Q1 2023 ONEOK Inc Earnings Call

Good day and welcome to the one Oak first quarter 2023 earnings conference call and webcast all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.

Please note this event is being recorded.

I would now like to turn the conference over to Andrew is Iola V V. P of Investor Relations. Please go ahead.

Thank you Chad and welcome to <unk> first quarter 2023 earnings call, we issued our earnings release and presentation. After the markets closed yesterday and those materials are on our website.

After our prepared remarks management will be available to take your questions Steve.

Statements made during this call that might include one oak's expectations or predictions should be considered forward looking statements and are covered by the safe Harbor provision of the securities acts of 1933 of $19 34.

Actual results could differ materially from those projected in forward looking statements for a discussion of factors that could cause actual results to differ please refer to our SEC filings.

As a reminder for Q&A, we ask that you limit yourself to one question and one quick follow up in order to fit in as many of you as we can.

With that I'll turn the call over to Pierce Norton, President and Chief Executive Officer. Thanks, Dan. Thanks, Andrew Good morning, everyone and thank you for joining us on today's call as well costs, our Chief Financial Officer, and Executive Vice President Investor Relations, and corporate development, and Kevin Burdick, Executive Vice President and Chief.

<unk> commercial officer also available to answer your questions are Sheridan swords, senior Vice President natural gas liquids, and natural gas gathering and processing and Chuck Kelley Senior Vice President natural gas pipelines.

Yesterday, we announced first quarter 2023 earnings and affirmed our full year 2023 financial guidance.

Strong first quarter results were supported by continued earnings growth in each of our businesses with higher natural gas processed and natural gas liquids volumes, providing a solid start to the year.

Producer activity continues to drive new volume to our assets in recent conversations with customers point to additional activity through the remainder of the year.

Crude prices well above breakeven economics in the basins, where we operate and continued strong demand for U S energy support a constructive outlook for 2023.

We provide midstream services to some of the largest most well capitalized producers in the U S, helping contribute to our history of earnings stability and growth despite commodity prices.

We continue to evaluate infrastructure and the needs of these customers. So that we can provide added capacity our services align with their growth.

Successful completion of our <unk> like three natural gas processing plant and MB five fractionator projects provide additional system capacity and resiliency and are examples of our continued focus on organic growth aligned with our customers' needs.

We remain financially well positioned with significant balance sheet strength and flexibility to support continued growth.

Our capital allocation priorities remain consistent with one oak's unique ability to identify and execute on high return organic growth opportunities setting us apart with that I'll turn the call over to Walt for a discussion of our financial performance.

Thank you Pearce.

Resulting in a net increase in operating income and adjusted EBITDA of $733 million.

This reflects the insurance settlement gain of $779 million offset partially by $46 million of third party fractionation costs incurred during the first quarter.

We expect third party fraction nation costs to remain around this level with the potential to decrease through the remainder of the year.

Our MB five fractionator ramps up.

Excluding the Medford impact net income increased 24% year over year, and adjusted EBITDA increased 14% over the same period.

Benefiting from increased NGL, and natural gas processed volumes higher average fee rates and higher natural gas storage rates.

We ended the first quarter with a higher inventory of Untracked Urinated Ngls primary primarily due to the timing of the MB five fractionator being placed in service.

And expect to recognize approximately $12 million over the second and third quarters as that inventory is fractionated unsold.

In April Moody's upgraded <unk> credit rating to be double eight two from <unk> III, recognizing our significant deleveraging conservative financial policy.

Assistant strong operating and financial governance.

Our net debt to EBITDA remains below our long term target of three five times, and we had $680 million of cash and equivalents as of March 31.

Our cash balance is primarily made up of highly liquid government and treasury money market funds and deposit fully insured by the FDIC.

We've reduced our total debt net debt by more than $1 billion compared with the first quarter of 2022.

In February 2020, we redeemed $425 million of 5% notes due September 2023, and we recently announced a June redemption of $500 million of seven 5% notes due September 2023, both with cash on hand.

As Pierce mentioned, we affirmed our financial guidance expectations in Yesterdays earnings release with.

With our strong first quarter performance and positive outlook for the remainder of the year.

Our confidence remains high and achieving our financial guidance I'll now turn the call over to Kevin for a commercial update.

Well, let's start with our natural gas liquids segment first quarter 2023, NGL volumes increased both year over year.

And compared with the fourth quarter 2022, with higher producer activity levels driving increased C, three plus or propane plus volumes on our system.

Permian Basin volumes saw the largest increase up 17% compared with the first quarter 2022, and 14% compared with the fourth quarter 2022.

We continue to have success contracting additional volumes in the basin and connected one new third party natural gas processing plant during the first quarter.

Permian producer activity remains strong and we continue to consider incremental expansions on our west, Texas NGL system to accommodate increasing volumes.

Volumes in the Rocky Mountain region increased during the first quarter compared with the same period last year and decreased slightly compared with the fourth quarter 2022. The decrease was driven entirely by reduced ethane recovery as our propane plus volumes increased sequentially.

We expect volumes to continue to grow in the spring and summer months.

In the mid continent region, consistent producer activity in the stack and Scoop continues to drive NGL volumes on our system.

Raw feed throughput volumes increased compared with the fourth quarter 2022, driven primarily by higher ethane recovery.

Regarding the macro ethane environment, we expect domestic petrochemical utilization rates to continue to improve as we move through 2023.

With lower sustained natural gas pricing and lower ethane inventory levels, driving improved ethane economics and volumes across our system.

Through the remainder of the year, we continue to expect that the Permian basin will stay at high levels of ethane recovery. The mid continent will be and partial recovery and that we will have opportunities for incentivized recovery in the Rocky Mountain region.

In April we completed our 125000 barrel per day MB five fractionator in Mont Belvieu.

With MB five now fully operational our system wide fractionation capacity is nearly 900000 barrels per day.

Added capacity will be used to accommodate volume growth and reduced third party fractionation needs.

We remain on track to complete our MB six fractionator in the first quarter 2025.

And the natural gas gathering and processing segment first quarter processed volumes averaged more than 2.1 billion cubic feet per day, an 11% increase compared with the first quarter 2022.

In the Rocky Mountain region processed volumes averaged nearly 1.4 billion cubic feet per day during the first quarter and have recently reached more than 1.5 Bcf per day.

We connected nearly 150 wells in the region during the quarter compared with approximately 90 connections in the first quarter 2022 more than 60% increase.

Well connections in the region are currently on pace to exceed our guidance midpoint of 500 for the year.

There are currently approximately 40 rigs and 23 completion crews operating in the basin with 20 rigs and approximately half of the completion crews on our dedicated acreage.

We continue to expect additional rigs entering the region as we exit winter.

In the mid continent region first quarter processed volumes averaged more than 750 million cubic feet per day, a 27% increase year over year, we connected 11 wells in the region during the first quarter compared with six in the first quarter 2022 and.

We're on track to be within our guidance of 45 to 55 connections.

There are currently more than 50 rigs and 11 completion crews operating in the region with 10 rigs on our dedicated acreage.

Despite weakness in natural gas prices, we continue to see strong activity in the higher crude and NGL rich producing areas of the region, where producers are focusing their drilling.

In the natural gas pipeline segment strong first quarter results continue to benefit from firm transportation services and the demand for natural gas storage. We are on track to complete an expansion of our natural gas storage capabilities in Oklahoma in the second quarter, allowing us.

To utilize and subscribe and additional 4 billion cubic feet of our existing storage capacity.

We have subscribed 100% of this incremental capacity through 2027 and 90% through 2029.

We continue to evaluate the <unk> connector pipeline.

Potential intrastate pipeline project that would provide natural gas transportation to the U S and Mexico border for ultimate delivery to an export facility on the West coast of Mexico.

There continue to be positive developments related to the potential LNG export project and we still expect to make a final investment decision on the one O pipeline in mid 2023 Pierce that concludes my remarks.

Thank you Walt and Kevin.

You both have highlighted.

<unk> is well positioned for another year of strong financial and operational performance. We continue to execute on high return organic growth projects and remain intentional and disciplined and looking for additional opportunities to add value for our business and our stakeholders.

<unk> for our products and services remains robust and we're continually looking for opportunities to enhance the vital services, we provide for our customers.

Our employees take pride in our position as a leading midstream operator, maintaining our focus on operational reliability safety and environmental responsibility.

As part of our core values, a focus on safety and environmental performance is at the core of our business and we're proud of the cultures. We built around these key areas 2023 is not only a year of continued financial progress, but also a year to continue our commitment to responsible operations emissions.

<unk> projects and our continued pursuit of a zero incident culture.

With that operator, we're now ready for questions. Thank you.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're using a speakerphone. Please pick up your handset before pressing the keys if at anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two.

We ask that you please limit yourself to one question and one follow up if you have additional questions you may reenter the question queue.

At this time, we will pause momentarily to assemble our roster.

Yeah.

And the first question will be from Brian Reynolds from UBS. Please go ahead.

Hi, good morning, everyone maybe.

Maybe to start off on the third party frac fees. The original guidance stipulates roughly a quarter billion in costs for all of 'twenty, three but <unk> trended better than expected and now with N. B five up and running you know kind of curious if you can give us an updated view on how we should see third party frac fees trending and going forward and into next year. Thanks.

Well, Brian as we said in the remarks, we expect that $46 million level to be viewed as kind of a run rate going forward with the potential for us to do better as we bring up MB five throughout the balance of the year.

Great Thanks, and as a follow up maybe just touch on the Bakken activity levels are off to a strong start this year with weather helping out in <unk>.

Given you know one oak is completed roughly a third of its Rockies well connects and <unk> was wondering if we should expect a slowdown in activity from producers or if we continue to see you know similar activities going on similar activity going forward. Thanks.

Yeah, Brian It's Kevin I think we see similar activity levels, if not a little bit stronger that we did is if you remember in the fourth quarter.

We're a little light on our connections and said that just timing it slipped some of those into the first quarter. So that was part but there the activity levels with 20 to 20 plus rigs on our acreage in and that looking to be consistent if not growing moving forward.

I don't see the activity level slowing down and that's why we think right now we're with those tailwind is looking that we'd be.

Ahead of our midpoint of the guidance for the well connects.

Great I appreciate it I'll leave it there thanks.

And the next question will be from Jeremy Tonet from J P. Morgan. Please go ahead.

Hi, good morning.

Morning, Jamie.

Just wanted to dial into the Bakken a little bit more if I could that's helpful. With the one five Bcf per day, a volume number that you provided there, but just wondering on the NGL side itself.

We saw the Bakken NGL ticked down a little bit quarter over quarter, but the rates went up a little bit quarter over quarter. Just wondering I guess, where you see that now how you think about volume NGL volumes trending and kind of like the ethane extraction economics at this point.

So Jeremy this is Sheridan and what I would tell you is that the as we said in the remarks a decrease in volume.

Quarter over quarter was due to less ethane that we incentivized in the first quarter versus the fourth quarter and actually our C. III plus volume on the NGL system was up quarter over quarter. So we still see good growth.

Good trajectory of growth going through 2023, and with the low gas prices right now and we think that ethane as really the preferred feedstock in the petrochemicals, we will have plenty of opportunity to incentivize ethane out of the Bakken going forward as well.

Got it that's helpful. Thanks and.

Just wanted to kind of pivot with the insurance proceeds obviously a lot of capacity on the balance sheet and thinking about where that could be deployed going forward between growth or buybacks or what have you and just any updated thoughts I guess as far as incremental west, Texas LPG looping our other extensions of the value chain such as the LPG export facility.

In the Houston ship channel.

Well I'll start out with the first part of it and kick it over to the other guys for the West Texas part of it.

[noise], Jeremy you're absolutely right our balance sheet is in a stellar shape at this point.

And it does give us a quite a bit of flexibility.

Our priorities haven't changed at all our first priority is to find very high return projects that we can grow our business or debt reduction as a kind of achieved the goals that we were looking for and that Oh.

It does create our flexibility for further dividend increases.

Potentially even stock buybacks over time, but that is our list of priorities and as I said.

High return growth projects that they are at the top of the list and that's a good segue into West Texas LPG.

Yeah, Jeremy it's Kevin.

As we think about it like we said in the remarks with the Permian volumes have been strong for US we've seen nice growth there. So clearly we're continuing to evaluate.

And we will stay ahead of any capacity needs, we had by through our looping of of West, Texas LPG. So I will stay on top of that and won't get caught short capacity.

Got it that's helpful. Thank you.

And the next question will be from Michael Bluhm from Wells Fargo. Please go ahead.

Thanks, and good morning, everyone.

I wanted to ask on the <unk> pipeline project around contracting.

What percent of the pipeline do you need to be contracted to move forward and what sort of an average length of contract that youre looking for.

Well, Michael it's Kevin as we think about swore we'll look at that project from an integrated perspective, I mean, you've got the contracts with the LNG facility the potential pipeline in Mexico, and then our potential pipeline.

So all of those are related at the end of the day the off takers of the ones that will be.

I'm looking for the transportation out of out of wall. So that's.

That's the way, we're thinking about that not ready to talk about any contract terms or or you know rates or anything like that yet.

Still early in the process, but we are taking the steps forward and continue to move it forward to hopefully will be in a position to announce something mid year.

Okay, great. So just maybe a follow up on that since midyear is fast approaching here.

If you do go forward with a project where that.

Would that result in some increase in 2023 Capex and then just generally when would the capex for the project.

Well that will all depend on when.

We would announce something but again not not ready to talk about any specific capital that might hit because we're still unsure of when it might be F. I D.

Alright, thank you.

And our next question is from Tristan Richardson from Scotiabank. Please go ahead.

Hey, good morning, guys.

Kevin I appreciate your comments on the Permian.

Obviously, you've got production growth there as well as adding a new plant third party plant, but you also talked about contracting additional volumes can you kind of talk about that environment. Whether these are medium long term deals.

Just kind of what that environment looks like and how that may have contributed to the first quarter.

Well I think a lot of the volumes that we've seen on our system are are growing volumes on contracts that may have been put in place several years ago.

Back back win even pre Covid.

But we also have seen opportunities to go contract new volumes and Sheridan you want to talk about some of the things we've seen there.

Obviously volume is growing well in the Permian basin and this we have a lot of relationship with producers out there and processors that we have been able to get our fair share if not a little bit more of the volume that's come up. So we've had good luck contracting new volume a lot of that is coming through existing plants on our system or the potential for new plants as we.

Look into the fourth but we think we're had that can have a compelling story out there to be highly competitive in a very competitive area and we are seeing some success.

I appreciate it sure it and then maybe just the obligatory high LOE question.

Obviously strong results in the first quarter, just thinking about the full year outlook.

Some of the conditions necessary to hit the high end versus what.

What might need to happen to see the low end occur.

So Tristan this is pierce.

I think you all picked up on the fact that.

We're coming out of the first quarter with some really really strong tailwind.

Net.

That actually is a very positive move for us a lot of times.

During the first quarter were trying to explain kind of the different trajectories that we have but we really really like.

Their trajectory that we're on now.

And we've affirmed our guidance range and.

Stay tuned for the quarters to come.

I appreciate it thank you guys.

Yeah.

And the next question is from Theresa Chen from Barclays. Please go ahead.

Alright, Thank you for taking my questions and what the G&P segment can you talk about the escalation and that I think kind of just wholly steps up in the second quarter and now that we're a month and change how.

How that's trending now.

How that gets to your guidance within the range.

I'm curious, it's Kevin on the on the fee rate again, that's going to move around on a couple of factors. One is just various contract mix as new volume comes on the system.

Every quarter and then the others is the contract escalators.

That that kick in so we've said historically that it previously that in G&P segment.

That's typically occurs in the spring so youre just seeing just the minor moves like that or just contract mix moving around from quarter to quarter.

Okay, and then in terms of the third party Frac fleets. So understand that you have downside from the 26 million per quarter. As you can utilize some of the space on 95, but as some of your competitors are also bringing on additional frac capacity second half of this year and into next year would you expect that to.

Spot. He will also we can to some extent Phil is there further downside even in addition to being able to use <unk>.

I think that has the potential as we look out into 2020 for a lot of what we did in 2023, we have contracted it at a certain rate.

But as we get into 2024 or for some reason, we would need a little bit more in 2003, we've definitely seen spot frac rates are a lot lower than they were.

Six months ago, and that will we predict that will continue into 2024. So we could see some additional downside or upside as it would be for us on lower third party practice.

Thank you.

The next question is from Spiro Donuts from Citi. Please go ahead.

Thank you operator, good morning, guys.

First question actually went from about Elk Creek.

Curious just talking about keeping pace with customer needs.

This question is probably a bit on the early side, but just given the well connect outlook.

Recovery <unk>, increasing over the next year or so when does it sort of time to start thinking about now for expansion.

Are you guys thinking about some of the capital Nathan timing that will go into that.

Yes.

I'll kind of give a high level thing throw it to Kevin here, but.

I can tell you that we've said before that we're not going to get short caught short on capacity. So as your question of when does it start time to thinking about it we're thinking about it so I'll, let Kevin kind of fill in the blanks. There yeah. We are with the strength, we've seen recently and even going back to last year.

With the activity levels in the produce are the rigs that were there.

But particularly now as we move into Q1 and seen what we have seen from the producers were definitely taking steps that go already taking steps necessary to ensure that we've got the capacity when we need it.

Great that's helpful color.

Second question kind of outside of the quarter as well, but over the last two years or so even for that sort of thing you lean more on some of our utility like businesses storage expansions now the potential swore O pipeline and more take or pay style.

Is that sort of kind of a larger plan to introduce even more earnings stability into the platform and how should we think about maybe other avenues, where you can continue to grow there.

Well the short answer to that is yes.

This is pierce.

But those things are really driven by customer demands as well but.

But we definitely are looking for those opportunities that's part of the intentionality.

The diversification.

Into those more stable earnings type of areas.

In the in our footprint. So the short answer is yes.

Understood appreciate the color guys. Thank you.

Yeah.

And the next question will be from Jean Ann Salisbury from Bernstein. Please go ahead.

Good morning, I, just have one and another one on the figure a connector at.

Yes, my understanding is that inside Mexico pipelines have I don't want any sort of a disaster that have generally been very very hard to lead in not successful.

I just wanted to ask and how do your investors get confidence that if you build another pipeline to the to the border that the rest of it will be on time.

Okay.

Yeah.

Jean Ann This is Kevin I think the way I would answer that is I mean, obviously, we as we come to a decision to F D or not that will be where we're factoring in.

What's going on with the full aspect of the pipeline.

And I think it's safe to say you know this will be.

Do the things we need to do from our contractual position to to mitigate that risk as much as we possibly can.

Okay that makes sense. Thank you for taking my question.

And thank you. The next question is from Neal Dingmann from Truest. Please go ahead.

Good morning, all thanks for the time My first question is just on the contract structure I'm just wondering.

You know maybe in and the type of volatile commodity tape. We're in now could you remind me I don't think it's changed much but I just want to make sure I've got this what percent of this year's earnings you expect to be fee based and I'm. Just wondering do you all have availability I don't know what any of these contracts to potentially walk them up the remainder of the year.

Just overall, we said were 90% fee based.

And 10% commodity exposed and then you think about the GNP business with our pop contracts, where some of the direct commodity exposure occurs we're well hedged in.

In 2023.

So that even reduces that commodity exposure further so really it's when you just look at it on an earnings perspective, it's a small percentage that that that.

We have direct commodity exposure.

Perfect, Okay, and then my.

Second just on the Rocky mountain that cast E&P.

Have a nice step up last quarter on the total debt I'm. Just wondering if you remind me how should we think about the expected cadence for the remainder of the year I see that.

Forget what slide I'm looking at here, but obviously the guide you've got for the year still.

We are now already at the low side, but you have got pretty pretty good range.

It was a pretty good step ups, we should think about.

You're talking about the gathering and processing volumes.

Correct, correct with Rocky Mountain region, yes, okay.

Yeah, we are.

The first quarter you were at the low end and and if you go to the we referenced we had breached here.

Recently, one five Bcf so.

We definitely think theres some theres ramp.

And that's one of the <unk> Pierce mentioned is where we sit today.

From a Bakken or.

Our Rockies volume perspective, we're in really good shape.

Great to hear thank you all.

Yeah.

And the next question is from Neel Mitra from Bank of America. Please go ahead.

Hi, Good morning, Thanks for taking my question has been answered.

So I wanted to go a little bit beyond the quarter and with the Mad for proceeds and what seems to be a strong 23 it seems like.

Your leverage levels are trending well below kind of the three five times target.

So when you when you think about that a little bit longer term b plant.

Ah stay lower like some of your peers or.

Are you thinking more about dividend increases repurchases are possible acquisitions.

And just in terms of how you plan to think about the mix.

Sure Neal this is walt.

Well, if you back out the gain from the Medford.

<unk>.

Worried at three right around three four times. So, yes, we're 335, but we're not meaningfully.

Below it at this point, we are not concerned of that trends lower.

If we don't have investment opportunities that are like it probably would would trend lower in the short term.

We continue to look at attractive opportunities.

<unk> spoken a little bit about the.

The increases we're seeing in the various basins and some of the expansion plans that we might need to do on some of the pipes and the like so.

Those are very very high return types of project from that's where we'd like to be first.

And then we have flexibility for other capital return.

Now that were done to achieve these goals.

Got it.

And then.

Question I know you've seen a lot of stickiness in terms of the rigs on your activity.

But now that we've.

We've seen crude fall below $70 twice this year.

Do you see the the producer activity given that a lot of publics have budgeted around $70. If we stay in this environment.

Over.

Intermediate to longer term.

Well Neil this is Kevin.

I haven't had a lot of time to talk to our customers over the last couple of days, but what I would say youre right. The rigs have been very sticky I like that word.

As we as prices if you rewind rigs really started coming back to the Bakken in earnest as prices.

Prices move through $50 $55. That's when we started seeing the stickiness now when it ran up to 110.

Rigs didnt necessarily follow but then as the prices came back down they didn't go away either so and we still there still feel very good it's not a matter of that's still well above breakeven as producers are still generating a tremendous amount of cash flow even at the prices we're seeing on the tape.

Now so so that would give me a lot of confidence that we're going to continue to see that stickiness, even in this type of environment.

And the only thing I'd add to that this is peers I get the opportunity to go around.

And meet with these hands of.

Many of these.

Exploration and production companies and they.

They take a really long term view so it's not just what is the price today, yes. The price has fallen off improved last couple of days.

They're taking a long term view of what do they think crude is going to do over time.

Because until they get the rigs.

Rail out there drill wells producing.

You don't have the opportunity to capture whatever price it is out there so.

They really take a long term view and it seems to be a very wide path that they look at as far as a range of prices.

They don't really get emotional and go either up or down they stay very steady.

Okay, Great I appreciate the color.

And the next question will come from Sue Mall Sip ball from Seaport Global Securities. Please go ahead.

Yes, hi, good morning, everybody and thanks for the clarity on the call. So I wanted to start off on Bakken.

I think there has been some chatter in the E&P community about.

Well productivity. So I was curious if you could talk about.

In the past you've talked about close to 400 wells per year to maintain.

You guys are gas volumes skewed isn't it that number has changed in your view based on your thoughts on the recent results and also it seems like you know gas to oil ratio have country down recently.

This is Kevin there was a couple of questions in there one is on well productivity and we really have not seen a degradation at all in the well productivity. We've there has been.

A little bit of movement with the strong prices.

To two different areas of the play.

So we've seen some changes a little bit and potentially the gas to oil ratio, but nothing nothing that would cause us concern to think that wells are getting less productive.

Anything.

<unk> drilling in the same area as the technology continues to improve.

And we've seen strong results. So we don't have any concerns at this point on on what's going on with well productivity or the G O r's.

Okay.

And then my follow up was on the <unk>.

Actual gas pipeline segment seems like a pretty strong Q1.

You know any money.

The remainder of the year turns out to be a similar to last year I think you would exceed that guidance.

Just curious if there are any one time items in Q1, which helped the gas pipeline.

Sunil This is Chuck no Q1 was a solid quarter for us in all regards our storage revenues were higher obviously we.

We had some gas sales that we're able to to pick up in the quarter like we typically do.

First quarter. So there wasn't a single outlier that generated that performance so balance of the year, we expect to be at or above our midpoint and are looking forward to see what opportunities come about this summer.

Got it thanks for that.

Thank you and the next question will be from Colton Bean from Tudor Pickering and Holt. Please go ahead.

Just a quick follow up on <unk>. It looks like the proposed 48 inch diameter would offer a plenty of capacity over and above the proposed LNG export send out.

Can you speak to how you scope that project and what opportunities you might be tracking downstream apart from LNG.

Colton this Kevin.

Well, we're just lining up again with the what's going on with the possible export facility.

So as we just back up from there and what they are talking about.

Building in Mexico.

What we would need to build for the border crossing.

That's what we're looking at right now, but not ready to talk about any other opportunities or or so forth, but there's you know there's there's.

Potential plans for the LNG facility for additional trains and so we scope the pipe kind of what in what they were looking for.

Understood. Thank you.

And the next question is from Craig Shere from Tuohy Brothers. Please go ahead.

Good morning.

Just a couple quick ones.

So.

The Permian NGL unit rates.

Rates.

We're showing that about six cents versus over six cents in the fourth quarter wondering if there's any detail or trending there and could.

Could you remind us are roughly on the increments that you can increase Oh Creek with additional pumping and what kind of capex.

Incrementally wrong.

Craig I'll take the first I'll take the last one and then let Sheridan talk about the fee rates on the Elk Creek expansion as Peter alluded to.

Yes, we're it's it's adding pumps up and down the pipe. So that's that would be the scope of the project, we havent talked to any specifics on on what that would cost.

And but again, we're not going to get caught short of capacity and we are already taken the steps.

Necessary to to hopefully bring that forward.

Craig This is sheridan on here.

I'm, sorry, I'm, sorry could you quickly just.

Elaborated.

How quickly or soon that can be done it's pretty efficient stock right. So.

Can you do it well under a year or once the decisions made or how quickly can you roll that out.

That again, we're still working through that that's the steps, we're taking us understand exactly what that would be.

Working with power companies working with pump providers and things like that so those are the step the types of steps, we're taking to ultimately come up with with with how long it might take but but yeah. It's not like building a brand new pipeline start to finish.

Alright, here's the owner.

The thing I'd add to that is.

The thing to remember on that as it relates to capital is.

These are very high return projects.

So.

Whatever the number is.

One we announced today that we're going to do this.

Just be assured that it.

A very high return project.

Understood.

And those Permian NGL unit rates.

Yeah, Craig This is Sheridan I mean, we always see a little bit of.

Escalation or changing up and down in our fee rates. It all depends on where the volumes come in from and one of the biggest thing that drives that is if we're getting a little bit more volume from a transport only contract versus a TNF contract or is that mix is a little bit it's going to play with with that rate just slightly in your <unk>.

And just a little bit of a slight change I mean, it's just noise. It it's really immaterial, it's just kind of contract mix.

Got it so so no trend going on there just just bouncing around.

No trends, there's no trends going on.

Thanks.

Yeah.

And ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Andrew <unk> for any closing remarks.

Well. Thank you all for joining us today, our quiet period for the second quarter starts when we close our books in July and extends until we release earnings in early August we'll provide details for that conference call. At a later date. Thank you all and have a good day.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

Okay.

[music].

Yeah.

Yeah.

Yes.