Q1 2023 Energy Transfer LP Earnings Call
Speaker 1: The.
Speaker 2: Hello and welcome to the Energy Transfer Q1 2023 earnings conference call. All participants will be in the Sonolimode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker 2: After today's presentation there will be an opportunity to ask questions.
Speaker 2: To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded.
Speaker 2: And now I'd like to turn the conference over to your host today, Tom Long. Sir, please go ahead.
Speaker 3: Thank you, operator. Good afternoon, everyone, and welcome to the Energy Transfer First Quarter 2023 earnings call. I'm also joined today by Mackie McCree and other members of the senior management team who are here to help answer your questions after I've prepared remarks.
Speaker 3: Hopefully you saw the press release we issued earlier this afternoon, as well as the slides posted to our website. As a reminder, we will be making forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934. These statements are based upon our current beliefs.
Speaker 3: as well as certain assumptions and information currently available to us and are discussed in more detail in our Form 10Q for the quarter ended March 31, 2023, which we expect to file this Thursday, May 4. I'll also refer to adjusted EBITDA and distributed cash flow for any key
Speaker 3: or DCF, both of which are non-GAAP financial measures. You'll find a reconciliation of our non-GAAP measures on our website. I'd like to start today by going over our financial results. We were pleased with our results for the first quarter of 2023.
Speaker 3: during which we generated adjusted EBITDA of $3.43 billion, which was up from $3.34 billion for the first quarter of 2022. Results for the first quarter benefited from record volumes across our interstate and midstream segments, as well as through our NGL pipelines and NGL and refined products terminals.
Speaker 3: $2.01 billion compared to $2.08 billion for the first quarter of 2022. This resulted in excess cash flow after distributions of $1.04 billion. On an incurred basis, we had excess DCF of $640 million after distributions of $967 million.
Speaker 3: and growth capital of $407 million. On April 26, we announced a quarterly cash distribution of 30 and three-quarter cents per common unit, or $1.23 on an annualized basis. This distribution represents an increase in the number of people who are in the business of the industry. The distribution of the annualized basis
Speaker 3: from 30 and a half cents per common unit paid for the fourth quarter of 2022. Although we cannot guarantee future performance, we expect to make ongoing quarterly increases to our common unit distribution of a quarter of a cent on a quarterly basis or one penny on an annualized basis.
Speaker 3: and we are now targeting 3 to 5% annual distribution growth rate. This targeted growth rate allows us to provide some clarity to our equity holders on future distributions.
Speaker 3: We continue to balance our leverage reduction and increasing equity returns.
Speaker 3: all while maintaining sufficient cash flow to invest in our incredible backlog of growth opportunities.
Speaker 3: Inclusive of the targeted distribution growth rate, we still expect to be at the lower end of our four to four and a half times leverage ratio target range going forward based on our calculation of the rating agency's leverage ratios. As of March 31, 2023, we are now at the lower end of our four to four to four range range.
Speaker 3: the total available liquidity under a revolving credit facility was approximately $3.01 billion. Now turning to results by segment for the first quarter, I'll start with NGL and refined products. Adjusted DBADA was $939 million compared to $700 million for the same period last year.
Speaker 3: $50 million from the recognition of gains on hedged NGL inventory, which is primarily related to the physical loss recorded in the third quarter of last year. NGL transportation volumes on our wholly owned and joint venture pipelines increased 13% to a record 2 million barrels per day.
Speaker 3: compared to 1.8 million barrels per day for the same period last year. This increase was primarily due to higher volumes from the Permian Region and on Mariner East Pipeline System.
Speaker 3: as well as on our NGO pipelines that deliver into our needle and terminal.
Speaker 3: Average fractionated volumes increased 18% to an average 949,000 barrels per day compared to 804,000 barrels per day for the first quarter of 2022.
Speaker 3: NGL export volumes grew more than 20% over the first quarter of 2022, driven by record ethane and LPG exports out of our needle and terminal, as well as record ethane exports out of the Marcus Hook terminal. This was primarily driven by the second tranche of satellites contract.
Speaker 3: going into effect on July 1st, as well as increased international demand for natural gas liquids.
Speaker 3: In the first quarter, we loaded more than 14 million barrels of ethane out of Needleman. In total, we continue to export more NGL than any other company or country, with our percentage of worldwide NGL exports remaining at approximately 20% of the global market.
Speaker 3: For midstream, adjust EBITDAV was $641 million compared to $807 million for the first quarter of 2022. This was primarily due to the lower natural gas and NGO prices, as well as increased operating expenses, which were partially offset by increased throughput.
Speaker 3: in all of our operating regions. In addition, the first quarter of 2023 included a one-time positive adjustment of approximately $40 million. Gathered gas volumes increased 14% to a record 19.8 million MMBTUs per day compared to 17.3 million MMBTUs per day.
Speaker 3: for the same period last year.
Speaker 3: For the Crude Old segment, adjusted EBITDAF was $526 million compared to $593 million for the same period last year. This was primarily due to lower volumes on the Boccan pipeline and lower optimization gains compared to the first quarter of 2022.
Speaker 3: The reduction in optimization was entirely a triple to the timing differences between physical and financial settlements.
Speaker 3: We expect to recognize a $25 million gain in the second quarter related to this activity.
Speaker 3: In addition, the first quarter of 2023 included a one-time negative adjustment of approximately $35 million.
Speaker 3: These were partially offset by higher throughput on several of our pipeline systems and higher export demand. Crude-Oltransportation volumes were 4.24 million barrels per day compared to 4.22 million barrels per day for the same period last year. This was a result of higher volumes on our Texas pipeline systems.
Speaker 3: and the Bayou Bridge pipeline, as well as placing the Ted Collins Link pipeline into service in the second quarter of 2022, which were offset by lower volumes on the Balkan pipeline as a result of weather-related production impacts.
Speaker 3: In the interstate segment, a Justi Badaw was $536 million compared to $453 million for the first quarter of 2022. This was due to increased transportation revenue related to higher contract volumes and rates on several of our wholly owned and joint venture pipelines. As of 1219 and a few are depicts of $P.992, 330.? bucks eachmerce government works
Speaker 3: as well as placing the Gulf Run Pipeline into service in December of 2022. Volumes increased 11% of the same period last year due to the Gulf Run Pipeline being placed into service, as well as higher utilization on many of our interstate pipelines, including transwestern, Pebble, Procline, MEP,
Speaker 3: and SESH. And for our intrastate segment, adjusted EBITDA was $409 million compared to $444 million in the first quarter of last year.
Speaker 3: This was due to lower pipeline optimization opportunities and decreased retained fuel revenues related to lower natural gas prices.
Speaker 3: which were partially offset by increased storage optimization opportunities and higher fees on assets in the Haynesville and Oklahoma.
Speaker 3: Utilization on our EOIK, HPL, and rigged systems increased due to higher demand from gas take away from growing production in a number of our operating basins.
Speaker 3: Looking briefly at recent developments, we are excited about the closing of our acquisition of Lotus midstream for approximately $900 million in cash and $44.5 million energy transfer common units.
Speaker 3: Lotus owns and operates Centurion Pipeline, a fully integrated crew pipeline terminal system in the Permian Basin.
Speaker 3: This acquisition will enhance energy transfers crude pipeline footprint across the Permian Basin with the addition of approximately 3,000 miles of crude gathering and transportation lines that extend from Southeast to Mexico to Cushing, Oklahoma. In addition, the assets provide direct access to other major hubs.
Speaker 3: including Midland, Colorado City, Wink, and Crane, and will increase our storage capacity at Midland by approximately 2 million barrels per day.
Speaker 3: Now turning to our growth projects, I'll start with an update on our Lake Charles LNG project. In May 2022, we received an extension from FERC of the deadline for completion of the construction of Lake Charles LNG facility to December of 2028 and in June 2022...
Speaker 3: we applied to the Department of Energy. As many are now aware, on April 25, the Department of Energy denied our request for this extension. We strongly disagree with this decision, and we plan to file an appeal with the DOE within 30 days of the DOE decision. Now turning to Nederland and Marcus Hook export terminals.
Speaker 3: FID and expansion to our NGL export capacity at Needlein, which we expect to add up to 250,000 barrels per day of export capacity. This expansion which is projected to cost approximately $1.25 billion will give us tremendous flexibility to load different products.
Speaker 3: as well as new products based upon customer demand and market dynamics at the time. The expansion is expected to be in service in mid 2025. We look forward to providing more specifics on this expansion in the near future.
Speaker 3: We also continue to pursue an optimization project at our Marcus Up terminal that would add incremental ethane refrigeration and storage capacity.
Speaker 3: Next, at Montbell View, Fractionation Throughput averaged over 1 million barrels per day for the month of April , which is a new monthly record. And we continue to expect Frack 8 to be in service in the third quarter of 2023. This edition will bring our total Montbell View Fractionation capacity to approximately 1.
Speaker 3: and growth from existing customer contracts.
Speaker 3: Construction continues on the bear plant, our 820 million cubic foot per day processing plant in the Delaware Basin. This plant remains on schedule to be in service in the second quarter of 2023.
Speaker 3: In addition, we continue to evaluate the necessity and potential timing of adding another processing plant in the Permian Basin.
Speaker 3: Regarding Permian Techaway, we also completed modernization and D-model-nacking work on our ACES pipeline during the first quarter, which added at least an incremental 60,000 MCF per day of Techaway capacity out of the Permian Basin.
Speaker 3: We also placed the Gulf Run pipeline into service in December of 2022. Gulf Run provides natural gas transportation between our upstream pipeline network and from the Haynesville Shell for delivery to the Gulf Coast, connecting some of the most prolific natural gas producing regions in the U.S. with the LNG export market.
Speaker 3: as well as many markets along the Gulf Coast. We were already utilizing a significant portion of Zone 1 capacity on Gulf Run, and we have added additional customer commitments through Zone 2, which is being delivered into our trunkline pipeline.
Speaker 3: In addition to these ongoing projects, we continue to evaluate a number of other potential growth projects that over the long term could provide strong returns and significant upset to our business. We remain optimistic that we can bring these projects to FID and will share any significant updates on these potential projects.
Speaker 3: at the appropriate time. On the alternative energy front, we continue to make progress on our carbon capture and storage project with capture point that is related to our North Louisiana treating plants. A class 6 permit for this sequestration site was filed by capture point with the EPA in June of 2022.
Speaker 3: Also, we recently executed a letter of intent with oxy related to oxy's magnolia hub in Alan Parrish, Louisiana, north of the Lake Charles Industrial Complex.
Speaker 3: pursuant to the letter of intent, energy transfer and oxy are working together to obtain long-term commitments of CO2 from industrial customers in the Lake Charles, Louisiana area.
Speaker 3: If this project reaches FID, Energy Transfer would construct a CO2 pipeline to connect the customers in OCSI's sequestration site in Allen Parish, Louisiana.
Speaker 3: Now looking at our growth capital project for the first quarter-ended March 31, 2023, Energy Transfer spent $407 million on organic growth projects, primarily in the midstream and NGO and refined product segments, excluding SON and USA Compression CapEx.
Speaker 3: For a full year 2023, we now expect growth capital expenditures to be at approximately $2 billion, which will be spent primarily in the midstream, NGL, refined products, and interstate segments. This capital outlook has been updated to include the NGL export expansion project at Needle UN, as well as the expenditures related to the Lotus acquisition.
Speaker 3: A significant amount of our 2023 growth capital spend is comprised of projects that are expected to be online and contributing cash flow before the end of 2023 at very attractive returns, including FRAK-8, the Bayer processing plant, and new treating capacity in the Haynesville. Now for our adjusted EBITDA guidance.
Speaker 3: We are updating our guidance to include EBITDA associated with the Lotus acquisition. As a result, we now expect our 2023 Adjusted EBITDA to be between $13.05 billion and $13.45 billion. As a reminder, with the current Ford curve for commodity prices and spreads,
Speaker 3: Our guidance does not assume the same upside benefits from pricing and spreads that we experienced in 2022. Our base business continues to provide stable cash flows and demonstrates our ability to operate through various market cycles. And we expect utilization in all of our core segments to increase.
Speaker 3: In addition, we continue to create opportunities for optimization and expansion driven by sustained domestic and international demand for our products and services. We remain bullish about the future of our industry and the growing worldwide demand for all of our products.
Speaker 3: As part of our capital allocation strategy, we will continue to look for new ways to address this demand through the pursuit of strategic growth projects that enhance our existing asset base and generate attractive returns.
Speaker 3: In addition, we will continue to place emphasis on strategically allocating cash flow in a manner that balances our targeted 3 to 5% annual distribution growth rate and our commitment to our 4 to 4 and a half times leverage target all while maintaining significant free cash flow for growth.
Speaker 2: This concludes our prepared remarks. Operator, please open the line up for our first question. Yes, thank you. At this time, we will begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker 2: To withdraw your question, please press star then 2. In consideration for the others, please limit yourself to one question and a follow up. If you have additional questions, please re-enter the question queue. At this time, we will pause momentarily to assemble the roster.
Speaker 2: The first question comes from Michael Bloom with Wells Fargo. Hey, good afternoon. Thanks, everyone.
Speaker 4: I'm wondering if you can break down how much of the EBITDA guidance that increase of 150 million is that due to Lotus versus just better performance in the base business?
Speaker 3: Yeah, Michael, this is Tom. The majority of it clearly was the Lotus acquisition, but I will say with strong performance you saw in the first quarter, we were able to bump that up a little bit, but it's the smallest piece of the bump.
Speaker 3: Great to be able to continue to increase it and obviously very excited about the contribution of Lotus as we got that one closed and fairly short over.
Speaker 4: Great, and then just wanted to get a little more insight into the change in the distribution policy. It seems like, you know, last quarter or certainly the last three quarters, you were thinking more once a year, and now you're going to this, you know, quarterly.
Speaker 4: distribution and then can you talk a little bit about what would drive the range from between three to five? Thanks
Speaker 3: We clearly have very good discussions with our directors every quarter and you can hopefully translate from this the strength of our business and
Speaker 3: the ability to be able to continue to grow our distributions. And when we looked at it and
Speaker 3: and I had the discussion on it. We decided that we would just continue to, you know, continue to bump on a quarterly basis. And the three to five percent, when you really kind of look out, you know, forecast, we all wish we had the perfect crystal ball. But we thought that was a good, sustainable target to put in. But keep in mind, we will always continue to evaluate this.
Speaker 3: distribution level on a quarterly basis.
Speaker 3: So, you know, maybe you'll be asking this question again as we get, you know, into the next quarter, but after good dialogue, I will say that it's great to be here and great to be in the position that we can see leverage coming down and all these growth opportunities and funding them at the same time to be able to grow distribution. So it's a great place to be.
Speaker 5: Alright good bye!
Speaker 2: Thank you. And then I ask question from Brian Reynolds with UBS. Hi, good morning everyone. You know, maybe as a follow-up to the guidance question, but maybe a focus on spread opportunities. On the last call, you kind of highlighted four to six hundred million of spread opportunities across the business. But now with the Lotus acquisition, you have a new market with future opportunities in the future. So.
Speaker 2: You know, they're numerous. I think exactly what you're talking about. I guess just focus on the base business with not gas opportunities and then, you know, in relation to a lotus as well, just give a new market opportunities.
Speaker 3: Okay, so around that gas, there is another pipeline being built prior to that. We expect, and it just takes the spreads across Texas to widen significantly. They really haven't yet, even with three ports coming back online. However, look at the growth out there. I think we hit 17.6 BCF, so the growth just continues, and we do expect those spreads to...
Speaker 3: to win, at least over the next year and a half, until the next pipeline project comes online. And then around the crude spreads, you know, overbuilt industry has overbuilt it. It's going to be that way for a little ways, but Lotus is such a great acquisition for us. We, you know, Chris Hapten, his team continues to create.
Speaker 3: deals with the naval and with WECS and then with this project we're so excited we can buy them to kind of multiple work for buying and bringing all those barrels into our system will not help us spread but certainly will help our revenue as we continue to keep our pipeline school across Texas.
Speaker 6: And you know, there's one thing to highlight if you look at the slides that we've posted out there, you'll notice we up the piece of the toe tie on the sensitivity. It used to be zero to two and a half percent related to the spread. We did take that up.
Speaker 6: a little bit to zero to 5%. So we have increased that a little bit. Not material when you compare it to the size of energy transfer, but it still is something that we did take up a little bit. Great, appreciate the incremental color. Maybe to just touch on growth catbacks, it seems
Speaker 2: about future projects could need to land be upsized or how are you thinking about markets so opportunities as well. Thanks.
Speaker 3: Yeah, this is Machigan. Could it be up size, it's being up size, it needs to be up size quicker than we can do it? The global demand for for ethane and propane and butane is incredible. If you look at the PDH facilities that are being built around the world over the next 12 to 18 months and also the growing demand for ethane.
Speaker 3: We are probably one of the most bullish companies in the industry where we think in-geal process and demand will go over the next three to five years or if not longer. So we have the tremendous capability both at New Zealand and at Mark's Food and Expanding Disexpansion that we've talked about today. We're very excited about. We pretty much maxed out what we can do.
Speaker 3: Right now with our facilities, we're living as quick as we can to get these built. They should be in service by the middle of 2025. We've already secured a number of long-term contracts and we have a enormous base load of customers that we're negotiating with.
Speaker 3: and very excited about that. And as we've always advertised, we're the only company that can export both Gulf Coast and also the little overseas. And so ultimately, we also anticipate that we will be expanding at Marcus Hook our ethane capability of...
Speaker 3: exporting more ethane. So we have set this up in such a way that we can source ethane out of Niederland. And once we are able to secure enough ethane in the north east, we can move those customers up to our marks of facility and then reload new customers into Niederland. So we feel very...
Speaker 2: blessed, I guess, for having these assets and our ability to meet the world of man for these growing products. Great, appreciate all the color. I'll leave it there. Enjoy your rest of your afternoon. Thanks.
Speaker 7: Thank you. Next question, Custin G. Nansal is very with Bernstein. Hi. Putting aside the denial of the Lake Charles extension, I just wanted to get an update on the contracting and EPC environment. It sounds extremely competitive out there. Yeah. We...
Speaker 3: We anticipate a question around LNG, so I'm going to make a little broader statement than your question. If you don't mind in that may help on some potential other questions. You know, people ask us, how do we feel? What are our thoughts on what happened 10 days ago? And a lot of the...
Speaker 3: agitizing things that we said I can't say on this call but I can't say things like upset and frustrated and shocked and surprised but at the end of the day it was just wrong It was wrong and it was political and what also was wrong is what happened over in Europe and really in the US and That really came to fruition here this past year when Russia attacked Ukraine
Speaker 3: And everybody now is not denying the need for natural gas, not for 5 to 10 years, but for 25, 30, 40 years. And everybody knows that and thank goodness for a warm winter, our two been catastrophic both economically and from a human standpoint. So we just have to like, we've been working on light.
Speaker 3: Russia attacked Ukraine, it flipped 180 and all of a sudden everybody woke up and the demand has increased astronomically. And we beat up our team, we began traveling throughout the world, throughout Asia and Europe . We've done that consistently over the last year. We immediately asked for an extension from FERC that gave us that extension.
Speaker 3: May of last year. We then asked the DOE in June of last year for an extension. We are in negotiations to your question right as we speak with over 20 million tons of additional customers on top of what we've already signed up. We have significant equity players that we're in negotiations with.
Speaker 3: And for months we've been given every indication that the DOE would approve our extension.
Speaker 3: And then, low on the hold, here recently, the...
Speaker 3: They come out and said that because of a new policy they are not going to extend our request. And they've cited the lack of progress. So here's the DOE, citing the lack of progress. They have not asked us one time with the last year of how we're progressing. They don't know if we're out there right now of building.
Speaker 3: facilities. We already have four tanks built. We already have a dock built. It's a brown field unlike some of our competitors. And so it knew it was to say we were frustrated. Additionally, we've had one customer come to us after we heard that 10 days ago and said they're going to go another direction at least for now. And we think it's extremely important to reverse this.
Speaker 3: decision as quickly as possible so it doesn't harm us more than it already has.
Speaker 3: And so we will be asking, as Tom mentioned earlier, we will be asking for re-hearing. And we're hoping that reasonable and rational minds at the DOE will prevail, and that reverse what was an arbitrary and capricious.
Speaker 3: as Tom mentioned earlier, we will be asking for re-hearing. And we're hoping that reasonable and rational minds at the DOE will prevail, and that reverse will wasn't arbitrary and capricious political decision.
Speaker 7: Okay. Yeah, you really have put a lot of work into it over the last year and before that as well. So thank you for that. Just with a follow up on something else, energy transfer has not been shy about your belief that the sector needs more integration.
Speaker 7: Can you speak to how you evaluate these opportunities looking at Lotus and enable is it fair to say that upstream flow into your system is kind of a major filter of what you would be looking for?
Speaker 6: Absolutely. We do evaluate a lot of the various opportunities that are good bolt-ones if you will to our system. If you look at some of the last ones, as you know, the enable the Lotus, the Woodford Express, when you really look at these, they all just further enhance our
Speaker 6: you know, pop asset base of the midstream space. And it's something we're gonna continue to pursue on those opportunities that makes sense. But here's the next piece that we always evaluate very carefully, and that is that it's a creative. We always want to look at these things and make sure they're going to bring...
Speaker 6: bring incremental value to our equity holders. And they have, they've all been very accreted to us. And we're always very conservative in how we run our numbers. So we feel like that every acquisition we've made has exceeded any forecast that we put on there. So that's how you've been able to continue to get the coverage up.
Speaker 6: get the distributions back up to where they are while at the same time the leverage coming down. So we're going to continue to follow that model as we look, meaning looking at the various areas that are good bolt-ones for us and the more tools we can give the fantastic team we have.
Speaker 6: the better off we're going to date for the long term.
Speaker 6: we're going to be for the long term. Great, that's all for me, thanks.
Speaker 2: Thank you. And the next question comes from Keith Stanley with Rope Research. Hi, thank you. A quick follow-up on the guidance, so just the math behind it. So Q1, I obviously had a really strong quarter. If you annualize that, you're at $13.7 billion of EBITDA, and the updated guide is $13.25 billion at the midpoint. So I know, Tom, you listed some of the inventory swings and things like that, but are there any other unique items in Q1 you just outperformed on spread, marketing-type items that you're assuming don't repeat over the balance of the year, or how should we think about that updated guidance? Yeah, that's actually a very good question, Keith. Glad you asked it. When you really kind of look at our earnings by quarter throughout the year, the first quarter is generally the strongest. I think you can go back and look at that. And so when we forecast out at the remainder of the year, we will generally bake in.
Speaker 6: what we see from a, you know, everything from a volume pricing, etc. So what you're looking at once again is that first quarter, and that's not, you know, that's not the way that it plays out as far as just annualizing that first quarter. And it's going to be a lot of the things you mentioned in there, whether it be, you know, some of the spreads we see, you know, pricing, etc. So...
Speaker 6: If you just take the forward curve on the pricing and you look at it I think you'll kind of see what you know how we look at it when we look at the forecast going out for the year But once again, this is guidance. It's our numbers that we're you know currently seeing and currently targeting and as you know Those can move around but as of right now we feel good about it every quarter when we come out with updated guidance We feel good about the numbers that we're providing
Speaker 2: Great. That's helpful. Second question, just on the leverage target, the 4 to 4 1 1 half.
Speaker 2: Some of your peers have moved lower over time and Tom, when you talk, he still talk to reducing leverage. So do you see the company ever aspiring to go below four times eventually or is the goal to get the triple B flag credit rating and less of a focus on a number? OR. And we jobs. And it's sorry that I'm doing this idea and I'm just going to sit on newspaper and
Speaker 6: Yeah, our goal is to get to that triple beach all that. If it goes below.
Speaker 6: below four, we're okay with that. We won't be upset with that, but I will tell you that's still the target. But here's where I'd like to expand on that a bit. Not all these leverage metrics when they come out of the same. As you know, leverage is only one metric. You have to also look at the makeup of the earning stream. You have to look at the scale of the company and the size.
Speaker 6: When you start looking through all those various components, like what a rating agency uses, we clearly are strong in all those areas. Our leverage metric, when we put it out, we think it's what fits for us. We think that Triple D is a good place to be. That's what we're going to continue to target.
Speaker 2: Thank you. Thank you. And then ask question, Mr. Jimi Tone with JP Morgan. Hi, good afternoon.
Speaker 8: I just wanted to pick up with Permian egress on the natural gas site if I could and want to see the latest thoughts on Warrior and Outlook for that project and how you see, I guess, you know, Wahaw spread, sebing and flowing, we've seen volatility there and it's...
Speaker 3: On the last earnings call that we signed up about 25 to 30 percent of our target. We're still at that level However, we are in negotiations with over two BCF of additional interest This is primarily interest on Market Pull along the Gulf Coast and in the southeast and other parts of South, Texas
Speaker 3: As I think most know in this call, there's other projects being built, other projects being looked at, but nothing compares to our project. We don't have to lay as much pipe to provide services to others who are trying to provide. Our 42-inch pipe would be built, and that's where it ends up getting to an FI Day, with the VL2.
Speaker 3: and it would enter into our significant intrastate system that would feed to Katy and to Beaumont, to Carthage and ultimately into our Louisiana interstates to get to the Gulf Coast. So we have a—
Speaker 3: You know, it probably be a better question for the guys that report to me on the, in the ladies that report to me on the crew side. We are so excited though. Those assets and we believe so much value. It does a lot of things for us. One, we've always wanted to be able to get to cushion. All we have to do is lay 30 miles and we can move fairly significant volumes to cushion when those, those blow out or when customers want to go that direction. We'll have access to wink, which is a growing area hub for oil that we don't have access today, which benefits us in many ways. We also have access to crane, which is kind of one of the main receipt points for the pipelines head and the corpus.
Speaker 3: There's a lot of opportunity to blend and create value there off our system. There will be. And then we also have the ability to move more barrels over to our Colorado City area. We have significant takeaway through our Permit Express systems. In addition to that, there's numerous blending opportunities at Midland, Radon, and
Speaker 3: several million barrels more of storage. So it's hard to kind of, I guess, relate how excited we are and the multiple that we paid for those we think will improve on significantly within a year or two and look forward to seeing all those barrels enter our system and also help support our cross-haul capacity our primitive.
Speaker 4: Got it. That's very helpful. I'll leave it there. Thanks. Thank you. And then next question comes and chase Marvahill with Bank of America. Hey, good afternoon. I guess if we could talk about the NGL and Reformed products segment for the second quarter in a row, you generated more than 900 million of EBITDA.
Speaker 4: for this segment. And I realized that there's a lot of marketing and optimization benefits that are included in the results over the last couple of quarters. But I don't know if you could kind of hold our hand a little bit and bridge kind of one queue and two queue, kind of how you're thinking about puts and takes for two queue. And then obviously in the back half you got crack eight coming online. But just trying to understand kind of how we should think about this segment.
Speaker 3: Midland for our NGL transport. We hit all time US NGL transport and we also hit a one-day high for fracks. So we're hitting records along our NGL systems and with the Like as we mentioned the growing demand we just couldn't be more excited about the acids that we have as we mentioned that our our our statements earlier we hit some records for ethane both at Newterland in the first quarter as well as Marcus book and so we we we we sitting such a great position in both areas one our murder franchise
Speaker 3: is locked and loaded. I mean, we've got a tremendous capability that all we have to do is add pumps and, you know, can double our capacity up there as we can bring on more volumes upstream. We already have permits to expand our our F-ing capabilities up to 140,000 barrels a day.
Speaker 3: and we'll continue to pursue that project and get that FID. And then of course we have Nederland, which is such a gem for us in so many different ways, but certainly on the NGL perspective. You know, it's ironic and kind of humorous inside our partnership. We kind of have a battle going on at Nederland between the usage of our dots between crude and NGL. Lately, NGL has been kicking the tail of crude and we'll continue to do that. And the benefits of that are we're now starting to move a lot more of our barrels over to Houston.
Speaker 4: segment. You know, Ibadal was was basically flat sequentially despite lower natural gas prices.
Speaker 4: So I guess maybe two questions here related to that. Number one, have you mostly hit the fee floors on your natural gas side for your pops? And then number two, if today's lower NGL prices hold, how should we think about potential further downside for the midstream segment in kind of 2Q and 3Q?
Speaker 3: Yeah, you know, downside on midstream the way I was described that is lower commodity prices. I mean, certainly one of the biggest impacts quarter to quarter this year on our midstream business was the lower commodity prices compared to where they were a year ago. It's kind of hard to believe. We'll see natural gas go lower than two.
Speaker 3: We remain pretty bullish on where all prices are as well in GL and the growing demand for in GL So we we remain very bullish. I didn't mention this a moment ago, but another record We also set three or four days ago is that we were now processing more gas and the terming based on the we've ever processed so we are very Optimistic about our volumes about our our spreads
Speaker 3: in the midstream and so the only challenge to those are commodity prices and we feel like they kind of bottomed out. We feel like with anything we're more optimistic on commodity price improvements as we go deeper in the 23 than where we've seen the first quarter.
Speaker 2: Okay perfect I'll turn it over. Thanks. Thank you and then that's President Council Gabe Maureen with Mizzouha. Hey good afternoon everyone. I'm just sticking on gas prices a little bit. I'm curious whether $2 gas has had any impact in terms of
Speaker 3: Producer, I'll look for supporting expansions in the Haynesville or the Marcellus at the moment, and particularly as it relates to Gulffront and your potential to expend that pipe there. Yeah, you didn't hone in on probably the area where we are starting to see some rigs going down in.
Speaker 3: and also completions being delayed, really both in Haynesville and also in Marcellus to a certain degree. So $2 dry gas prices is not great for those areas. In regards to how it impacts, people are looking long-term producers aren't betting that prices are going to stay at $2 for the next four or five years.
Speaker 3: discussions that we've had, the deals that we've done and deals that we're negotiating to extend, to expand our capacity to the Gulf Coast through our network of pipelines. They're ongoing and that demand will increase. We are in a little bit of a low here as we've entered the second quarter of 23. We'll possibly stay in that for the next quarter or so, but we'll come out of this and more.
Speaker 3: It's funny, hang on the pipe and it gets valuable sooner or later. Our cross-all capacity across Louisiana and all the way to Florida is becoming very vague. Thanks, Mackie. Then maybe if I can also ask about the 2 billion growth capex figure now for 23 to the extent that you're looking at additional stuff, would you characterize it as a good chance that other projects get FID and that 2 billion product, the capex figure potentially goes higher for this year? Yep. Gosh, I guess I'd be a little disappointed if we don't get some more projects approved. How much of those dollars we spend in 23 remains to be seen. Of course, some of these bigger dollar projects that we're talking about, we don't anticipate them willing to pay.
Speaker 3: any significant dollars contributing to capital need, the 23 for any of those, even if they get to FID in the next three to six months. But we've got a very aggressive team of commercial folks in all of our segments and we're chasing deals everywhere. And so we don't see anything overly material.
Speaker 3: standpoint of huge capital needs, but we'll continue to have gathering needs and adding compression and things like that that will add revenue for our assets. Thanks, Mark. Thank you. And the next question comes from Marcel Sider with Barclays. Hi, good afternoon. If we think about optics in the NGL segment, particularly on the fracks, can you just remind us how we should think about the impacts from lower-neck gas prices in that segment and how that flows through to your gas and utility costs.
Speaker 3: Yeah, it's kind of twofold. One, we are able to gain some upside on the energy that we keep based on the Houston chip challenge price versus what we charge for. So we're harmed a little bit there from the standpoint of revenue. However, with lower prices, we also benefit from the operation side of that. So it's the kind of health note.
Speaker 3: both sides of the cost there. But yes, with the lower gas prices, we aren't benefiting as much on the excess energy that we keep compared to what we charge back to our customers. Got it. That's helpful. And then maybe just a circle back only, Charles, and that's put the carriage before the horse, but just a touch on the progress that you have made. Wonder if there's been any update on the EPC side?
Speaker 3: We, as I think everybody knows, we were working with two different companies and we expect to get to one of those final bits here soon, next within the next 10 or 12 days and we are very pleased with what we're seeing and where we think the cost will come in, but we will be seeing some of those kind of final numbers in the very end of the future. We are very pleased with what we're seeing and where we are.
Speaker 6: Got it. Appreciate the time. Thank you. This concludes the question and answer session. I would like to turn the floor to Tom Long for any closing comments. Well, once again, we thank all of you for joining us today. As you can see, we're very excited about all the great stuff we have going on. So, we look forward to talking with you soon and thank all of you for your support.
Speaker 5: Thank you. The conference has now concluded. Thank you for attending today's presentation. I'll just connect your lines.