity segment profit in the fourth quarter of 2022 decreased 6% sequentially that grew 27% from the prior year quarter.
The improvement over the prior year was driven in part by the acquisition that closed in the third quarter in 2000 or 2022.
Yeah.
Natural gas gathering volumes were 1% higher sequentially, and 22% higher compared to the prior year quarter.
These solid results drove another robust quarter with $337 million of adjusted EBITDA and $55 million of free cash flow after distributions.
Full year 2020 to Enlink delivered adjusted EBITDA of $1 $2 $85 billion and free cash flow after distributions of $312 million.
These results represent an impressive 22% growth in adjusted EBITDA over the prior year and the third consecutive year of over $300 million in free cash flow after distributions.
We achieved these results despite the approximate $11 million impact of the December weather and earthquake, a badge and despite incurring $3 million in severance costs related to an organizational realignment in the fourth quarter.
Capital expenditures net to Enlink plant relocation expenses and investment contributions for $137 million. This included a $20 million contribution to our Matterhorn joint venture, bringing our total investment in Matterhorn to $66 million for 2022.
On the balance sheet side, we continue to find ourselves in a very strong position with a leverage ratio of three four times at the end of the year and ample liquidity.
Credit rating agencies have taken note of the positive steps, we have made to strengthen our balance sheet most.
Most recently Fitch upgraded enlink to investment grade with a triple B minus rating and a stable outlook.
We remain one notch below investment grade at both S&P and Moody's with a positive outlook at S&P.
Consistent with our capital allocation plans to increase returns to investors, we increased our common unit distribution by 11% in the fourth quarter of 2022 to <unk> 50 per unit annualized.
Additionally, we remain active with our common unit repurchase program and completed the $200 million planned for 2022 with $53 million spent in the fourth quarter.
We also repurchased $19 million of our preferred series C units in the fourth quarter at an average price of 80 cents on the dollar.
Now, let me turn to 2023 guidance that we announced yesterday.
We are in a solid position to continue the momentum we ended the year with and 2023 is forecast to be another year of record results.
From an adjusted EBITDA standpoint, we're forecasting a range of 130 $5 billion.
140 $5 billion.
This represents growth of approximately 5% at the midpoint of the range.
It is driven by continued robust activity in the Permian double digit volume growth in Oklahoma and continued stability in North Texas.
Turning to commodity prices, our business remains approximately 90% fee based.
For our 2023 guidance range, we assumed average double UTI and Henry hub prices of $80 per barrel and $4 per Mb to U respectively.
While the pullback in natural gas prices may have been faster than we anticipated we expected prices to moderate this year and in turn we took action in 2022 to hedge a large majority of our 2023 exposure to natural gas prices and wahhab basis at prices significantly above current levels, providing increased certainty.
For 2023 financial results.
Accordingly, a change of plus or minus 50 per M. M Btu impacts adjusted EBITDA by approximately approximately $1 million.
And a change of plus or minus $5 per barrel impacts adjusted EBITDA by approximately $11 million in each case, assuming no change in our forecast volumes.
Looking at the segments, we are projecting another year of significant growth for our Permian business.
At the midpoint segment profit for 2023 is forecast to be $430 million.
That includes $30 million of plant relocation expenses for Tiger two.
Excluding plant relocation expenses, we forecast Permian segment profit at a midpoint of $460 million for growth of approximately eight 5%.
Louisiana segment profit for 2023 is forecast to be $345 million at the midpoint of guidance.
Oklahoma segment profit for 2023 is forecast to be $425 million at the midpoint, representing an increase of approximately 8% when excluding plant relocation expenses incurred in 2022.
North Texas segment profit for 2023 is forecast to be $295 million at the midpoint.
On the investment front total capital expenditures plus operating expenses associated project Tiger two net to Enlink and investment contributions are forecast to be between $485 million and $535 million.
This spending includes the two new projects, we announced last night with the Tiger two plant relocation accounting for $30 million net to Enlink and.
And $25 million associated with our share of the restart at gcs.
As a reminder, it also includes about $40 million related to our Ccs project with Exxonmobil, which takes advantage of our existing assets in the ground.
From a free cash flow perspective, we expect this modest increase in high return projects to offset the increase in adjusted EBITDA. As a result, we forecast free cash flow after distributions in the range of $210 million to $270 million is.
As mentioned earlier, our board authorized a new $200 million common unit repurchase program for 2023.
In summary, the Enlink team delivered solid results in 2022, and we expect the momentum to continue in 2023 despite.
Despite the recent volatility our assets are well positioned to grow led by our largest segment today the Permian.
With that I'll turn it back to Jesse.
Thank you Ben.
I'm proud of the Enlink team for their solid execution in 2022.
Which resulted in a number of records for Enlink as our guidance shows we are well positioned to build upon our record year and I'm excited about what the future holds.
With that you may now open the call for questions.
Thank you.
At this time, we'll be conducting a question and answer session.
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One moment. Please so we poll for questions.
Yeah.
And once again Thats star one.
Thank you.
My first question is from the line of Colton Bean with Tudor Pickering Holt. Please proceed with your questions.
Good morning.
Couple of questions on the volume outlook for 2023 here. So it's included in Oklahoma.
<unk> consistent with the double digit growth I think Devin mentioned yesterday that they are targeting high single digits for the anadarko's be curious are you seeing better growth from other counterparties or is that just a difference in terms of where specifically the drilling activity is taking place.
Hey, good morning, Colton this has been a little bit of both.
Youre right.
We do expect to see double digit gathered volume growth in Oklahoma.
And we did see devins comment last night.
We think that that will help.
Demonstrate to our investors our level of confidence.
They share our confidence in volume growth, but that is not our only customer.
We've had about nine rigs running in Oklahoma year to date.
Which four have been Devin.
The other five had been operated by four different counterparties.
So we expect to see them contribute a bit to volume growth as well.
Great and I guess for the other five just about there.
Any rough breakout between public.
But activity.
Yes, it's mostly private activity.
Others and.
We don't necessarily expect to see nine rigs operating on dedicated acreage throughout the year. We don't we don't need that the bulk of the volume growth does come from the Devon, Dow JV, but the private operators do contribute to a couple of percentage points.
Understood and then just score North, Texas in 2023, and it looks like it's a little bit lighter than the second half of 2022 you once you have that.
The acquisitions in place does that guidance assume that the two rigs running today remain for the entirety of the year.
Yes, so let's do a little take apart the north, Texas number a little bit.
Youre seeing a few things there one is that while we've seen volume stability on the legacy Enlink assets. The acquired assets are still on a slight decline and so youre seeing a little bit of a little bit of decline from from the second half actuals on the acquired assets.
There's also a little bit of price impact in north, Texas, it's very modest compared to compared to some of the other areas, but there is a modest price impact.
And then no we don't don't necessarily expect to see the two rigs that are working on dedicated acreage stay in place I mean, just being realistic given where gas prices are today, if we see a reduction in activity. We would expect to see that first in north, Texas, we haven't seen it yet, but just being realistic with with how we're guiding the market.
We feel like we should allow some room for that.
So it sounds like the North, Texas number does assume a little bit lighter activities on track.
That's correct.
Great. Thank you.
Our next question coming from the line of Christopher Jeffrey with Mizuho. Please proceed with your question.
Hi, everyone. Thanks for taking my question.
Just maybe.
Chip shutting off of what Colin said is there any impact on the double digit growth rate coming from that Oklahoma acquisition kind of how you're thinking about it.
Yes, the double digit growth rate really is on our legacy enlink assets and excludes the impact of the acquisition of course as we as we start reporting.
The impact of the acquisition, you'll see a little bit of contribution from permit.
For reference the acquired assets in Oklahoma have a volume today of about 80000 Mcf a day.
$80 million a day.
Got it thanks.
And then maybe just looking at maintenance Capex seems to be taking a bit of a leap in 'twenty three wondering what is contributing to that.
Inflation bigger footprint or some catch up spending.
And kind of should we expect a similar directional outlook for O&M and G&A spending.
Yes.
In the order that you asked it and in terms of the maintenance Capex for this year.
Youre seeing a little bit of impact from bigger footprints.
More assets.
Given we've had a couple of acquisitions and we've.
Got a couple of plants online, but the main thing is the timing of the maintenance cycle mode.
The increase over last year reflects more compressor overhauls some of which are on turbine compressors in those cost a couple of million dollars.
It's not necessarily indicative of.
Our run rate because that does come in a cycle and in 2023, we happen to have more.
More of those compressors coming to the point of needing major maintenance than we had last year and frankly more than we expect to have next year.
Does flex a little bit with activity. If you don't accrue the hours on the machines, you don't need to do the overhauls and so it'll move around a little bit as volumes move around.
It doesn't really have any read through into <unk>.
O&M.
Or into G&A.
We think the G&A number for this year will be roughly flat to last year and O&M like everyone else, we're seeing a little bit of cost pressure, mainly around consumables, but but that is more than offset by the inflation escalators that we have in the commercial contracts such that in.
<unk> on a net basis is isn't really much of an issue for us.
Okay.
Got it thank you.
The next question is from the line of Michael Cusimano, Pickering Energy Partners. Please proceed with your questions.
Hi, good morning, everyone.
Good morning.
I was hoping to talk about gcs a little bit.
Can you give us a little more detail you know really what went into the discussions to bring it back online and if you could talk about the.
Any contractual arrangements you have there or are you, bringing on just spot frac capacity.
Yeah. So first of all just as a reminder, gcs.
In Mont Belvieu and the capacity of 145000 barrels per day, and we owned 38, 75% of it and our partners are Targa and Phillips 66.
The discussion.
And we idled a couple of years ago, because it needed some major maintenance and at the time, the frac market was pretty soft.
Of the three partners really needed the asset Frac.
Frac portfolios.
What's changed is the Frac market has tightened up as volume has grown.
And all three partners now.
Roll for the Frac in their portfolios and so the discussions around bringing it up we are merely merely to confirm that each of us had any for it.
For the operator to develop a restart budget.
Our share of that restart budget is about $25 million that will contribute this year and we will see the frac come up in the first half of 2024.
In terms of the volume will go into that Frac, we've been handling a portion of the barrels we control through off loads to third parties in Mont Belvieu.
And most of our capacity will be accounted for by allowing those offload arrangements with third parties to expire and redirecting those barrels to gcs the asset that we own.
Got it okay. That's helpful.
And then looking at the Permian volumes for fourth quarter can.
Can you give us an idea with run rate levels might look like today or maybe if you could provide like the throughput impact just trying to get a normalized level for <unk> ex weather and the earthquake impact.
Yeah. So the most important thing to know there is but for the fact that we had.
Weather and we had the earthquake, we would've seen sequential growth in the Permian.
It's a little bit hard to say precisely how much because.
Two events were so significant for the last two or three weeks of <unk>.
December and frankly, even carrying over a little bit into January youll see I think youll see that when we report Q.
In may.
But suffice to say that we would have seen.
Some some sequential volume growth in the Permian absent those events, it's just hard to say exactly how much.
Got it alright, that's all from me I appreciate the help.
The next question is coming from the line of Spiro <unk> with Citi. Please proceed with your questions.
Thanks, operator, good morning team.
Jesse.
Question for you just on.
Tcs I know you've got the Investor day coming up next week.
Don't expect you to get too much ahead of that but just curious since that Exxon deal how commercial momentum has been curious what youre seeing in terms of any gating items to signing similar deals going forward.
Any color there would be appreciated.
Yes, good morning, Spiro and thanks for the question look I think the momentum has continued to strengthen.
Post IRI, you've got both the emitters and numerous questions sequestration players in the market.
Discussions are going ongoing with multiple parties, we do expect to give you an update.
Next week, so I hope, we see you there next week, but the momentum is there. We do expect 2023 is going to be a very active year on the Ccs front in Louisiana.
Great I appreciate the color there I'll definitely stay tuned for next week.
And then just on free cash flow after the distribution and the buyback and thinking about capital allocation.
You guys highlighted two other buckets there of course repurchasing preferred units and then potentially spending on some some more high return projects and so as you prioritize those would you sort of force rank one above the other just any help you can Brian in terms of thinking about where that those dollars get spent.
Really thinking more about is there a backlog of potential projects that you see or is this really truly more opportunistic as things come to market.
Yes, let me start and I'll, let <unk> weigh in more of a philosophical approach, but when you look at the incremental capital spent this year over 2022.
These are these are high return, which we will always prioritize value added high return projects.
These are very strategic projects of the incremental 115 of that.
<unk> growth in the Delaware Basin, a relocation of the plant and then our downstream focus growth DCF is obviously one component of that.
Global is another expansion, we're doing there and then $40 million is what we were spending in 2023 on the Ccs business. So you can see these are high return multi.
Year additions to our portfolio as it will always prioritize high return projects.
With respect to how we allocate the rest of the capital that <unk>, yes.
To build on what Jeff said.
We'd always love to find incremental high return organic projects.
That would be our first priority if we find additional opportunities this year.
Absent that the additional $40 million in free cash flow after distributions after the $200 million comment unit repurchases would be available to do additional common unit repurchases or some other means of capital structure reduction we did in the past quarter redeem $19 million of our preferred.
C units at <unk>.
And we like the risk reward on that but that's going to be opportunistic it's going to happen. When we have a good risk return and a willing seller and not.
I would not describe it as a priority for us.
Understood I appreciate the color thanks for the time guys.
Our next questions come from the line of Jeremy Tonet with Jpmorgan. Please proceed with your questions.
Hey, guys. This is Ross on for Jeremy.
I guess you mentioned the weather impacts in <unk> I was just wondering if you guys could provide any.
Incremental details.
Think about the magnitude of impacts in <unk>.
Yes.
Relatively modest in <unk>. It continued between the weather and the earthquake. It continued for probably the first 10 days or so of January the important thing to know is we've accounted for that in the guidance that we gave you last night. So it's not it's not creating.
A risk to the guidance at all.
Got you that's helpful. There and then switching topics a bit.
Talked about notable hedging.
2023, I was wondering if you could run us through the 2023 EBITDA breakdown between fee based hedge commodity and percent.
<unk> price exposure.
Yeah, our business is about 90% fee based.
That has been the case for a couple of years and really hasn't changed what we did proactively for 2023.
To hedge the majority of Enlink <unk> exposure to natural gas prices.
Both Nymex and <unk> basis.
And we did that at prices in 2022 that are that are significantly higher than what we're seeing today in the market.
We did that because we're not surprised at where the gas market is today.
We got we got here a little faster than we expected.
Because of how long the winter has been but we're not at all surprised to see the gas strip for the balance of the year and the $3 range.
And we took the opportunity to get ahead of that a bit. So the result of that is.
Change in gas prices all else equal has very little impact on Enlink for 2023, or 50 change in gas impacts our margins by about $1 million we've.
We've also hedged a significant portion of our NGL and crude exposure not as much as gas and a $5 change in WTS prices equates to about an $11 million change in our gross margin.
Got it that's helpful. If I could just squeeze one quick one in.
The 2023.
Capex run rate something or Capex. Some run rate, we can think of going forward or how should we think about that.
Yes.
A little too early to tell like I said, we outlined.
Kind of the bigger discreet items for you that are onetime in nature, we will continue to evaluate as Ben said.
We will look at the high return projects.
We are seeing a lot more opportunity in Louisiana on the downstream side.
So we'll just have to update you as we go here and we're not the only thing I'd add to that is I think over time, youll see us devote more and more of the capital budget to Ccs opportunities.
Got it thanks for the color guys I'll leave it there.
As a reminder to ask a question today. Please press star one from your telephone keypad.
Our next question is from the line of Samuel <unk> with Seaport Global. Please proceed with your questions.
Yes, hi, good morning, everybody.
Congrats on a good 23 guidance.
Wanted to start off on the balance sheet side of things.
So good to see rating upgrade Fitch was kind of curious you know how do you see description with although.
Although agencies.
And specifically I think.
Some of the agencies are kind of.
And some of them starting to have talked about.
As part of the capital structure.
Was wondering you know if you could talk about your.
Longer term plans on the press.
Yes, happy to do that and I appreciate your highlighting the.
The Fitch upgrade to investment grade mid Triple B minus.
We are one notch below at both Moody's and S&P with a positive outlook at S&P.
Sure.
From our perspective, we've done everything that we need to do.
To be to be rated investment grade.
Ending the year at three four times Levered.
With a lot of liquidity and I think a very positive business outlook that we've outlined for everyone last night and then again on the call today.
So we think we've done our part.
We obviously can't control the timing of any decisions by the other ratings agencies, but we're optimistic.
<unk>.
We will see more than just the upgrade from Fitch over the course of the year.
In terms of the plans on the preferreds.
I would reiterate something I said, a little earlier, we have been opportunistic in chipping away at the preferreds.
When the opportunity has arisen and the price on offer was one that we thought presented a favorable risk reward. So we chipped away at the preferred series B.
Last year, and then we chipped away a little bit of the preferred series C. In the fourth quarter of 'twenty. Two is well again at prices that we thought at prices that we thought made sense, we're going to be opportunistic on those we don't don't have.
Don't don't consider it to be a priority to eliminate those preferreds today.
Okay got it and then.
One question with regard to your contract structures.
I think somewhat.
<unk> midstream plans, especially in the Permian has talked about.
Contracts for.
So much be oil with fee based flows so.
So when you mentioned the 90% fee based contracts do you include such like contracts.
In that in that fee based and then kind of a follow up on that how does if you have those.
Of contracts how does those you know the.
Our fee based gross kind of compare to the current commodity prices are.
Yes.
Our contracts generally are either fee based fixed fee.
Or are there.
Contracts that have both a PLP component and a fee components, so not necessarily a floor, but a fixed number of cents per <unk>, our mcf plus.
<unk> component.
Does that does that help that.
So theres not really a comparison to current commodity price. There's just both a fee element <unk> element and we include the fee element of the contract when we talk about the percentage of the business is fee based.
Understood Thanks for that clarity.
Thank you at this time, we've reached into the question and answer session and I will turn the call over to Jessie Arena Ross for closing remarks.
Thank you Rob for facilitating the call. This morning, and thank everyone for being on the call today and for your continued support.
As always we appreciate your continued interest and investment in Italy, We look forward to seeing most of you in Dallas next week, when we host our first Investor day on February 23.
Meantime, we wish you well stay healthy and have great day.
This will conclude today's conference. Thank you for your participation you may now disconnect. Your lines at this time and have a wonderful day.