Q1 2023 Plains All American Pipeline LP Earnings Call

May 5, 2023

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Operator: Good day, and thank you for standing by. Welcome to the PAA and PAGP Q1 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Blake Fernandez, Vice President, Investor Relations. Please begin.

Good day, and thank you for standing by and welcome to the PAA and PAGP first quarter 2020 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session will need to press star one on your telephone you will then hear an automated message advising your hand is raised.

So Australia. Your question. Please press Star one again, please be advised today's conference is being recorded I would now like to turn the conference over to your Speaker today, Blake Fernandez, Vice President Investor Relations. Please begin.

Blake Fernandez: Thank you, Kevin. Good morning, and welcome to Plains All American's Q1 2023 Earnings Call. Thank you for all of you for joining us on our new time today. The new day and time for our earnings call is a result of feedback from many of you and part of our ongoing efforts to continue optimizing our engagement with investors and analysts. Today's slide presentation is posted on the Investor Relations website under the News and Events section at plains.com, where an audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide 2. Highlights from the quarter are provided on slide 3. A condensed consolidating balance sheet for PAGP and other reference materials are located in the appendix.

Thank you Kevin Good morning, and welcome to Plains, All American <unk> first quarter 2023 earnings call.

For all of you for joining us on our new time today, the new day in time for our earnings call. As a result of feedback from many of you and part of our ongoing efforts to continue optimizing our engagement with investors and analysts.

Today's slide presentation is posted on the Investor Relations website under the news and events section at <unk> Dot Com. We're an audio replay will also be available following today's call.

Important disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide two.

Highlights from the quarter are provided on slide three our condensed.

Consolidating balance sheet for PAGP and other reference materials are located in the appendix.

Blake Fernandez: Today's call will be hosted by Willie Chiang, Chairman and CEO, and Al Swanson, Executive Vice President and CFO, as well as other members of our management team. With that, I will turn the call over to Willie.

Today's call will be hosted by Willie Chiang Chairman and CEO and Al Swanson Executive Vice President and CFO as well as other members of our management team with that I will turn the call over to Willie.

Willie Chiang: Thank you, Blake. Happy Friday, everyone, and thank you for joining us. Earlier this morning, we announced strong results reflecting good progress towards executing on our full year 2023 targets and providing us with confidence in our ability to deliver on the plan that we laid out in February. As a result, our comments today will be brief. It's been a volatile few months from a macro perspective, with recessionary concerns, headlines in the banking industry, and an unexpected OPEC production cut, along with the ongoing war in the Ukraine. Through all of this, we remain confident that Plains is well-positioned for the long term, as North American supply will continue to be critical to meeting growing long-term global demand. For 2023, and as illustrated on slide four, our focus is on execution. Through the Q1, we've done just that.

Thank you Blake happy Friday, everyone and thank you for joining US earlier. This morning, we announced strong results, reflecting good progress towards executing on our full year 'twenty three targets and providing us with confidence in our ability to deliver on the plan that we laid out in February as a result, our comments today will be brief.

It's been a volatile few months from a macro perspective with recessionary concerns headlines in the banking industry and an unexpected OPEC production cut along with the ongoing war in the Ukraine through all of this we remain confident that plains is well positioned for the long term as north American supply will continue to be.

Coal to meeting growing long term global demand.

For 2023, and as illustrated on slide four our focus is on execution and through the first quarter. We've done just that reporting adjusted EBITDA attributable to PAA of $715 million as a result of our first quarter performance and our outlook for the balance of the year, we are reaffirming our adjusted <unk>.

Willie Chiang: Reporting Adjusted EBITDA attributable to PAA of $715 million. As a result of our Q1 performance and our outlook for the balance of the year, we are reaffirming our Adjusted EBITDA guidance range of $2.45 to $2.55 billion for 2023. Additionally, we continue to expect Free Cash Flow generation of approximately $1.6 billion and common distribution coverage of 215%, which includes our recent 20 cent per unit annualized distribution increase. Looking forward, we expect that our continued focus on Free Cash Flow supports our previously announced capital allocation framework, which targets multiyear annualized distribution increases of 15 cents per unit and further debt and leverage reduction. Al will share additional detail on our quarterly performance in 2023 outlook in his portion of the call. Let me shift to the Permian.

<unk> guidance range of $2 45 to $2 55 billion for 2023.

Additionally, we continue to expect free cash flow generation of approximately $1 6 billion and common distribution coverage of 215%, which includes our recent 20 per unit annualized distribution increase.

Looking forward, we expect that our continued focused on free cash flow supports our previously announced capital allocation framework, which targets multi year annualized distribution increases of 15 cents per unit and further debt and leverage reduction al will share additional detail on our quarterly performance in 2023 outlook.

In his portion of the call, let me shift to the Permian, we continue to capture increasing volumes on our system and we expect production growth of plus or minus 500000 barrels a day exit to exit in 2023 based on an assumed 2020 to exit production of approximately 565 million barrels a day.

Willie Chiang: We continue to capture increasing volumes on our system, and we expect production growth of ±500,000 barrels a day exit to exit in 2023, based on an assumed 2022 exit production of approximately 5.65 million barrels a day. While still relatively early in the year, current horizontal rig count is tracking in line with our expected full year average of 340 horizontal rigs, and we continue to monitor additional data points, including well completion activity and commodity price environment. Consistent with our February guidance and as shown on slide 5, we expect year-over-year growth in our crude oil segment underpinned by continued Permian production and throughput growth volumes in our gathering and our long-haul systems.

While still relatively early in the year current horizontal rig count is tracking in line with our expected full year average of 340 horizontal rigs and we continue to monitor additional data points, including well completion activity and commodity price environment.

Consistent with our February guidance and as shown on slide five we expect year over year growth in our crude oil segment underpinned by continued Permian production and tariff growth volumes in our gathering and our long haul systems before I hand, it over to al I wanted to reinforce that capital discipline remains front and center.

Willie Chiang: Before I hand it over to Al, I wanted to reinforce that capital discipline remains front and center as we continue to advance capital efficient NGL opportunities around our Fort Saskatchewan facility, which we expect to share additional detail on later this year. With that, I'll turn the call over to Al.

As we continue to advance capital efficient NGL opportunities around our Fort Saskatchewan facility, which we expect to share additional detail on later this year with that I'll turn the call over to al. Thanks, Willie We reported first quarter adjusted EBITDA attributable to PAA of $715 million.

Al Swanson: Thanks, Willie. We reported Q1 Adjusted EBITDA attributable to PAA of $715 million. This includes Crude Oil segment benefits from market-based opportunities and increased volumes across our systems, primarily within the Permian. The NGL segment benefited from seasonally higher sales volumes due to winter demand and favorable margins. Slides 9 and 10 in today's appendix contain walks which provide more detail on our Q1 performance. A detailed overview of our 2023 guidance and key assumptions, which remain consistent with our February guidance, is located on slide 12 within today's appendix. We continue to expect year-over-year growth in our Crude Oil segment, driven by anticipated volume increases in our Permian business. For the NGL segment, we remain highly hedged and continue to expect segment Adjusted EBITDA midpoint of $420 million.

This includes crude oil segment benefits from market based opportunity and increased volumes across our systems, primarily within the Permian.

The NGL segment benefited from seasonally higher sales volumes due to winter demand.

Favorable margins.

<unk> nine and 10 in today's appendix contains walk which provide more detail on our first quarter performance.

A detailed overview of our 2023 guidance and key assumptions.

Each remained consistent with our February guidance are located on slide 12 within today's appendix, we continue to expect year over year growth in our crude oil segment driven by anticipated volume increases in our Permian business for the NGL segment, we remain highly hedged and continue to expect segment adjusted EBITDA.

The midpoint of $420 million I would note. This reflects a more pronounced winter to summer saddle versus 2022, which reflects volume lower volumes due to our planned third party turnaround in the second quarter of February .

Al Swanson: I would note this reflects a more pronounced winter to summer saddle versus 2022, which reflects lower volumes due to a planned third-party turnaround in Q2, the February sale of our non-op interest in the Keyera Fort Sask facility, and an NGL market structure that supports increased sales volumes in the peak winter demand months relative to the summer months. Regarding capital allocation, as illustrated on slide 6 and consistent with our February outlook, we remain committed to significant returns of capital to our equity holders, continued capital discipline, and reducing debt and maintaining financial flexibility. For 2023, we expect to generate $2.3 billion in cash flow from operations, $1.6 billion of free cash flow, with $600 million of free cash flow after distributions available for net debt reduction, resulting in year-end leverage of approximately 3.5x.

February sale of our non op interest in the <unk> fab facility.

NGL market structure to support increased sales volume and.

And the peak winter demand months relative to the summer months.

Regarding capital allocation as illustrated on slide six and consistent with our February outlook, we remain committed to significant returns of capital to our equity holders continued capital discipline.

And reducing debt and maintaining financial flexibility for 2023, we expect to generate $2 $3 billion in cash flow from operations.

One $6 billion of free cash flow with $600 million of free cash flow after distributions.

Available for net debt reduction, resulting in year end leverage of approximately three five times.

Al Swanson: We will continue to self-fund $325 million and $195 million of investment and maintenance capital net to PAA, which is consistent with our February guidance and does not include amounts related to the potential Fort Sask opportunity. With that, I will turn the call back to Willie.

We will continue to self fund $325 million and $195 million of investment in maintenance capital net to PAA, which is consistent with our February guidance and does not include amounts related to the potential port SaaS opportunity.

That I will turn the call back to Willy.

Willie Chiang: Thanks, Al. Today's results reflect another quarter of strong execution, and we remain confident in our outlook for the year despite the near-term volatility. We continue to believe that the world needs North American energy supply long term and that our business is well-situated to meet this need in a low cost, reliable, and responsible manner. We also believe we're well-positioned to meaningfully increase returns of capital to unit holders through our targeted multi-year distribution growth and 8.5% current yield, significant free cash flow generation, balance sheet strength, as illustrated on slide 7. We appreciate your continued interest and support, and we look forward to providing further updates on our earnings conference call in August. With that, I'll turn the call over to Blake to lead us into Q&A.

Thanks Al today's results reflect another quarter of strong execution and we remain confident in our outlook for the year. Despite the near term volatility. We continue to believe that the world needs North American energy supply long term and that our business is well situated to meet this need and a low cost reliable and responsible manner. We also.

I believe we are well positioned to meaningfully increase returns of capital to unit holders through our targeted multiyear distribution growth.

And eight 5% current yield significant free cash flow generation balance sheet strength as illustrated on slide seven. We appreciate your continued interest and support and we look forward to providing further updates on our earnings conference call in August with that I'll turn the call over to Blake to lead us into Q&A. Thanks Willy.

Blake Fernandez: Thanks, Willie. As we enter the Q&A session, please limit yourself to one question and one follow-up. For those with additional questions, please feel free to return to the queue. This will allow us to address questions from as many participants as practical in our available time this morning. Additionally, the IR team will be available to address any additional questions you may have. Kevin, we're now ready to open the call for questions.

As we enter the Q&A session. Please limit yourself to one question and one follow up for those with additional questions. Please feel free to return to the queue. This will allow us to address questions from as many participants as practical available time. This morning. Additionally, the IR team will be available to address any additional questions you may have Kevin.

We're now ready to open the call for questions.

Operator: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered or you wish to remove yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Michael Blum with Wells Fargo. Your line is open.

Thank you ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for Manuel we compile our Q&A roster.

Okay.

Our first question comes from Michael Blum with Wells Fargo. Your line is open.

Michael Blum: Hey, thanks. Good morning, everyone. Wanting to talk about Permian growth. Curious if you're seeing any change in producer activity or messaging as commodity prices pull back and any updated outlook for Permian growth rate in 2023.

Hey, Thanks, good morning, everyone.

Wanted to talk about Permian growth.

Curious if you're seeing any change in producer activity are messaging as commodity prices pull back in.

Any update on outlook for Permian growth rate in 2023.

Willie Chiang: Jeremy?

Jeremy Hey.

Jeremy Goebel: Hey, Michael. Good morning. What I would say is combination of activity, as William alluded to, 340 rigs still working. That's in line with our plan and activity. Number of completion crews, number of connections in the H1 and H2. Current volumes on the system, that growth implies roughly 40 to 50 thousand barrels a day per month of growth necessary to achieve the 500,000 barrel a day growth range. And then discussions with producers. We're in this band of inelasticity somewhere between, I don't know if it's 65 to 85, but it doesn't seem like producers move rigs one way or the other on the crude side. Gas has kind of gotten out of that, and you've seen some gas rigs move off.

Hey, Michael Good morning.

What I would say a combination.

Activity is willing alluded to of 340 rigs that working that is in line with our plan of activity number of completion crews number of connections in the first half of this year in the second half current volumes on the system that growth implies roughly to $40 to 50000 barrels a day per months of growth necessary to achieve that.

500000 validate growth range.

And then discussions with producers where in this band of Inelasticity somewhere between I don't know if that 65 to 85, but it doesn't seem like producers move rigs one way or the other on the crude side gas is kind of got out of that and you've seen some gas rate move off but by and large we don't see any material change to our forecast.

Jeremy Goebel: By and large, we don't see any material change to our forecast.

Willie Chiang: Michael, this is Willie. You've probably seen the Permian numbers. We ended at 565 at the beginning of the year. We think we're right around 5.9 now, and our exit is kind of 6.15. We're kind of on track with what we had outlined in February.

Michael This is Willie you've probably seen there.

Permian numbers, we ended at 565 at the beginning of the year. We think we're right around five nine now and our exit is a kind of a $6. One five so we're kind of on track with what we had outlined in February .

Michael Blum: Okay, great. Thanks for that. Realize you're not giving 2024 guidance yet, but just wanted to ask in general directionally how we should think about 2024 CapEx. Is there anything on the horizon that would point to that really being materially higher than 2023? Or do you think that could trend higher or lower? Thanks.

Okay, great. Thanks for that and then.

I realize you're not giving 'twenty four guidance, yet but just.

Wanted to ask in general Directionally, how we should think about 'twenty four capex.

Is there anything on the horizon that would point to that being.

Being materially higher than <unk>.

23 of you think that could trend higher or lower.

Willie Chiang: You know, Michael, we've kind of stated our expectations of between $300 to 400 million of expansion CapEx, and we'll likely get the question because we think about our NGL assets up in Canada and what we are trying to do there. Even if we move forward with that, I think we'll still be in that range on an annual average basis over maybe a couple of years. Most importantly, I don't think that we would be taking on any expansion CapEx that would jeopardize our Free Cash Flow story and our desire to return capital back to unitholders.

Michael we've kind of stated our expectations of between $300 million to $400 million of expansion Capex.

And we'll likely get the question, but as we think about our NGL assets.

In Canada, and what we are trying to do there.

If we move forward with that I think.

We will still be in that range on an annual average basis or maybe a couple a number of years and but most importantly, I don't think that we would be taken on any expansion capex that would jeopardize our free cash flow.

<unk> story, and our desire to return capital back to unit holders.

Michael Blum: Thanks, Willie.

Thanks Ross.

Willie Chiang: You bet. Thank you.

Thank you one moment for our next question.

Operator: One moment for our next question. Our next question comes from Spiro Dounis with Citi. Your line is open.

Our next question comes from Spiro <unk> with Citi. Your line is open.

Spiro Dounis: Thanks, operator. Morning, everybody. First question, just hoping you guys could update us on Corpus-bound pipeline utilization. Seems like that's been getting kind of close to full. I was just wondering if the economics there at some point maybe start supporting the use of DRA again, or if maybe you start to see these flows kind of turn back to Houston from here.

Thanks, operator, good morning, everybody.

First question, just hoping you guys could update us on corpus bound pipeline utilization. It seems like thats been getting kind of close to full and so just wondering if the economics there at some point maybe start supporting the use of DRA again, or if maybe you start to disclose kind of turn back to Houston from here.

Willie Chiang: Well, I'll start with this, Spiro. The volumes on the long-haul lines down to Corpus are running very full. And we constantly optimize power and DRA to have the most economic way of delivering it. Jeremy, you want to comment a little bit on outlook?

Well I'll start with this spirit the volumes on the long haul lines down to corpus are running very full.

We constantly optimize power and DRA have the most economic way of delivering it but Jeremy you want to comment a little bit on outlook.

Jeremy Goebel: Sure. As we discussed, volumes are growing every month and longer haul lines are getting more full. The Wink to Webster ramped up in February, as everyone's aware. A lot of that volume came off of inbound Houston pipes. Might have had some marginal impact to the Corpus pipes, but notably had an impact on spreads between Midland and the Gulf Coast. We expect volume growth to get us out of that and get it to more reasonable ranges and longer-term ranges where we've been contracting. What I would say is that we continue to expect that to continue to happen. Corpus is the most logistically sound place. It's the shortest distance. It's nothing but Permian crude leaving the docks. It's an area that just will draw the incremental demand. Our Basin Pipeline, as summer driving season pulls up, will pull additional demand.

Sure.

As we discussed volumes are growing every month and longer haul lines are getting more full.

Webster ramped up in February as everyone's aware a lot of that volume came off of and then Houston pipe.

Some marginal impact to the corpus pipes, but notably had an impact on spreads between Midland and the Gulf Coast.

And we expect volume growth to get us out of that and get to more reasonable ranges and longer term ranges with where we've been contracting and so what I would say is that we continue to expect that to continue to happen in the core versus the most logistically downplayed the shortest distance.

Nothing, but Permian, leaving the docs, it's an area that we.

We will draw the incremental demand our basin pipeline as summer driving season that will pull additional demand. So we're seeing more and more activity on the long haul pipes as production has grown as Willy mentioned you get to $6 one five.

Jeremy Goebel: We're seeing more and more activity on the long-haul pipes as production has grown, as Willie mentioned. You get to 6.15 million barrels a day towards the end of the year, and they will be full, but you'll have balancing across the pipelines because all of the markets are needed. Corpus will remain full since the marginal demand is an export barrel.

Millions barrels a day towards the end of the year end.

They will default, but youll have balancing across the pipeline at all of the markets are needed, but corpus for main full since the marginal demand is.

Export barrel.

Willie Chiang: Spiro, you probably already realize this, but we've contracted the majority of our long-haul space down to Corpus Christi for 2023 into 2024. Back to our thesis of tightening capacity and margins in the out years, this is very supportive for that as we go forward for the next number of years.

And Spiro you probably already realize this but we've we've.

We've contracted the majority of our long haul space down in Corpus Christi for 'twenty, three 'twenty, four and so back to our thesis of tightening capacity and margins.

In the out years this is very supportive.

For that as we go forward for the next number of years.

Spiro Dounis: Got it. That's helpful color. Thank you both. The second one, just going back to NGL in Canada. You know, you guys have kind of talked about this debottlenecking and optimization for a bit now. Just curious, what are some of the gating items to kind of moving forward there? When do you think we can get closer to an announcement?

Got it that's helpful color. Thank you both.

The second one just coming back to you.

NGL in Canada, you guys kind of talked about this debottlenecking and optimization for a bit now just curious what are some of the gating items to kind of moving forward. There. When do you think we can get closer to an announcement.

Willie Chiang: We expect to be able to give you an update in August on our August call. As you can imagine, putting these things together is a complicated situation, especially when you're trying to evaluate opportunities around debottlenecking and expansions and trying to link up commercial contracts to anchor it. There's quite a bit of work that's been going on, and I think we'll be able to give you a good update in August.

We expect to be able to give you an update in August on our August call. As you can imagine putting these things together is a complicated situation, especially when youre trying to evaluate opportunities around debottlenecking and expansion and trying to link up commercial contracts to anchor it so theres quite a bit of work that's been going on.

And I think we will be able to give you a good update in August .

Spiro Dounis: Great. Good to know. That's all I have today. Thanks, guys.

Great.

Willie Chiang: Thank you.

All I have today, hey, guys. Thank you.

Operator: One moment for our next question.

One moment for our next question.

Operator: Our next question comes from Brian Reynolds with UBS. Your line is open.

Our next question comes from Brian <unk> with UBS. Your line is open.

Brian Reynolds: Hi, good morning, everyone. Maybe just to follow up on the NGL segment. You know, your updated views from the guidance was expectations for being down roughly $100 million year-over-year. You know, just given the strong Q1 and really strong frac spreads to start the year and continuing throughout Q2, just wondering if there's any updated view there or if there's any maintenance in Q2 or beyond that we should be thinking about. Thanks.

Okay.

Hi, Good morning, everyone, maybe just to follow up on the NGL segment.

Your updated views from the guidance was expect expectations for being down roughly $100 million year over year, just given the strong Q and really strong crack spreads to start the year and continuing throughout <unk> I was just wondering if there's any updated view there or if there was any maintenance in <unk> or beyond that we should be thinking about thanks.

Al Swanson: Yeah, this is Al. I'll take a shot. We came into the year fairly hedged. As we commented, you know, a little over 80% hedged. We had a strong Q1, but our view is that it really doesn't change the year. We're still guiding to $420 million for the full year, which again, in our prepared comments, we talked about probably a bigger saddle in the summer months. What you're seeing there a bit too is we do anticipate a turnaround in Q2 impacting some volumes, as well as a market structure that incentivizes us to store and sell next winter, some of which would push into Q1 2024.

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

Are we came into the year fairly hedged.

As we commented.

Little over 80% hedged we.

We had a strong <unk>, but our view is it really doesn't change the year, we're still guiding to $420 million for the full year, which again in our prepared comments, we talked about probably a bigger saddle.

In the summer months.

What youre seeing there a bit too as we do we do anticipate a turnaround in the second quarter impacting some volume.

As well as.

A market structure that incentive.

The store and sell next winter some of which would would push into the first quarter of 2024. So summary, we didn't we didn't change our guidance for the NGL segment.

Al Swanson: Summary, we didn't change our guidance for the NGL segment.

Jeremy Goebel: Just a couple of things to add, Brian. We had an asset sale in February, so the full year impact of that would reflect both. A larger component is commodity-exposed barrels will be lower this year. There is a turnaround at a third-party facility that we receive commodity-exposed barrels from. There was a storm in the Williston last spring that led to additional volume and additional at the highest commodity-exposed period. I think the combination of those is probably a bigger driver for the year-over-year reduction in EBITDA.

Just a couple of things to add Brian we had an asset sale in February so the full year impact of that would reflect both but a larger component as commodity exposed barrels will be lower this year. There is a turnaround at a third party facility that we received from IV into those barrels from and there was a storm in the Williston last spring that led to additional <unk>.

Volume and additional at the highest commodity exposed to period. So I think the combination of those is probably a bigger driver for the year over year.

Reduction in EBITDA.

Brian Reynolds: Great. Really appreciate the incremental color. Next question is just on capital allocation. You know, Plains is trending towards that 3.5 leverage target or below by year-end. While you know, distribution growth seems to be on the table for 2024, kind of was curious if Plains could provide updated thoughts and views around potential pref reduction just given, you know, S&P has recently updated its views that it may not necessarily, you know, penalize equity credit for companies that have dramatically reduced leverage and, you know, look to reduce their cost of capital. Thanks.

Great really appreciate the incremental color next question just on capital allocation.

Wayne just trending towards that three five leverage target or below by year end and while distribution growth seems to be on the table for 'twenty for kind of was curious if claims to provide updated thoughts and views around potential perhaps reductions.

S&P has recently kind of updated its views that it may not necessarily penalize equity credit for companies that have dramatically reduced leverage and look to reduce their cost of capital.

Al Swanson: Yeah, this is Al. I'll take a shot. Yeah, the S&P kind of clarification of how they look at it is very favorable for potential reduction, you know, when and if, you know, it makes sense for us to. We value our financial flexibility in bringing our leverage down, at least in the near term, more than trying to take out any of the pref. No change in our view, call it in the near term or for the balance of this year. Expect us to kind of revisit that maybe in the future. We do not view that the cost of the pref are so high that we should, you know, immediately sacrifice the balance sheet or financial flexibility to take them out.

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

The S&P kind of clarification of how they look at it is very favorable for us.

The potential reduction when and if it makes sense for us too.

We value our financial flexibility in bringing our leverage down.

At least in the near term more than trying to take out any of the perhaps so no change in our view call. It in the near term or for the balance of this year expect us to kind of revisit that maybe in the future.

We do not view that.

The cost of the Prefs or are so high that we should immediately sacrifice the balance sheet, our financial flexibility to take them out.

Al Swanson: The weighted cost of the pref securities are below what we think our cost of capital is on a weighted basis. This isn't the best debt market to go refinance in as well. No real change in our thinking there. We are pleased because we do think we would meet the kind of S&P exception of significantly lower leverage than when we last issued the pref security. We do think we got incremental flexibility in the future, but definitely not this year.

The weighted cost of the crest securities are below what we think our cost of capital is on a weighted basis.

And this isn't the best debt market to go refinance in as well so no really change in our in our thinking there.

We are pleased because we do think we would meet the kind of the S&P exception of significantly lower leverage than when we last issued.

Crest security. So we do think we got incremental flexibility in the future, but definitely not this year.

Yeah.

Brian Reynolds: Great. Appreciate your updated thoughts. Have a good rest of your morning.

Great I appreciate your updated thoughts have a good rest of your morning.

Al Swanson: Thanks, Brian.

Thanks very much.

Operator: One moment before our next question. Our next question comes from Jeanine Salisbury with Bernstein. Your line is open.

One moment for our next question.

Our next question comes from Jean Salisbury Bernstein. Your line is open.

Jeanine Salisbury: Hi, good morning. I just wanted to follow up on an earlier question. Your Corpus pipelines, I think, are at full capacity now with no real expansion capacity with DRAs. Is that accurate? I know some of the other pipelines have been talking about potential expansions that I didn't actually think were possible, but wanted to see for Plains if that was a possibility.

Hi, good morning.

I just wanted to follow up on an earlier question Gareth Corpus pipelines I think are at capacity now with no real expansion capacity with Drs is that accurate I know some of the other pipelines have been talking about potential expansion, sorry, I, didnt actually think where possible.

Wanted to see if that was a possibility.

Jeremy Goebel: Geneanne, this is Jeremy. We don't foresee any expansions of our facilities at this time, the Cactus I and Cactus II assets.

Yes. This is Jeremy we don't foresee any expansions of our facilities at this time.

<unk> two assets.

Jeanine Salisbury: Great. Thank you. I wanted to also ask about your expectations of what duration is expected in recontracting, if you were to kind of start blending and extending on your crude pipes in the next year or 2. We've heard from others that the E&Ps are kind of really only on the market for 3 to 5 years for recontracting as those contracts are coming up. But your high capacity utilization might better position Plains than others. Wanted to get your thoughts there.

Great. Thank you.

And then I wanted to also ask about your expectations of what duration is expected in re contracting.

Blending and extending into.

The next year.

We've heard from others that the E&ps are kind of really on the market for three to five years performing contracting as contracts are coming up but you are tight.

Mike might better position plan.

And then other so wanted to get your thoughts there.

Jeremy Goebel: Ginna, we're in the middle of those discussions and have been for a while. It all depends on rates. At lower rates, we'd rather not have longer duration. We push for longer duration at higher rates. I think that's something between us and our customers. What I can tell you is we haven't seen any issues getting 5-year terms for contracts that we like and customers like. I'd say we push towards the high end of that range.

We're in the middle of those discussions and have been for a while and.

It all depends on the rate at lower rates, we'd rather not have longer duration, we push for longer duration at higher rates I think thats something between us and our customers, but what I can tell you is we haven't seen any issues getting five year terms on that for contracts that we like and customers' lives. So I'd say, we'd push towards the high end of that range.

Jeanine Salisbury: Okay.

Al Swanson: You know, Ginna, this is Willie. One other comment I would make is, remember our assets are an integrated asset base. So when we look at when Jeremy's team look at recontract extensions, it's really not just the long haul, it's the desire to integrate the gathering through the intrabasin through long haul. So we think we offer a more fulsome opportunity set for folks that want to move barrels out.

Jean Ann This is Willie one other comment I would make is remember our assets are an integrated asset base. So when we look at.

When Jeremy's team look at re contract extensions, it's really it's really not just the long haul it's the desire to integrate the gathering through the intra basin through long haul.

So we think we offer a more fulsome opportunity set for folks that want to move barrels out.

Jeanine Salisbury: That's helpful. If I can sneak in one more really quick one, if that's okay. Do you anticipate that the recent Energy Transfer acquisition of Lotus will have any material impact on Plains's businesses?

That's helpful and if I can sneak in one more quick one.

Do you anticipate that the recent energy transfer acquisition.

Have any material impact on plant this businesses.

Willie Chiang: You know, we don't. We've got a great system, that you've heard a lot about and we think it gives us all the flexibility we need.

We don't.

We've got a great system.

That you've heard a lot about and we think it gives us all the flexibility we need.

Jeanine Salisbury: Great. Thanks. That's all for me.

Great. Thanks, that's all for me.

Operator: One moment for our next question. Our next question comes from Chase Mulvehill with Bank of America. Your line is open.

One of them before our next question.

Our next question comes from Chase Mulvehill with Bank of America. Your line is open.

Okay.

Neel Mitra: Hi, this is actually Neel Mitra. Thanks for taking the question. First, just wanted to ask regarding the NGL business. I know fracs spreads have been really strong for the last kind of year and a half. Have you considered moving more to a fixed fee business just to create a little bit more stability longer term?

Hi, This is actually Mitra, thanks for taking my question.

Just wanted to ask regarding the NGL business.

Fracs Frac fracs.

Spreads have been really strong for.

For the last kind of.

Year and a half.

But have you considered moving more to a fixed fee business just to create a little bit more stability longer term.

Jeremy Goebel: No. These assets that we're talking about are straddled. We have not looked to do that and don't anticipate that.

No.

These assets that we're talking about are straddles we have not look to do that and don't anticipate that.

Neel Mitra: Got it. Maybe the second question for Jeremy. As you look at recontracting in 2025 and 2026, Corpus is getting a premium, but are some of your producers looking at possibly having spot in place in Houston and that impacting the flows that would go to Corpus and the premium that you'd get?

Got it.

The second question for Jeremy.

Look at re contracting in 'twenty five 'twenty six Corp.

Corpus is getting a premium.

What are some of your producers.

Looking at possibly having spot in place in Houston.

And that impacting.

The flows that would go to corpus and the premium that you get.

Jeremy Goebel: Neil, it's hard to speculate what would happen. Enterprise noted that demand for that probably isn't until 2027, so we're not sure what those markets look like. What I can say is, if that were to happen, in 2027, that's because there's another 1.5 million or 2 million barrels a day of production. Corpus flows wouldn't be materially impacted, and you'd need the same amount of barrels to clear because the incremental demand is there. The reason for it being pushed is largely because Ginna mentioned lower contract durations. You need long-term contracts to get there. Docks are 40% to 50% utilized. Everything's moving and quality is maintained. We struggle to see it in the near term. We do agree with Enterprise.

So.

It's hard to speculate what would happen enterprise noted that demand for that probably up until 2027. So we're not sure what those markets look like but what I can say is.

If that were to happen.

In 2027, and Thats, because there is another $1 billion or 2 million barrels a day of production and corporate flows wouldnt be materially impacted and you'd need the same amount of barrels to clear the incremental demand is there. So the reason for it being pushed largely because.

Jean Ann mentioned lower contract duration, you need a long term long term contracts to get their docs are 40% to 50% utilized everything moving and qualities maintained then.

We struggled to see that in the near term, we do agree with enterprise. If there is a longer term need and higher production that means our gathering pipes are full on long haul pipes are full and corpus flows wont be materially impacted because that incremental volume will likely come from the inland docs and growth.

Jeremy Goebel: If there's a longer-term need and higher production, that means our gathering pipes are full, our long-haul pipes are full, and Corpus flows won't be materially impacted because that incremental volume will likely come from the inland docks and growth.

Neel Mitra: Great. If I could just clarify one question on the gathering and intrabasin side. If the Permian continues to grow like you expect, at what point would you have to see kind of major expansions on your gathering and intrabasin system? You know, would that put you kind of outside of the $300 to 400 million dollar range at some point?

Great and if I could just.

Clarify.

One question on the gathering and the intra basin side.

Yes.

If the Permian continues to grow like you expect.

At what point would you have to see kind of major expansions on gathering and intra basin system.

Hum.

Would that put you kind of outside of the $400 million range some point.

Jeremy Goebel: What was that range, Neil? I'm sorry. I just want to make sure I answer the question properly.

What was that range Neil answer I, just want make sure I answer. The question just just just the capex range that you're in.

Neel Mitra: Just the CapEx range that you're in right now.

Yeah.

Jeremy Goebel: I don't foresee anything that would push us out of that range. I think, the way I would look at it, Neil, is we're constantly debottlenecking and creating capacity. We announced earlier this year that there's probably $100 million of our capital program is to creating more capacity through stations and pipes. We can always ship on other pipelines if it's a temporary need for additional capacity. The Wink to Webster segment between Wink and Midland will come on towards the end of this year, but large segments of pipe are in the neighborhood of $100 million to debottleneck the system. It's not hundreds of millions. We'll have lots of gathering capacity in and out. The shorter answer is we don't see much that would push us out of that.

I don't foresee anything that would push us out of that range I think.

Way I would look at it Neil is we're constantly debottlenecking and creating capacity, we announced earlier this year and that there's probably $100 million of our capital program is to creating more capacity three stations from the highest.

We can always ship on other pipelines, if it's a temporal need for additional capacity in the Wink to Webster segment between Wink and Midland will come on towards the end of this year.

But large segments of pipe or in the neighborhood of 100 million to Debottleneck. The system, it's not hundreds of millions and we will have lots of gathering capacity in and out. So the shorter answer is we don't see much that would push us out of that potential acquisitions and other things that we might look at from time to time, but as far as building organic projects.

Jeremy Goebel: Potential acquisitions and other things that we might look at from time to time, but as far as building organic projects, we don't see a ton of need for multi-hundreds of millions of dollars projects.

We don't see a ton of need for multi hundreds of millions of dollar projects. Yeah. This is Willie if you look at slide five there is a good illustration of our operating leverage in the Permian and as Jeremy said, we're constantly trying to optimize the system to be able to get more out of it. So I think it will be a number of years before we had constraints.

Willie Chiang: Yeah, this is Willie. If you look at slide 5, there's a good illustration of our operating leverage in the Permian. As Jeremy said, we're constantly trying to optimize the system to be able to get more out of it. I think it'll be a number of years before we hit constraints, meaningful constraints.

Meaningful constraints.

Neel Mitra: Okay, perfect. Thank you for all the color.

Okay perfect. Thank you for all the color.

Operator: One moment for our next question. Our next question comes from Jeremy Tonet with J.P. Morgan. Your line is open.

One moment for our next question.

Our next question comes from Jeremy Tonet with Jpmorgan. Your line is open.

Ross Adon: Hey, guys. This is Ross Adon for Jeremy. Just curious, looking past 2023, how you guys think about risk to long-haul versus intrabasin versus gathering volumes and, when you guys might see capacity becoming tighter? Thanks.

Hey, guys. This is Robert on for Jeremy.

Just curious looking past 2023, how you guys think about rest of long haul versus base at risk gathering volumes.

When you guys might see capacity becoming tighter.

Jeremy Goebel: Great. On the gathering side, we're always constantly moving with volume and producers. I'd say that is one where we're just trying to stay ahead of the producers, and we'll have an active program to move constraints, as Willie mentioned. Intrabasin is one, depending on where volume flows go, you can see constraints, but we work with our partners and try to resolve that. That's where you might see the investments Neil was talking about, is intrabasin. If more needs to go to Houston or Corpus, do we need to expand capacity in one place or direction? I would say that that's transient, and there's a big piece coming online toward the end of this year that we could ship on if we needed incremental capacity.

Great.

That's it.

We're always on the gathering side, we're always constantly moving with volume and producers. So I'd say that is one where we're just trying to stay ahead of the producers and will have an active program to the constraints as Billy mentioned intra basin is one depending on where volume closed go you can see constraints, but we work with our partners and try to resolve.

That's where you might see the investment Neil was talking about the intra basin if more needs to go to Houston, our corpus do we need to expand capacity in one place or direction, but I would say that that's transient.

There is a big piece coming online towards the end of this year that we can ship on if any of this incremental capacity. So there might be some intra basin constraints, but we have ways to resolve them and those investments are being made that the last one is on the long haul side.

Jeremy Goebel: There might be some intrabasin constraints, but we have ways to resolve them, and those investments are being made. The last one is on the long-haul side. You know, it depends on by market, right? As I mentioned, all markets are needed. You're 90%+ utilized to Corpus, but there's plenty of places for the barrels to flow. They can flow to Houston, they can flow to Nederland, they can flow to Cushing. Over time, the differentials today are inside of where they would support incremental investment and expansion. You'd probably need to see rates move first before you saw incremental expansion. But that's probably a couple years away before you would need incremental expansion from here on the long-haul side.

Depends up by market, but as I mentioned all markets are needed.

90, plus percent utilized at corpus, but theres plenty of places for the barrels to flow they can flow to Houston. It can flow to nederland. They can float fishing. So over time that the differentials today are inside of where they.

What support incremental investment and expansion. So you probably need to see rates move first before you saw incremental.

<unk> expansion.

That's probably a couple of years away before you would need incremental expansion from here on the long haul side.

Ross Adon: Okay, great.

Willie Chiang: Maybe just as a reminder, as you think about long haul, there's about 8 million barrels a day of total capacity, takeaway capacity out of the basin. If you look at economic capacity, it's roughly a little bit over 7. Our forecast for year-end, as we talked about, was just a bit over 6. You can see the capacity there, and as you start filling that up and you use drag reducer to try to get into the higher end of the volumes, you know, the costs go up. That's part of the reason that we think that margins ultimately have to get stronger as we go forward.

Okay.

Just as a reminder, as you think about long haul there's about 8 million barrels a day of total capacity takeaway capacity out of the basin.

If you look at economic.

<unk>, it's roughly a little bit over 7%.

Our forecast for year end as we talked about was just a bit over six so you can see the capacity there and as you start filling that up a nice drag reducer to try to get into the higher end of the of the volumes.

Costs go up and so thats part of the reason that we think that margins ultimately have to.

Gets get stronger as we go forward.

Ross Adon: Great. Thanks for all the color there. On the energy transition front, kind of switching gears, just wondering what kind of capital, I guess, would be deployed by this group? What are the types of projects the team's focusing on, or any incremental updates there?

Great. Thanks for all the color there and then on the energy transition front.

Switching gears just wondering.

What kind of capital I guess would be deployed by this group what are the types of projects that the team is focusing on or any incremental updates there.

Chris Chandler: Sure. This is Chris Chandler. We continue to evaluate a number of projects in this area. The one we've announced is a battery energy storage project at our Sarnia, Ontario facility. That's actually in construction, and it'll begin operation this summer. It's a modest investment, less than $10 million. We're looking at a number of different areas, whether that's renewable power generation behind, you know, the meter at our existing facilities, converting existing assets or pipelines, even things like hydrogen storage underground. In particular, our Canada storage position lends itself to opportunities to store hydrogen. We're looking across the partnership. At the end of the day, these projects have to compete for capital and have to meet our investment hurdles.

Sure. This is Chris Chandler, we continue to evaluate a number of projects in this area. The one we've announced as a battery energy storage projects that are.

Sarnia, Ontario facility.

It's actually in construction and it will begin operation this summer.

Modest investment less than $10 million, we're looking at a number of different areas, whether thats renewable power generation behind the meter at our existing facilities.

Converting existing assets, our pipelines, even things like hydrogen storage underground.

In particular, our Canada storage position lends itself to opportunities to store hydrogen so.

We're looking across the partnership but at the end of the day. These projects have to compete for capital and after meet our investment hurdles.

Ross Adon: Got it. I'll leave it there.

Got it I'll leave it there.

Operator: One moment for our next question. Our next question comes from Gabriel Moreen with Mizuho. Your line is open.

One moment for our next question.

Yeah.

Our next question comes from Gabriel Moreen with Mizuho. Your line is open.

Gabriel Moreen: Hey, good morning, guys. Maybe if I can ask kind of a two-pronged Canadian crude oil question. One is just, can you just characterize for us where we are sort of in the ramp on Capline volumes and how that asset is going? Maybe a little premature to ask this, but assuming Trans Mountain starts up early next year, can you just talk about how well insulated your crude oil pipes are coming out of Canada from that start up?

Hey, good morning, guys and if I can ask kind of a two pronged.

And crude oil question. One is just can you just.

Characterize for us, where we are sort of in the ramp on topline volumes and how that asset is going and then.

Maybe a little premature to ask this but assuming trans mountain starts up early next year can you just talk about how well insulated your pipes, our crude oil pipes are coming out of Canada startup.

Jeremy Goebel: Sure. On the Capline front, we've seen quite a bit of demand from the existing shippers and the same-grade refiners. It's based on incentive volumes and committed volumes that's been outperforming year to date, and we expect that to continue, a mix of light and heavy barrels. On the TMX startup, the way to think about that is you've got heavy crude that will leave and head west when it does start up. That could impact some heavy crudes going to the east and into the United States, but they need barrels to run, right? That's largely not getting exported out of the Gulf Coast. That could bring either additional imports or it could bring additional barrels to the MidCon refining complex that soaks a lot of that up.

Sure.

So on the Cat line front, we've seen quite a bit of demand from the existing shippers and the St. James refiners.

Based on incentive volumes and committed volumes.

Volume Thats been outperforming year to date, and we expect that to continue our mix of light and heavy barrel and then on the Tms startup the way to think about that is you've got heavy crude that will leave and head west when it does start up that could impact some heavy crudes going to the east and Andy.

But they need barrels to run right that largely not getting exported out of the Gulf coast. So that could bring either additional import Oregon bring additional barrels to the mid continent refining complex that sounds a lot of that so that could support our base and pipeline in our mid continent. So it could draw additional barrels into the Cushing area that could be a positive.

Jeremy Goebel: That could support our Basin Pipeline and our Mid-Continent. It could draw additional barrels into the Cushing area. That could be a positive. Capline, I think, will continue to move because those movements are for specific refiners who are looking for them. They could have some imports, but largely we'd expect quite a bit of those barrels to move. Our Canadian assets are largely insulated. Those are largely gathering assets into the mainline. If the differentials would tighten, that would increase the realized price and incent more production and volume to come. We think it would just be a matter of time before things normalize, because with additional takeaway and lower differentials, we might see lower market-based opportunities, but we could see some more fee-based opportunities and volume growth along the systems.

Cap line I think we will continue to move those movements are for.

Specific refiners, who are looking for them they could have some imports, but largely we would expect quite a bit of those barrels to move.

Our Canadian assets are largely insulated those are largely gathering assets and the mainline. So if the differentials would tighten that would increase the realized price and incent more production and volume to come. So we think it would just be a matter of time before things normalize because with additional takeaway and lower differentials, we might see lower market based.

Entities, but we could see some more fee based opportunities and volume growth along with systems.

Gabriel Moreen: Thank you. Maybe if I could just get an update sort of on the Line 901 receivable, if there's any, an update there.

Thank you and then maybe just get an update sort of on the line 901 receivable if there's any update there.

Al Swanson: No update. We've submitted the claim. Parts of the claim has been denied, and we are proceeding with arbitration. We feel strongly with the merits of our position and expect to collect in full, although it'll take some time, and we've modeled it into early 2024.

No update.

We've submitted the claim part of the claim has.

Been denied.

And we are proceeding with arbitration, we feel strongly with the merits of our position and expect to collect in fall, although it will take some time and we've modeled it into early 2024.

Gabriel Moreen: Thanks a lot.

Thanks Al.

Operator: One moment for our next question. Our next question comes from Neal Dingmann with Truist. Your line is open.

One moment for our next question.

Our next question comes from Neal Dingmann with <unk>. Your line is open.

Jake Nivasch: Hi, this is Jake Nivasch on for Neil. Thanks for the question. Just wanted to go back to the customer contracts. I know you mentioned, you know, the duration that, you know, the color that you provided there, but I just wanted to get a sense. Could you remind us, I guess, what time of year, you know, typically do these customer contracts get reevaluated? I guess, could you provide, if possible, a quantification of, I guess, what percent of those contracts are up for renewal?

Hi, This is Jamie on for Neil Thanks for the question I just wanted to go back to the customer contracts I know you mentioned that.

The ratio of net.

The color that you provided there, but I just wanted to get a sense can you remind us I guess.

What time of year.

Typically do these record customer contracts.

Get reevaluated and I guess could you provide if possible at.

Quantification of I guess, what causes what percent of those contracts are up for renewal.

Jeremy Goebel: Yeah. Neal, thanks for your time. Candidly, it's fluid because each contract has notification periods, whether it's cancellation or options. We really can't. A lot of that's driven by the time of year the pipeline is in service. There's not a contracting season like there is for NGL sales or purchases. We've recontracted a lot of those producers for long periods of time, substantially longer than their long-haul contracts on our gathering systems, with the intent it's just a matter of price when we get to the long-haul piece. We have open lines of communication and dialogue, and we'll update. It's a function of price when it gets to where we're willing to do something, and they feel it's appropriate to do it.

Neil Thanks, Thanks for your time candidly, it's fluid because each contract has notification periods, rather than a cancellation or options that we really can and a lot of that is driven by one time of year. The pipeline in service Theres not a contracting season lender is for NGL sales or purchases.

So but.

We re contracted a lot of those producers for long periods of time substantially longer than their long haul contracts on our gathering systems with the intent of it's just a matter of price when we get to the long haul piece. So we have open lines of communication and dialogue and we'll update it as a function of price when it gets to where we're willing to do something.

And they feel it's appropriate to do it but we feel very good about the volume on the pipelines and that we will continue to re contract the pipe and the utilization support that.

Jeremy Goebel: We feel very good about the volume on the pipelines and that we will continue to recontract the pipes and the utilization support that. I don't know if there's anything to add there, but that's all I can give you at this time.

I don't know if theres anything to add there, but that's all I can give you at this time.

Jake Nivasch: Sure. Thank you. Just a quick, you know, follow-up here. I know you guys mentioned hedged in 2023, I guess about 80%. Do you have any update on 2024 hedges? Have you guys added anything recently there?

Sure. Thank you and just a quick.

Follow up here.

I know you guys mentioned hedged in 2023, I guess about 80%, but do you have any any update on that.

<unk> 24 hedges have you guys add anything recently there.

Willie Chiang: I assume you're talking about natural gas liquids. The answer is, we haven't given any guidance on 2024.

I assume youre talking about natural gas liquids the answers we haven't given any guidance on 2024.

Jake Nivasch: Gotcha. Okay. Thank you very much.

Got you okay. Thank you very much.

Operator: One moment for our next question. Our next question comes from Sunil Sibal with Seaport Global. Your line is open.

One moment for our next question.

Okay.

Our next question comes from Sydney, Youll see well with Seaport Global your line is open.

Sunil Sibal: Yeah. Hi, good morning, everybody, and thanks for the clarity on the call. I was curious, you know, things like upstream M&A, especially in Permian, has picked up pace. I was curious, you know, how does that impact Plains, especially, you know, with regard to your negotiations on recontracting and more broadly, you know, the integrated model that Plains has had so much success with in Permian?

Yes, hi, good morning, everybody.

Thanks for the clarity on the call. So I was curious you know it.

Seems like upstream M&A, especially in Permian.

Picked up pace.

Just curious how does that impact.

Play into especially with regard to your negotiations on re contracting.

And more broadly the integrated model. Please have had so much success.

And pardon me.

Willie Chiang: Jeremy?

Jeremy Goebel: Sure. Sunil, I take it a couple steps. M&A has been happening for a long time in the Permian. The bigger the customer, the more they're largely driven to us in the integrated nature and more options. That's a positive. As they get bigger, they do push more on rates, but we try to add services and balance a lot of that off. We have some unique attributes to the system, which gives us a premium relative to other services, and we lean into that. By and large, everyone's happy in the end. I'd put it that way. The other thing about M&A is the way it's been run lately is producers are buying inventory and largely financing with selling lower-tier inventory.

Jeremy here Neil.

Taking a couple of steps Emma.

M&A has been happening for a long time in the Permian and the bigger the customer the large the more they're largely driven to us and the integrated nature and more options. So thats a positive.

As they get bigger they do push more on rates, but we try to add services and balance a lot of that off we have some unique attributes to the system, which gives us a premium relative to other services and we leaned into that but by and large everyone's happy NDA put it that way.

The other thing about M&A is.

The way, it's been run lately as producers are buying inventory and largely financing with selling lower tier inventory. The benefit of that is that lowered your inventory that wasn't going to get drilled that can be dedicated to our system private equity comes in by that it immediately starts to drill it which has been supporting the growth numbers, we've seen so while it is.

Jeremy Goebel: The benefit of that is that lower-tier inventory that wasn't gonna get drilled, that could be dedicated to our system. Private equity comes in, buys it, and immediately starts to drill it, which has been supporting the growth numbers we've seen. While it is on the surface reducing rigs, the private equity is adding rigs. That's why you see stability in the rig count. Some of it's a positive for us as we see incremental production in places where we weren't seeing it before.

On the surface, reducing rig that private equity is adding rig that's why you see stability in the rig count. So some of it is a positive for us as we see incremental production in places, where we weren't seeing before.

Yes.

Sunil Sibal: Got it. Thanks for that. You know, when I look at your commodity price assumptions, it seems to me that the Canadian AECO price assumption of CAD 3.50 per gigajoule is probably one of the biggest kind of variables. Is that kind of thinking correct, and if so, any sensitivity on that price to your NGL segment?

Got it.

Thanks for that and then.

Look at commodity prices assumptions it seems to me that.

The Canadian vehicle price assumption of up to $50 million.

<unk>.

Probably one of the biggest kind of really Airbus is that thinking correct.

Sensitivity.

On that price to our NGL segment.

Willie Chiang: You know, Sunil, we've got a pretty good sensitivity on that we disclosed on one of the slides. What I would tell you got AECO. There's a lot of pieces that fit into that. You got AECO, you've got the price of the NGL barrels, and then you've got some basis differential between Mont Belvieu and the markets we serve. I would just go back to the kind of the rule of thumb that we have, which is on an annual basis, a penny's worth about $7 million of frac spread.

So now we've got a pretty good.

Sensitivity on.

That we disclosed on one of the slides what I would tell you got echo Theres a lot of pieces that fit into that you've got <unk>, you've got the you've got the price of the NGL barrels.

And then you've got some basis differential between Mount Belvieu and the markets we serve so.

Just go back to the kind of the rule of thumb that we have which is on an annual basis at penney's worth about 7 million Bucks.

A frac spread.

Jeremy Goebel: On an annual basis.

Got it.

Willie Chiang: On a clean year, right.

On a clean year right.

Okay.

Sunil Sibal: Okay, thanks.

Okay great.

Operator: I'm not showing any further questions at this time. I'd like to turn the call back over to the company for any closing remarks.

And I'm not showing any further questions at this time I'd like to turn the call back over to the company for any closing remarks.

Willie Chiang: Well, listen, thanks all of you for joining us today. Hopefully, the new time works a little bit better for folks. We look forward to seeing you soon. Have a great day.

Well listen thanks to all of you for joining us today, hopefully the new time works, a little bit better for folks and we look forward to seeing you soon have a great day.

Operator: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

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Thanks.

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[music].

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[music].

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Thanks.

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[music].

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Great.

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[music].

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Donna.

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[music].

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[music].

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Q1 2023 Plains All American Pipeline LP Earnings Call

Request a DemoDemo

PAA

Plains All American Pipeline

Earnings