Q3 2023 Enterprise Products Partners LP Earnings Call

Okay.

Yeah.

Hello, and welcome to the enterprise products Partners L. P Q3, 2023 earnings conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone you wouldn't hear automated message advising you had just raised to withdraw your question. Please press star one again.

I would now like to hand, the conference over to Randy Burkhalter VP of Investor Relations, Sir you may begin.

Each one of them.

Good morning, everyone and welcome to the Enterprise products Conference call as we discuss our third quarter earnings speakers today will be co chief executive officers of Enterprise's General partner, Jim Teague and Randy Fowler.

Members of our senior management team are also in attendance for the call today.

During this call we will make forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 1930 based.

Based on the beliefs of the company as well as assumptions made by and information currently available to enterprises management teams.

Although management believes that the expectations reflected in such forward looking statements are reasonable it can give no assurance that such expectations will prove to be correct.

Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward looking statements made during this call and so with that I'll turn it over to you Jim Okay. Thank you Randy just wondering we reported solid results for the third quarter, including adjusted EBITDA of $2 3 billion.

We had one seven times coverage of our distributable cash flow and we returned $773 million.

But we had challenges throughout the quarter.

Record heat in August and September affected.

Processing plants through good and refrigeration at our NGL export facilities, and we experienced operational challenges at our PTH plants. We were also challenged by low natural gas and NGL prices, but despite these challenges we handled record volumes across our midstream CIS.

Including our liquids pipelines natural gas pipelines, NGL fractionator and our marine terminals.

In total our pipelines transported 12 2 million barrels per day of crude oil equivalent.

In terms of hydrocarbon exports, we reported $2 1 million barrels a day.

And while most people focus on crude exports, we focused on hydrocarbon exports, we exported everything from ethylene to crude oil.

I think both Randy and I are very optimistic that our folks can do more with the assets we have.

Among some of the highlights so far this year.

<unk> growing appetite for ethane exports.

And of course, we're expanding.

Our export facility and this demand seems like it's it comes from all parts of the world.

We're also continuing to see a growing appetite for LPG exports.

And we're having productive negotiations and anticipation.

Getting our spot license to construct permits soon.

Our fundamentals group forecast have been consistently on the money in the past we have a lot of confidence in their future outlook.

Therefore, this morning, we announced an expansion of our NGL franchise, we're going to build two more 300 million cubic feet a day processing plants in the Permian one in the Delaware and Midland.

When completed we will have 19 processing trains in the in the Permian and 41 company wide.

Today, we also announced that we are converting our 210000 barrel per day seminar.

Crude oil pipeline back to NGL service to support our needed Permian NGL takeaway.

In addition, we announced our Mohit 30 inch NGL pipeline that will originate in the Permian and deliver up to 600000 barrels a day of Ngls and our storage system and Chambers County.

The beauty of this Seminole pipeline as we can seamlessly switch service between crude or Ngls or as an expansion of our new tw refined products system.

Finally, we announced today that we would bill Fracked 14, and a related D I b.

Seemingly refract 12 won't be able to fractionate, approximately 200000 barrels a day.

This will bring enterprise is company wide.

Brexit wide fractionation capacity.

The 2 million barrels a day across 20 fractionator.

We haven't just been announcing new projects, we've also been blocking and tackling and that could take up this entire hour.

Thinking about what our people are doing every day to improve the performance of our existing assets.

Operator: Hello, and welcome to Enterprise Products Partners LP Q3 2023 Ernest Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during this session, you will need to press start 1-1 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press start 1-1 again. I would now like to hand the conference over to Randy Burkhalter, VP of Investor Relations. Third, you may begin.

But one example of what we've been doing as a Permian initiative to improve the quality of the crude we deliver for our customers.

We have spent money to develop a system to monitor crude receipts to ensure that those receipts meet our specs, which mirror the platts dated Brent specs.

Since we've adopted this submission this initiative in May.

Every <unk> cargo, we bled loaded has met the platts dated Brent specs that is over 100 cargos of crude.

Randy Burkhalter: Good morning, everyone, and welcome to the Enterprise Products Conference Call, as we discussed our third quarter earnings.

Our focus on quality is extremely important to the entire producer community in order to ensure that Gulf coast crude remains highly desirable in global markets. We have also improved the quality of our Eagle Ford crude oil system not only is it made it easier to sell South Texas wheat, it's improved the <unk>.

Randy Burkhalter: Speakers today will be co-chief executive officers of Enterprise General Partner, GMT and Randy Fowler. Other members of our senior management team were also in attendance with Call today.

Randy Burkhalter: During this call, we will make four-look statements within the meeting of Section 21-E of the Security Exchange Act of 1930. Based on the police of the company, as well as assumptions made by an information currently available in Enterprise Management Team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, you can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the four-looking statements made during this call.

Rice that we get for that credit.

Or there is creating new growth projects are improving the performance of asset.

And since we have our folks enterprise people.

It continued to deliver strong financial results.

We are exceedingly proud of each and every one of Devin.

I'll turn it over to Randy Okay. Thank you and good morning, everyone.

Starting with the income statement items net income attributable to common unit holders for the third quarter of.

Jim: And so that will turn it over to you, Jim. Okay, thank you, Randy. This morning we reported solid results for the third quarter, including adjusted EBITDA of $2.3 billion. We had 1.7 times coverage of our distributable cash flow, and we retained $773 million.

2023 was $1 3 billion or <unk> 60 per common unit on a fully diluted basis.

<unk> to $1 4 billion or 62 cents per common unit on a fully diluted basis for the third quarter of last year adjusted cash flow from operations or <unk>.

Jim: But we had challenges throughout the quarter. Record heat in August and September affected our processing plants through food. And refrigeration at our NGL export facilities. And we experienced operational challenges at our PDH plants. We were also challenged by low natural gas and NGL prices. But despite these challenges, we handled record volumes across our midstream system, including our liquid pipelines, natural gas pipelines, NGL fractionators and our marine terminals. In total, our pipelines transported 12.2 million barrels per day of crude oil equivalent. In terms of hydrocarbon exports, we reported 2.1 million barrels a day. And while most people focus on crude exports, we focused on hydrocarbon exports. We exported everything from ethylene to crude oil.

Which is cash flow.

From operating activities before changes in working capital was $2 billion for the third quarters of both 2023 and 2022.

We declared a distribution of <unk> 50 per common unit for the third quarter of 2023, which is a five 3% increase over the distribution declared for the third quarter of 2022.

The distribution will be paid November 14 to common unitholders of record as of close of business.

Today.

This year marks our 25th consecutive year of distribution growth I guess, you can say you can treat that distribution is a treatment today.

Our dividend reinvestment plan and enterprise unit.

All unit purchase plan.

<unk> purchased approximately one 4 million common units on the open market for a total purchase price of approximately $37 million during the third quarter of 2023.

Jim: I think both Randy and I are very optimistic that our folks can do even more with the assets we have. Among some of the highlights so far this year is an unbelievable growing appetite for ethylene exports. And of course, we're expanding our export facility and this demand seems like it comes from all parts of the world. We're also continued to see a growing appetite for LPG exports. And we're having productive negotiations and anticipation of getting our spot licensed to construct permits soon.

Our utilization of the authorized $2 billion buyback program is unchanged at 41%.

With unit purchases for the first nine months of the year totaling approximately $3 6 million common units for a total purchase price of approximately $92 million.

For the 12 months ending September 30.

Enterprise paid out approximately $4 3 billion in distributions to limited partners. These distributions combined with $213 million in buybacks for the last 12 months result in enterprise, having a payout ratio of adjusted cash flow from operations of 56% and a payout ratio of adjusted free cash.

Jim: Foundation. Our Fundamentals Group, forecast have been consistently on the money in the past. We have a lot of confidence in their future outlook.

Flow of 90% for the for that 12 month period.

Our buyback activity has been admittedly lumpy over the last 18 months, the ped elected not to buy back equity in the third quarter during the third quarter buyback window our.

Jim: Therefore this morning, we announced an expansion of our NGO franchise. We're going to build two more 300 million cubic feet a day processing plants in the Permian, one in the Delaware and one in Midland. When completed, we'll have 19 processing trains in the Permian, and 41 company wide.

P. Wap our volume weighted average price was 98% of our 52 week unit price and we elected to be patient, we fully expect to be back in the market doing buybacks in the fourth quarter.

Jim: Today, we also announced that we are converting our 210,000 barrel per day Seminole, Crudal Pipeline, back to NGO service to support our needed Permian NGO takeaway. In addition, we announced our Bahia 30-inch NGO Pipeline that will originate in the Permian and deliver up to 600,000 barrels a day of NGOs. And our storage system in Chambers County. The beauty of this Seminole Pipeline is we can seamlessly switch service between Crudal or NGOs, or as an expansion of our new TW Repined Product System.

We have established a track record of opportunistic buybacks over the last six years, we will continue to look for opportunistic windows to reduce unit count as we remain focused on improving our cash flow per unit metrics. We recently did a comparison of the six largest north American midstream energy companies.

Those with a market capitalization over 35 billion.

Since 2019 PPD is one of only two companies to have actually reduced common units slash share count and we are the only midstream company to reduce unit count over this time period without material asset sales.

<unk> reduced its common unit count by approximately 1% over this period as did our peer while this is a modest start it is a consistent sort of buybacks for six years in a row.

Jim: Finally, we announced today that we would build Fract 14 and a related D.I.B. The practice simulator, Fract 12, will be able to fractionate approximately 200,000 barrels a day. This will bring enterprises company-wide fractionation capacity to 2 million barrels a day across 20 fractionators.

We were also one of only three companies that grew distributable cash flow per unit by 15% or more in fact for this group of six midstream energy companies PPD is the only company to have both reduced unit count and increased DCF per unit, we will.

Jim: We haven't just been announcing new projects. We've also been blocking and tackling, and I could take up this entire hour talking about what our people are doing every day to improve the performance of our existing assets. But one example of what we've been doing is a Permian initiative to improve the quality of the crude we deliver for our customers. We've spent money to develop a system to monitor crude receipts, to ensure that those receipts meet our specs which mirror the plaats dated Brent specs.

We include this peer comparison of D C DCF per unit growth.

And unit count and change in debt and our upcoming Investor Slide deck. After our peers filed their third quarter 10, Qs. We believe this will show <unk> balanced approach to increasing the value of the partnership for our limited partners over time.

Total capital investments in the third quarter of this year were 826 million, which included $722 million for growth projects and $99 million of sustaining capex.

Jim: Since we've adopted this initiative in May, every WTI cargo we've loaded has met the plaats dated Brent specs, that is over 100 cargo of crude. Our focus on quality is extremely important to the entire producer community in order to ensure that Gulf Coast crude remains highly desirable in global markets. We've also improved the quality of our Eagleford crude oil system. Not only is it made it easier to sell South Texas wheat, it's improved the price that we get for that crude. Where there's creating new growth projects are improving the performance of asset we assets we have. Our folks enterprise people continue to deliver strong financial results.

Capital investments for the first nine months of 2023 or $2 3 billion, which includes 2 billion organic growth capital projects and $284 million for sustaining capital expenditures, we expect our 2023 gross capital expenditure to totaled $3 billion.

We expect 2023 sustaining capital expenditures will be approximately $400 million.

As Jim mentioned earlier this.

Earlier. This morning, we also announced $3 1 billion of organic growth projects to expand our core NGL franchise and the most prolific basin in North America. These projects will provide additional natural gas processing and NGL pipeline and fractionation capacity to support continued.

Randy Fowler: And we are exceedingly proud of each and every one of them, but that I'll turn it over to Randy. Okay, thank you. And good morning, everyone. Starting with the income segment items, net income, attributable to common unit holders for the third quarter of 2023 was 1.3 billion or 60 cents per common unit on a fully diluted basis. Business. Compared to 1.4 billion or 62 cents per common unit on a fully diluted basis for the third quarter of last year.

<unk> production growth out of the Permian Basin. These growth projects will also bring additional volumes to our downstream NGL storage pipeline and marine terminal assets.

In addition, facilitating Permian production growth also provides indirect business opportunities for our crude oil and natural gas businesses with the addition of these four projects, we have $6 $8 billion of major growth capital expenditures of projects under construction. We are currently.

Randy Fowler: Adjusted cash flow from operations, or which is cash flow from operating activities before changes in working capital, was $2 billion for the third quarters of both 2023 and 2022. We declared a distribution of 50 cents per common unit for the third quarter of 2023, which is a 5.3 percent increase over the distribution declared for the third quarter of 2022. The distribution will be paid November 14 to common unit holders of record as of close of business today.

Forecasting 2020 for growth capital expenditures in the range of three to $3 5 billion.

We do not expect this level of capital investment to impact our distribution growth or our buyback activity in 2024 for 2024, we expect for our buyback activity to be consistent with our history of approximately $200 million to $250 million a year, we are confident the returns.

Randy Fowler: This year marks our 25th consecutive year of distribution growth. I guess you can say you can treat that distribution as a treat to that. Our dividend reinvestment plan and enterprise unit employee unit purchase plan purchased approximately 1.4 million common units on the open market for a total purchase price of approximately $37 million during the third quarter of 2023. Our utilization of the authorized $2 billion buyback program is unchanged at 41 percent with unit purchases for the first time months of the year totaling approximately $3.6 million common units for a total purchase price for approximately $92 million.

Generated by these organic capital investments in the heart of our NGL value chain will support the continued growth in <unk> cash flow per unit and free cash flow, which will support future returns of capital through both distribution growth and buybacks.

Our total debt principal outstanding was approximately $29 2 billion as of September 32023.

Assuming the final maturity date for our hybrids the weighted average life of our debt portfolio was approximately 19 years.

Our weighted average cost of debt is four 6% at September 30, approximately 96% of our debt was fixed rate.

In 2024.

Randy Fowler: For the 12 months ending September 30, Enterprise paid out approximately $4.3 billion in distributions to limited partners. These distributions combined with 213 million in buybacks for the last 12 months result in enterprise having a payout ratio of adjusted cash flow from operations of 56 percent and a payout ratio of adjusted pre cash flow of 90 percent for that 12 months period. Our buyback activity has been admittedly lumpy over the last 18 months.

Only $850 million or approximately 3% of our $28 6 billion in term debt obligations, which excludes commercial paper.

Actually mature for the three years 2024 through 2026, only 13% of our term debt obligations mature.

The combination of this modest maturity ladder, the average life of our debt portfolio and high percentage of fixed rate debt provides the partnership with ample financial flexibility and provides a solid foundation to grow cash flow per unit in other words incremental cash generated from there.

Randy Fowler: The EPD elected not the buyback equity in the third quarter during the third quarter buyback window our fee gap our volume weighted average price was 98 percent of our 52-week unit price and we elected to be patient. We fully expect to be back in the market doing buybacks in the fourth quarter. We have established a track record of opportunistic buybacks over the last six years. We will continue to look for opportunistic windows to reduce unit count as we remain focused on improving our cash flow for unit metrics.

These new projects will not be materially eroded by having to refinance our existing debt portfolio folio and the current interest rate environment, and thus will better translate into cash flow per unit growth I do not believe the value of our debt portfolio and liability manager.

<unk> is fully appreciated.

Our consolidated liquidity was approximately $3 8 billion at the end of the quarter and this includes availability under our credit facilities and unrestricted cash on hand.

Randy Fowler: We recently did a comparison of the sixth largest North American midstream energy companies those with a market capitalization over 35 billion. Since 2019, EPD is one of only two companies to have actually reduced common unit slash share count and we are the only midstream company to reduce unit count over this time period without material assets sales. EPD reduced its common unit count by approximately 1 percent over this period as did our peer.

Our adjusted EBITDA was $9 2 billion for the trailing 12 months ending September.

September 32023 compared to $9 billion.

The trailing 12 months ending September 32022.

We ended the quarter.

With a consolidated leverage ratio of 3.0 times on a net basis after adjusting debt for the partial equity treatment of our hybrid debt.

Randy Fowler: While this is a modest start, it is a consistent start of buybacks for six years on the road. We were also one of only three companies that grew distributable cash flow per unit by 15 percent or more. In fact, for this group of six midstream energy companies, EPD is the only company to have both reduced unit count and increased DCF per unit. Partners. We will include this peer comparison of DC-DCF per unit growth, change in unit count, and change in debt in our upcoming investor slide deck after our peers filed their third quarter tin queues.

<unk> reduced by the partnership's unrestricted cash on hand, our leverage target remains three times plus or minus.

Two five so the range of 275% to three five times.

Randy we can open it up for questions. Okay. Thank you Randy.

Andrew we're ready now to take questions from our participants and I would just remind our participants to please restrict your questions to one question and one follow up okay. Thank you wanted to go ahead. Thank you ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and then wait to hear your name announced with <unk>.

Your question. Please press star one again please.

Randy Fowler: We believe this will show EPD's balanced approach to increasing the value of the partnership for our limited partners over time. Total capital investments in the third quarter of this year were 826 million, which included 722 million for growth projects and 99 million of sustaining CapEx. Capital investments for the first nine months of 2023 were 2.3 billion, which includes 2 billion for organic growth capital projects and 284 million for sustaining capital expenditures.

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

Our first question comes from the lineup Theresa Chen with Barclays. Your line is open.

Good morning, Thank you for taking my questions.

Would you mind, providing some more color about what drove the magnitude of the project at.

At this specific juncture what changed versus previous expectations.

Annual Capex cadence.

Or some of these projects contemplated earlier in that Q2, and a half billion Capex range I think it's got more expensive. They are discrete projects that previously weren't any runway not been brought in.

Randy Fowler: We expect our 2023 growth capital expenditures to total $3 billion. We expect 2023 sustaining capital expenditures will be approximately $400 million. As Jim mentioned earlier this morning, we also announced 3.1 billion of organic growth projects to expand our core NGL franchise in the most prolific basin in North America. These projects will provide additional natural gas processing and NGL pipeline and fractionation capacity to support continued production growth out of the Permian Basin.

Yes.

I guess what changes the opportunities were there Teresa.

Randy Fowler: These growth projects will also bring additional volumes to our downstream NGL storage, pipeline, and marine terminal assets. In addition, facilitating Permian production growth also provides indirect business opportunities for our crude oil and natural gas businesses. With the addition of these four projects, we have $6.8 billion of major growth capital expenditures of projects under construction. We are currently forecasting 2024 growth capital expenditures in the range of $3.5 billion. We do not expect this level of capital investment to impact our distribution growth or our buyback activity in 2024.

And.

We felt like is the right time to go I know Theres a lot of.

Questions in the past on Shin Oak and as we look at what we're doing out in the Permian, We felt like we needed to move on Shin oak given that we're going to build two more plants.

Bringing our plants out there the 19, which is quite a lot of y grade.

Chris.

Yes, Theresa this is Chris.

What we've been talking about on the last quarter's earnings call was that we were looking for what was the most effective way to expand our NGL takeaway capacity out of the basin and as Jim alluded to with some of the commercial successes, we've had in expanding and.

And winning contracts on.

Alan.

Gas processing capacity, we came to the conclusion that we needed to build the full Bahia pipeline.

And as a result of that downstream.

Downstream of that you need additional frac capacity so in our minds that these things go very much hand in hand, and it is in the core of our NGL franchise.

And as evidenced that twice a week.

We took similar a lot of crude service because we need NGL takeaway right now until the pipeline gets in service so.

Randy Fowler: For 2024, we expect our buyback activity to be consistent with our history of approximately 200 million to 250 million a year. We are confident the returns generated by these organic capital investments in the heart of our NGL value chain will support the continued growth in EPD's cash flow per unit and pre cash flow, which will support future returns of capital through both distribution growth and buybacks. Our total debt principle outstanding was approximately 29.2 billion as of September 30, 2023.

<unk>.

2014 will be full and those two processing plants, when we bring them on will be full right Natalie.

Got it.

Would you also be able to provide an update on the commercialization progress for spot and would it be possible to maybe move some or all of that echo export volumes over spot, maybe supplementing that commercialization effort, if anything and that would make space I imagine for incremental NGL exports.

Randy Fowler: Assuming the final maturity day for our hybrid, the weighted average life of our debt portfolio was approximately 19 years. Our weighted average cost of debt is 4.6%. As September 30, approximately 96% of our debt was fixed rate. In 2024, only 850 million or approximately 3% of our 28.6 billion in term debt obligations, which excludes commercial paper, actually mature. For the three years 2024 through 2026, only 13% of our term debt obligations mature.

Given that you do see a tremendous amount of NGL growth across your system underlying your project announcements today, which includes expansions nearly along.

Every aspects of your NGL infrastructure value chain excess exports.

Yes, we're going to.

We're having some productive negotiations.

With producers and.

Large trading houses on.

On spot.

Frankly, I am getting more.

Optimistic by the day.

Randy Fowler: The combination of this modest maturity ladder, the average life of our debt portfolio and high percentage of fixed rate debt provide the partnership with ample financial flexibility and provides a solid foundation to grow cash flow per unit. In other words, incremental cash generated from these new projects will not be materially eroded by having to refinance our existing debt portfolio. And the current high interest rate environment and thus will better translate into cash flow per unit growth.

Yes.

We have that record of decision, we're still waiting on Bob Sanders the license to construct which we're hoping we expect to have by the end of the year, we're continuing to work with mayor Ed and the department of transportation on moving that forward. So.

Timing is relatively short yesterday.

You got anything.

Overall, the momentum on spot it continues to get better and better.

Your earlier question. This question.

To me, it's what do we believe as a company.

I think Tony Chovanec, and his group need to take a victory lap for their ability to forecast production.

Randy Fowler: I do not believe the value of our debt portfolio and liability management is fully appreciated. Ltd. Our consolidated liquidity was approximately $3.8 billion at the end of the quarter, and this includes availability under our credit facilities and unrestricted cash on hand. Our adjusted EBITDA was $9.2 billion for the trailing 12 months ending September 30, 2023 compared to $9 billion for the trailing 12 months ending September 30, 2022. We ended the quarter with a consolidated leverage ratio of 3.0 times on a net basis after adjusting debt for the partial equity treatment of our hybrid debt and reduced by the partnerships unrestricted cash on hand. Our leverage target remains 3 times plus or minus 0.25, so the range of 2.75 to 3.25 times.

And spot is going to be about what the Permian basin does from.

From crude oil and all things and that's what all of these projects along toward.

And then.

To the question of more LPG out of the ship channel I think everybody knows how much I love the Houston ship channel.

<unk>.

The neat thing about the sheep.

<unk> channel is.

Yes.

You have two way traffic.

From what I understand daylight restrictions will be lifted November 1st, but then when they widen that that's even if we can get a lot more traffic come down that channel Bob Yes, Thats, absolutely correct wider channel is going to allow us to move more product whether its LPG as a crude oil.

Our ethane.

Got it thank you.

Randy Burkhalter: With that, Randy, we can open it up for questions. Okay, thank you, Randy. Twanda, we're ready now to take questions from our participants, and I would just remind our participants that to please restrict your questions to one question and one follow-up. Thank you. Twanda, go ahead. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press start 1-1 on your telephone, and then wait to hear your name announce. To withdraw your question, please press start 1-1 again. Please stand by while we compile the Q&A roster.

Thank you.

Please standby for questions Kevin.

Our next.

Comes from the line of Jeremy Tonet with J P. Morgan Securities. Your line is open.

Hi, good morning.

Good morning.

Just wanted to come back to capital allocation appreciate the deep commentary in the prepared remarks there.

But just wanted to kind of come in overlaying once once these projects into service our projects announcing today enterprise appears well positioned generate significantly more free cash flow and.

Teresa Chen: Our first question comes from the line up to Risa Tun with Barclays. Your line is open. Good morning. Thank you for taking my questions. Would you mind providing some more color about what throws the magnitude of the project FIDs at this specific juncture? What changed versus previous expectations the annual growth of CapEx cadence, and were some of these projects contemplated earlier in that 2.2 and a half billion CapEx range, but things got more expensive, were they're discrete projects that previously weren't in your one way not been brought in.

And dropped leverage well below three times here it seems.

I believe your messaging highlights the ability to return more cash to investors with these projects and maybe could you talk us through how you see enterprises capital allocation unfolding in particular given.

The potential for Lumpiness as you described.

Yes, Jeremy.

I think we've demonstrated as far as coming in and consistently.

I'd like to say we balanced.

The buybacks would continuing to invest.

Teresa Chen: I guess what changes the opportunities were there at Teresa. And we felt like it's the right time to go. I know there's a lot of questions in the past on Shino. And as we look at what we're doing out in the Permian, we felt like we needed to move on Shino given that we're going to build two more plants and bringing our plants out there to 19, which is quite a lot of way.

And the and the partnership and grow cash flows per unit and to meet the cash flow per unit growth is the main metric that and leverage.

And keeping leverage in check.

Is really the main metric because the more cash flow per unit you grow.

Eventually this is going to translate into.

Free cash flow because again I think our growth capex is lumpy over time.

Chris Nelly: That's great. Yes, Teresa. This is Chris Nelly. You know, I think, you know, what we've been talking about on the last quarter's earnings call was that, you know, we were looking for what was the most effective way to expand our NGO take away capacity out of the basin. And, you know, as Jim alluded to with some of the commercial successes we've had in expanding and winning contracts on, on, on gas processing capacity.

We.

In 2020 for what we said we were going to be back in the range of three to three five times and some of that is we have a number of projects I keep heightened use word lumpy. So we have some material projects out there whether it's our niches river.

Export, our ethane and propane export facility or whether it's the Bahia pipeline that are fairly large projects.

Chris Nelly: We came to the conclusion that we needed to build before the via pipeline. And as a result of that, you know, downstream of that, you need additional frag capacity. So in our minds that these things go very much hand in hand, and it is in the core of our NGO franchise. You know, and as evidence to that, Teresa, we, we took some and a lot of crude service because we need NGO take away right now until the via pipeline gets in service. So. Track 14 will be full, and those two processing plants, when we bring them on, will be full, right, Natalie? Got it.

Once you get past those natural gas processing plants NGL fractionator are very.

Our very.

Manageable growth Capex.

Spot would be out there.

If we can go ahead and finish commercializing that but thats something thats going to be spread out over three three and a half years, so I really see.

The period, where we're investing to three $3 5 billion a year is pretty limited and.

And so as a result, I think once you get out further call. It 25, 26, 27, we ought to be thrown off.

Jim: Would you also be able to provide an update on the commercialization progress for spot, and would it be possible to maybe move somewhere all of the echo expert volumes over spot, maybe supplementing that commercialization effort of anything? And that would make space, I imagine, for incremental NGL exports, given that you do see a tremendous amount of NGL growth across your system underlying your project announcement today, which includes expansions nearly along every aspect of your NGL infrastructure value between accept exports.

Good better free cash flow as you say.

Right now, we don't see the need to come in and reduce leverage any more from where we are today with a target of three three.

Three times, so again that provides more cash for distribution growth on buybacks.

Got it.

That's very helpful. Thanks, and then just wanted to pivot back to the projects announced today, a little bit more if I could and clearly the growing logistics needs associated with robust Permian production is the focal point for midstream here.

Highlighted by our announcement today, and so diving in a little bit more here on the NGL pipe side specifically.

Jim: Yeah, we're going to, we're having some productive negotiations with producers and large trading houses on spot. And frankly, I'm getting more optimistic by the day, we have that record of decision. We're still waiting on Bob Sanders, the license to construct, which we're hoping we expect to have by the end of the year. We're continuing to work with Mirad and the Department of Transportation on moving that forward, so timing is relatively short, yes sir.

With today's announcement and the NGL pipe additions appear to outpace I guess, the $1 2 million of NGL production growth Enterprise six 2030, if you look at all the NGL pipes, I think talked about in the industry and granted enterprise as acreage dedications in a closed loop system, which provides barriers to entry there but.

Do you see risk to a looser NGL pipeline market down the road and how did enterprise against comp comfort in this size of an NGL pipe.

You bet.

Jim: You got anything for it? No, I think overall the momentum on spot continues to get better and better. And the earlier question, this question, to me, what do we believe as a company? I think Tony Chavonic and his group need to take a victory lap or their ability to forecast production and spots going to be about what the premium base and does from crude oil and all things. And that's what all these projects align toward.

You're talking about.

The 30 inch Bahia.

Well, yes, just given.

Sorry.

We felt like that was the right size given what we see.

Yes, a lot of people.

Tony looking at sometimes is a damn Permian.

About 10 stacked pays.

Currently greater than that particularly on the Delaware side, Jim Yes, plus from the Middle and then I look at what somebody like Exxon CEO said about getting more efficient in getting better recoveries and I think we're just scratching the surface and I think we will.

Jim: To the question of more LPG out of the ship channel, I think everybody knows how much I love the Houston ship channel. And you know, the neat thing about the ship channel is, you have two way traffic. From what I understand, daylight restrictions will be lifted November 1st, but then when they widen it, that's even we can get a lot more traffic coming down that channel, Bob. Yes sir, that's absolutely correct. The wider channel is going to allow us to move more product, whether it's LPG's or crude oil. Or FN. Got it.

Unknown Executive: Thank you.

One thing, Jim Teague, Capes, and Randy Fowler hates are empty assets.

And they won't stay empty for a loan and.

And Jeremy what I'd add also felt the timing was good Rusty Brazil had a.

Note that also highlighted in the last week in the last week, Tony you want to hit some of the.

Yes, so look when we look at our production forecast EIA actuals for what those words of work are supposed to be out today or tomorrow, but if we go through what they have for actuals just through July we're showing 853000 barrels of growth in crude oil production for this year. So far now they've been a very.

Jeremy Tonet: Please stand by for a question. Our next question comes from the line of Jeremy Tillnet with JP Morgan Securities. Yaline is open.

Their data is very hard to set your watch to admittedly.

But.

We had talked about one 8 million barrels over a three year period 'twenty through.

Jeremy Tonet: Hi, good morning. I just want to come back to capital allocation. Appreciate the deep commentary and the prepared remarks there. But just wanted to kind of come in, you know, overlaying once these projects and to service the projects announced me today. Enterprise appears well positioned, generates significantly more free cash flow and drop leverage well below three times here. I believe in messaging highlights the ability to return more cash to investors with these projects.

25, Okay, and people said well how do you gauge it year to year it's.

It's hard to tell but just divided evenly definitely take the over on 600 for 2023 without a doubt for crude oil additions and I have to tell you when I look at what's going on relative to activity.

And profitability for the for the for the produce I have to ask myself whats going to change this trajectory in 2024 or for that matter whats going to change in 2025.

Jeremy Tonet: And maybe because you talk us through how you see enterprises capital allocation unfolding and particularly given the potential for lumpiness as you describe. Yeah, Jeremy, I think we've demonstrated as far as coming in and consistently, and I'd like to say we've balanced the buybacks with continuing to invest in the partnership and grow cash flows per unit. And to me, the cash flow per unit growth is the main metric that in leverage.

Brent and thank you for the commentary I mean, we spend a lot of time and a lot of effort.

Have sources that are significant relative to things, we buy and then that we.

I will now go mate with I would call it data science and data engineering, but last but not least we have a significant amount of institutional knowledge from the army of people that we have.

On top of that.

Remember, we're taking chaparral lot of NGL service.

And those and then we took a seminal out of NGL service now, we're putting it back into NGL service, which says Hey, you guys need more takeaway right now which is true and then we will have the option, but here it comes out.

Jeremy Tonet: And keeping leverage in check is really the main metric because the more cash flow per unit you grow, eventually this is going to translate into free cash flow. Because again, I think our growth cap X is lumpy over time. You know, we, in 2024, we said we were going to be back in the range of 3 to 3.5 times. And some of that is, you know, we have a number of projects, I keep using word lumpy, but we have some material projects out there, whether it's our net just river export our ethane and propane export facility, or whether it's the behia pipeline that apparently large projects.

As to what we do with <unk> and we can do one of three things with it.

We're pretty damn good at Repurposing.

I would look at enterprises Permian assets as a portfolio and I think we've demonstrated what Jim said is that we.

We use those pipes for how the market sees fit.

And I would expect us to do that going forward.

Got it I'll leave it there thank you.

More of an answer than you wanted wasn't it.

Jeremy Tonet: Once you get past those natural gas processing plants, NGO fractionators are very manageable growth cap X spot would be out there, you know, that if we can go ahead and finish commercializing that, but that's something that's going to be spread out over three, three and a half years. So I really see the period where we're investing to three, three and a half billion a year is pretty limited. And so as a result, I think once you get out further, call it 25, 26, 27, we ought to be throwing off a good bit of free cash flow, as you say, right now we don't see the need to come in and reduce leverage any more from where we are today with the target of 3.3 times.

Thank you.

Please standby for our next question.

Our next question comes from the line of Tristan Richardson with Scotiabank. Your line is open.

Hi, Good morning, all just in the context of NGL production outlook, you offered in and really how critical and unique the export complex is can you talk about the competitive landscape for NGL export capacity, particularly now as some of your peers might like to enter this market either be it M&A or organically.

Hi, Justin this is Jim.

Yes, we keep hearing that.

Yeah.

I personally think we made a mistake and maybe it was I made a mistake when we were the only game in town.

And that we went after pretty happy when I wish would have gone after lower fees, because we opened the door.

Jeremy Tonet: So again, that provides more cash for distribution growth and buybacks. Got it. That's very helpful there. Thanks. And then just wanted to pivot back to the projects announced today a little bit more if I could and clearly the growing logistics needs associated with robust permeant production is the focal point for midstream here. Highlight by your announcement today. And so diving in a little bit more here on the NGO pipe side specifically with today's announcement and the NGO pipe additions appeared out case, I guess, the 1.2 billion of NGO production growth enterprise, 20, 30, if you look at all the NGO pipes.

For our competition.

That won't happen again.

I don't know how a greenfield project competes with the brownfield project, especially when you have someone like enterprise, that's going to be them aggressive and holding market share or even grow in it.

Super helpful. I appreciate the context and then.

You've talked about all of the folks in enterprise are very focused and incentivized around project nine three.

Can you give an update there as we near year end and really more importantly, any thoughts yet on an incentive targets or goals for 2024.

Jeremy Tonet: I think talked about the industry and granted enterprise as acres, sedications and a closed loop system, which provides barriers to entry there, but DC risk to a looser NGO pipe wine market down the road and how did enterprise against gain comfort comfort in this size of an NGO pipe. You're talking about 30 inch by here. Yeah, just give it. Sorry. We felt like that was the right size given what we see, you know, you know what a lot of people what I have Tony looking at sometimes is a damn permeant.

Nine three was never intended to be guidance. Although they are all every one of you guys took it as such.

Hello.

It was a goal and I can't remember the last time, we missed meeting ago.

Appreciate it thanks, Tim.

Thank you.

Please standby for our next question.

Our next question comes from the line of Jean Ann Salisbury with Bernstein. Your line is open.

Jeremy Tonet: 10 stack pays, Greater than that, particularly on the Delaware side, Jim, plus on the middle of it. And then I look at what somebody like Hexon CEO said about getting more efficient and getting better recoveries. And I think we're just scratching the surface and I think one thing Jim T. Cates and Randy Fowler hates are empty assets and they won't stay empty for long. Yeah, and Jeremy, what I had also thought the timing was good, Rusted Brazil had a note that also highlighted in the last week.

Hi, good morning, there's not really any Gulf coast LPG export capacity being added until mid 2025, do you see export capacity getting tight over the next year and a half and could that be a tailwind for you next year.

It will be very tight Jean Ann.

Alright.

Yes.

And a follow up.

We announced a lot of organic Permian G&P growth today can you talk about how you looked at the pros and cons of organic versus inorganic <unk> adds in the Permian, There's obviously a lot of options.

Jeremy Tonet: Yeah, in the last week, Tony, you want to hit some of the... Yeah, so look, when we look at our production forecast, the EIA actuals for what those words of work are supposed to be out today or tomorrow, but if we go through what they have for actuals just through July, they're showing 853,000 barrels of growth in crude oil production for this year so far. Now, they've been a very... Their date is very hard to set you watch to, admittedly.

And with organic you can build plants, where you want them.

And you don't have to deal with some.

Acquiring a company that has a hell of a lot of our.

Dedications to other companies.

So we just we can build them, where we want them and when we control the liquids.

Yes.

That's all for me thank you.

Thank you.

Please standby for our next question.

Jeremy Tonet: But we had talked about 1.8 million barrels over a three-year period, 23 to 25, okay. And people said, well, and you know, how do you gauge it year to year? And I said, well, it's hard to tell, but just divided even more. I'll definitely take the over on 600 for 2023 without a doubt for crude oil additions. And I have to tell you, when I look at what's going on relative to activity and profitability for the produce, I have to ask myself, what's going to change this trajectory in 2024?

Our next question comes from the line of Brian Reynolds with UBS. Your line is open.

Hi, Good morning, everyone. Maybe a question for Tony to follow up on some of the Permian fundamentals clearly a lot of these new product announcements are predicated on Permian crude and NGL forecast going forward and Jim you discussed some significant efficiencies that are expected in the Permian.

Through this timeframe so kind of curious if you can discuss how many of these efficiencies do you need to show up in these numbers to be realized in your view and then second kind of.

Jeremy Tonet: Or for that matter, what's going to change in 2025? You know, Brent, and thank you for the commentary. I mean, we spend a lot of time and a lot of effort. You know, we have sources that are significant relative to things we buy, and then that we... I'llalgamate with how we'd call it data science and data engineering, but last but not least, we have a significant amount of institutional knowledge from the army of people that we have.

Does this imply for the Permian rig count going forward to see that we have seen some weakness going forward, but the medium term outlook still seems to be intact.

Well I'll start out.

When we did our forecast.

We projected what activity was going to be so Permian rig counts, we said would range between $3 15 and 320.

In that range between $303 25, so it's not hard math there for Frac crews, we estimated between $1 35, and $1 50 in there between $1 45 to 160.

Jeremy Tonet: On top of that, you know, remember, we're taking Shaparell out of NGL service. And then we took a Subinoe out of NGL service. Now, we're putting it back into NGL service, which says, hey, you guys need more takeaway right now, which is true. And then we will have the option once the year comes on as to what we do with Subinoe, and we can do one of three things with it. And we're pretty damn good at repurposing.

It's producers' behavior.

And look there are customers, we talk to them we plan.

Projects and capital and in hand with them. So we have a significant amount of what I'd call institutional knowledge.

Tony Let me ask them when youre forecasting the gel build in any growing efficiencies.

It's a great question, we do not put coefficient in there for growing efficiencies and they've been growing for 10 years I don't know what stops them at this point.

Jeremy Tonet: I would look at enterprises and perming assets as a portfolio. And I think we've demonstrated what Jim said is that we use those pipes for how the market sees fit. And I would expect us to do that going forward. Got it. I'll leave it there. Thank you. I was more of an answer than you wanted, wasn't it? Thank you. Please stand by for our next question.

Jim to your point about 80 producers that have rigs working in the Permian basin today out of those 80, only 20 of them have cyber greater rigs running okay. There is significant upside as far as that 60 producers to have less than five rigs running.

A lot of metrics you can look at but that's a simple one.

That's the reality and I guess Tony also.

Tristan Richardson: Our next question comes from the line of Tristan Richardson. Let's go Shavite. The line is open.

The forecast your team worked on did not assume a higher recovery of reserves no sorry, I did not.

Jim: Hi, good morning all. Just in the context of the NGO production outlook you offered and really have critical and unique the export complexes. Can you talk about the competitive landscape for NGO export capacity? I mean, particularly now as some of your peers might like to enter this market, either BNA or organically. Hi, Tristan, this is Jim. Yeah, we keep hearing that. You know, we, I personally think and we made a mistake and maybe it was I made a mistake when we were the only game in town in that we went after pretty high fees when I wish we had gone after lower fees because we opened the door for a competition.

Assumes historical recoveries, which are in the high single digit range.

Now, we all know that.

At least two majors have said that that is not how they are forecasting going forward. So G&A and all of that would be using our Louisiana term millennia.

A little something extra.

Hi, Brian Great Alright. Thanks, I appreciate it appreciate the color on that maybe just a quick follow up on the Permian natural gas liquids Seminole conversion.

Seems to be catered towards the highest margin molecule, whether thats crude and natural gas liquids or I think you kind of referenced refined products.

Jim: That won't happen again. I don't know how a Greenfield project competes with the Brownfield project, especially when you have someone like Enterprise that's going to be them aggressive and holding market share or even growing it. Super helpful appreciate the context and then you've talked about all of the folks in Enterprise are very focused and incentivized around project 9.3. Can you give an update there as we near your end and really more importantly any thoughts yet on on incentive targets or goals for 2024?

In your prepared remarks going forward so.

Given the opportunities for spot in 2025, plus pet Chem 2025, plus how.

How should we think about maybe.

<unk> for Shin Oak and assemble kind of just go to the highest margin market does that kind of just a wait and see what the market is going to give you in that timeframe or do you ultimately see seminal returning back to crude surplus if you do want to pursue.

Exports.

Okay.

I think we're going to stay flexible Brian.

I mean, all of the above as possible are those.

For full it's possible, we'll just build another one.

It's really dependent on spot success and like I said earlier, we're getting a lot more optimistic.

Jim: You know, 9.3 was never intended to be guidance, although everyone you guys took it as such. It was a goal. It was a goal and I can't remember the last time we missed meeting ago. Appreciate it. Thanks, Jim. Thank you. Please stand by for our next question.

On being able to.

I get this thing done with.

Good commercialization, we're talking to a lot of people retina.

Britain we're in.

Europe.

About three weeks ago Grant.

And our sole purpose was to promote spot and we got some pretty good feedback from people.

Great. Thanks, I'll leave it there and enjoy the rest of the morning.

Gene Southbury: Our next question comes from the line of gene and Southbury with Bernstein.

Thank you.

Please standby for our next question.

Jim: Yalana is open. Hi, good morning. There's not really any Gulf Coast LPG export capacity being added until like mid 2025. Do you see export capacity getting tight over the next year and a half? And could that be a tailwind for you next year? Don't be very tight. You obviously announced a lot of organic Permian GMP growth today. Can you talk about how you looked at the pros and cons of organic versus in organic GMP ads and the Permian?

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

Thanks, operator, good morning, everybody at few clean up questions for me, Randy you're going to see if I can try and get you to say lumpy one more time, but just going back to spot and thinking about capital allocation next year.

You mentioned that you'd still be able to sort of maintain this level of distribution growth.

With the current Capex program and not come off this sort of buyback plan, but I just want to verify if spot those get sanctioned capex, presumably gets higher and I think you guys lean on the balance sheet, maybe for the first time in a while so just curious is all that still hold if spot does get sanctioned.

Jim: There's obviously a lot of options. And with organic you can build plants where you want them. And you don't have to deal with some acquiring a company that has a hell of a lot of dedication to other companies. So we just can build them where we want them and when we control the liquids.

Unknown Executive: Cool.

Unknown Executive: That's all for me.

Hi.

Bob how many once once we get a license to construct we're not through all we know so thats just the first of about 24 that are needed.

Unknown Executive: Thank you.

So it's going to take a while to license to construct mid mainland go out there and start digging ditches.

Sir.

Brian Reynolds: Please stand by for our next question. Our next question comes from the line of brine Reynolds with EBS.

That is a ramp up on cash flow.

Yes.

That's fair I think again.

With or without spot it doesn't impact 2024, and frankly, most I mean, if we're successful with spot most of that's going to be 'twenty five 'twenty six 'twenty seven.

Brian Reynolds: Yalana is open. Hi, good morning, everyone. Maybe a question for Tony to follow up on some of the Permian fundamentals. Clearly a lot of these new project announcements are predicated on, you know, Permian crew and NGO forecast going forward. And Jim, you discuss some significant efficiencies that are expected in the Permian, you know, through this time frame. So kind of curious if you can discuss, you know, how many of these efficiencies we need to show up with these numbers to be realized in your view.

We're in we're in good shape to continue distribution growth and buybacks during that time period.

The one thing I would also add to that is I still think even if we get to a point where spot is sanctioned we will still be within our.

Three times leverage plus or minus a quarter of a turn.

Brian Reynolds: And then second kind of business imply for the Permian grid count going forward to seeing that we have seen some weakness going forward. But the meeting term outlook seems to be. Thanks. Well, I'll start out when we did our forecast, we projected what activity was going to be so Permian Brick counts we said would range between 315 and 320 and they've range between 300 and 325. So not hard math there. For five crews, we estimated between 135 and 150 and they're between 145 and 160.

Got you Okay. That's helpful color there.

So I'm just going to M&A from two different perspectives. So one I guess on the upstream side, we've seen a lot of your customer base continue to consolidate.

I'm curious just to get your updated views on the potential impact to EQT into midstream broadly and then as we think about M&A for free PD, just given the slate of growth projects in front of you I imagine youre sort of out of that market at the time being but sand put words in your mouth.

Unlike what Randy says price matters.

Right deal the right price I'm not sure with back away from it but it's got to be the right deal at the right price that fits us strategically.

Brian Reynolds: It's producer's behavior. And look, there are customers, we talked to them, we plan projects and capital and in hand with them. So we have a significant amount of what I'd call institutional knowledge. Tony, I only asked you your forecast. Did y'all build in any growing efficiencies? No, it's a great question. We do not put a coefficient in there for growing efficiencies and they've been growing for 10 years. I don't know what stops them at this point.

All right I'll leave it there thanks guys.

Thank you.

Please standby for our next question.

Our next question comes from the line of John <unk> with Goldman Sachs. Your line is open.

Hey, good morning, everyone. Thanks for the time I wanted to pick up on something that I think Chris mentioned earlier in the call.

Brian Reynolds: But to Jim to your point, there are about 80 producers that have rigs working in the Permian Basin today out of those 80 only 20 of them have five or greater rigs running. Okay, there is significant upside as far as that's 60 producers that have less than five rigs running. There's a lot of metrics you can look at, but that's a simple one. That's the reality. And I guess Tony also the forecast that your team worked on did not assume a higher recovery of reserves.

Just in terms of we're looking at all of these new Permian growth projects on the NGL side, how much how much of the flow do you think it's going to come from.

Our own plants on the PD side versus third party flows and if we're thinking about that overall, how do you think your market share trends on.

NGL pipeline throughput over the next couple of years.

You got any idea.

And I think going back to some of the the previous commentary our G&P asset basis, what the feeder to our NGL pipes will continue to be and will continue growing on a percentage basis.

Brian Reynolds: No, sir, it did not. It assumes historical recovery switcher in the high single digit range. Now, we all know that at least two majors have said that that is not how they are forecasting going forward. So Gina and all that would be using a Louisiana term, a land yeah, a little something extra. Great. Thanks appreciate appreciate the color on that. Maybe just a quick follow up on the Permian natural gas liquids, you know, seminal conversion, you know, seems to be catered towards the, you know, the highest margin molecule, whether that's crude and natural gas liquids.

Don't have that.

The exact percent, but I bet, it's 80 plus percent fed from our own GMP and I would expect that's going to continue to grow as.

As we continue to grow that footprint.

Alright, Thats fair I appreciate it maybe maybe just shifting gears quickly.

<unk>.

You had the commentary on the PVH to ramp in there just maybe can give us an update now that we're a little bit into the fourth quarter and what we should look for there.

Brian Reynolds: Or I think you kind of reference refined products in your prepared marks going forward. So, you know, just given the opportunities for for spot in 2025 plus pet cam 2025 plus, you know, how should we think about maybe opportunities for for Shinokin seminal kind of just go to the highest margin market. Is that kind of just a wait and see what the market can give you in that timeframe, or do you ultimately see seminal, you know, returning back to crude service if you do want to pursue crude exports.

We did have some operational issues in the.

In the third quarter with the ph.

We're working on some.

Issues with a reactor where the license or we should have that resolved later this month and expect this to be one off and returning to full operation.

Later in November.

I appreciate time, thank you.

Thank you.

Please standby for our next question.

Brian Reynolds: I think we're going to stay flexible grind, but I mean, all of the above is possible or if those are full, it's possible, we just build another one. It's it's really dependent on spot success. And like I said earlier, we're getting a lot more optimistic. On being able to get this thing done with good commercialization, we're talking to a lot of people right now, we're in Europe, what three weeks ago, Brent. And our sole purpose was to promote spot and we got some pretty good feedback from people. Great, thanks. I'll leave it there. I'll do it the rest of your morning. Thank you.

Our next question comes from the line of Michael Blum.

Thanks, Good morning, everyone.

Unknown Executive: Please stand by for our next question.

Oh.

I'm sorry.

No worries thanks.

So a lot of questions. Obviously today on projects and then supply, but I'm wondering if you can give us an update on what youre seeing on the demand side.

Clearly in China and India.

And how.

Panama Canal issues are impacting you.

Your exports and then.

Second part of that question is really the same question, but longer term, you're obviously very bullish on U S supply here for a long time, where do you see all these all these products are.

Being consumed do you see that shifting at all from from the current setup.

Spiro Dounis: Our next question comes from the line of Spiro Dounis with City. The line is open. Thanks, operator. Morning, everybody. If you clean up questions for me, Randy is going to see if I can try and get you to say lumpy one more time. But just going back to spot and thinking about capital allocation next year, I think you mentioned that you still be able to sort of maintain this level of distribution growth with the current CAPEX program and not come off this sort of buyback plan, but I just want to verify if spot does get sanctions, CAPEX presumably goes higher.

Okay.

I'll start.

I'll, probably ask Brent a question.

Yeah.

As I've said in our script Michael.

Spiro Dounis: And I think you guys lean on the balance sheet. Maybe for the first time in a while, so just curious is all that still hold if spot does get sanctioned. Bob, how many, once once we get a license to construct, we're not through are we? No, sir, that's just the first of about 24 that are needed. So, so it's going to take a while to license to construct didn't mean we can go out there and start digging ditches.

It's been a pleasant surprise that the appetite for ethane.

And that's not yet.

It's in Europe.

Asia and.

We've got a couple more contracts that I expect that we will sign so.

I thought ethane was going to be just a point to point project.

I wanted to build the first one but I didn't really expect it looks to me like it's becoming much more of a traded product more so than I expected and then Brent speak to.

The type of people that type of demand, we see on thing on LPG.

Yes, Michael if you just look at in the third quarter, where the LPG cargoes, when 55% with Asia, 18% went to the Americas, 17% Europe, 9% Africa.

Spiro Dounis: No, sir. Yeah, so I fear I think again, whether whether without spot it doesn't impact 2024 and frankly, most, I mean, if we're successful with spot, most of that's going to be 25, 26, 27. And we're in we're in good shape to continue distribution growth and and buybacks during that time period. Chris, one thing I would also add to that is if I still think even if we get to a point where spot is sanctioned will still be within our if three times leverage plus or minus a quarter of a turn. Gotcha.

If you were to go trend that and look at the incremental molecule words going Asia is far and away the leader.

Where each molecule goes.

On the demand side of what the.

LPG is used for about one third is used for <unk>. Two thirds is used for call it human needs.

Cooking and heating.

Tony gave us some numbers.

Say it was yesterday.

I'm going to try to do is notes, but about IAA came out and said one 5 billion people use LPG for cooking and heating.

Jim: Okay, I hope we'll call it there. I'm just going to MNA from two different perspectives. So one, you know, I guess on the upstream side, we've seen a lot of your customer base continue to consolidate. I guess I'm curious just to give you your updated views on the potential impact to EPD into midstream or broadly. And then we think about MNA for a prepd just given the split of growth project in front of you.

If you look at the estimates through 2030, there is about 2 billion people, who don't have access to it.

If you look at the same consumption per capita.

1 billion people would need about 3 million barrels of LPG between now and two thirds 2030, and if you look at Tony's forecast.

Jim: I imagine you're sort of out of that mark the time being, but don't put words in your mouth. I like what Randy says price matters right deal the right price. I'm not sure would back a well from it, but it's got to be the right deal at the right price that fits us strategically. All right, I'll leave it there. Thank you. Please stand by for our next question.

Little shy of 600000 barrels of LPG from the U S. Through 2030, so the middle East will make up some of that but at some point. The U S. Producers are going to have to step up and fill that void.

Hi, Chris.

Organization that said propane and natural gas was.

Was a transitional year.

Yes, Jim MSCI recently came out.

Upgraded enterprise to an a rating for their ESG score.

John McKay: Our next question comes from the line of John McCay with Goldman Sachs. The line is open. Hey, good morning, everyone. Thanks for the time. I wanted to pick up on something that I think Chris mentioned earlier in the call. Just in terms of we're looking at all these new Permian growth projects on the NGL side. How much how much of the flow do you think is going to come from. You know, your own plants on the EPD side versus third party flows.

I think it really is a result of the static branches throughout again, if you think about what lpg's do in improving the quality of life for people and call to southern Hemisphere.

That is an absolute game changer, needing 3 million barrels a day of additional LPG between now and the end of the decade is really the reason why MSCI came out and said Okay. Lpg's are now eight a greens green fuel if you will.

John McKay: And if we're thinking about that overall, you know, how do you think your market share trends on NGL pipeline throughput over the next couple of years. Justin, you got any idea? I think going back to some of the previous commentary. I mean, our GMP asset bases, what the feeder to our NGO pipes will continue to be and will continue growing on a percentage basis. Don't have the exact percent, but I bet it's 80 plus percent that fed from our own GMP and I would expect that it's going to continue to grow as we continue to grow that footprint.

Yeah.

I'd like to add relative to solar and when you think about Africa. Okay.

John McKay: That's fair, I appreciate it.

It's going to happen, they're going to use it but solar no matter. How you think about it is it is not a good choice to cook and eat homes with its simply has not and people in Africa.

They're going to get more and natural gas and electricity are very expensive can move around that's what we've seen over the last 10 or 12 years with LPG you get a lot of energy not hard to move around it's not hard math.

A little yes sure absolutely.

Absolutely.

Unknown Executive: Maybe, maybe just shifting gears quickly. Have the commentary on the PDH2 ramp in there, just give us an update now that we're a little bit into the fourth quarter and what we should look for there. We did have some operational issues in the third quarter with the PDH. We're working some issues with the reactor with the license, or we should have that resolved later this month and expect it just to be one off and returning to full operation later in November. All right, appreciate time. Thank you. Please stand by for our next question.

And I go back to paraphrase Daniel Yergin. This world is never done energy transition that is only done Energy addition, I don't think.

We're going to see more of that.

Great. Thank you for all the color I appreciate it.

Thank you.

Please standby for our next question.

Our next question comes from the line of Keith Stanley with Wolfe Research. Your line is open.

Hi, good morning.

Had a question on the quarter and then a follow up on the NGL pipes. So.

On the quarter, just NGL marketing has been softer this year than last year any any drivers you'd highlight and the frac margin too you had a huge step up in volumes with the new frac, but the per unit margin was down a lot anything you'd call out there.

Michael Blum: Our next question comes from the line of Michael Bloom. Thanks. Good morning, everyone. I'm sorry. No worries. Thanks.

Jim: So a lot of questions, obviously today on the projects and on supply, but what do we give us an update on what you're seeing on the demand side, particularly in China and India and how any Panama Canal issues are impacting your exports. And then the second part of that question is really the same question, but longer term. You know, you're obviously very bullish on the U.S, supply here for a long time.

Talk just Frac Zhang.

Yes, I'll start with the Frac.

So this quarter, we had two turnarounds on two of our Fracs, so that increased our cost obviously there.

There is some uplift that we get from from blend margins, which were down year over year and then.

ERCOT pricing so just the hot summer hit us this year relative to last year.

And so NGL marketing Keith.

Keith I think most of it just has to do with structure in the market on a storage. So if you look back when Covid happened, we put on obviously a lot of contango.

Jim: Where do you see all these all these products being consumed? Do you see that shifting it all from the current setup? Thanks. Well, you know, I'll start them. I'll probably ask Bren a question. As I said in our script, Michael, it's been a pleasure surprise at the appetite for FDA. And that's not it's not it's in Europe. That's in Asia. And we've got a couple more contracts that I expect that we will sign.

Some of that was extended further long dated.

And then we had some backwardation opportunities last year that frankly, we just didn't see those opportunities this year.

It's been less volatile in general this year Theyre, just really hasn't been a lot of spreads.

Got it Thats helpful.

And then sorry, I have one on the NGL pipe so.

I just wanted to confirm it's a brand it's a brand new pipe, that's a greenfield newbuild and.

Jim: And so I thought that was going to be just a point to point project. And I wanted to build the first one, but I didn't really expect it. It looks to me like it's becoming much more traded product. Or so. And then I expected. And then Brent speak to the type of people, the type of demand we see on LPG. Yeah, Michael, if you just look at in the third quarter where the LPG cargo is when 55% went to Asia, 18% went to the Americas, 17% Europe, and 9% Africa.

If theres any way to give more color on what you see as the disadvantages of some of the other alternatives like a cheaper looping of Shin oak or even leveraging some of that third party capacity. That's getting added just because it's a lot of capacity I think that the market seeing getting added all at one time.

We looked at partial loops and we didn't think that served what we've made it decided to just.

The entire pie.

And I'll remind you.

What was chaparral <unk> capacity of 130000 barrels a day.

130000 barrels a day, we've got to move on the other.

Jim: If you were to go trend that and look at the incremental molecule, where it's going, Asia is far and away the leader of where each molecule goes, on the demand side of what that LPG is used for, about one-third is used for pet chem use, two-thirds is used for call it human needs, cooking and heating. Tony gave us some numbers, I want to say it was yesterday, I'm going to try to look at these notes, but about IAA came out, said 1.5 billion people use LPGs for cooking and heating.

Another pipe, we're getting at least Shin oak.

You around 600000 barrels a day right now 600, and we need to <unk>.

And.

Frankly, we don't leverage third party pipes would put it in our own.

Thank you.

Thank you.

This is Randy we have time for one more question.

Thank you please standby for our next question.

Right.

Our next question comes from the line of Neel Mitra with Bank of America. Your line is open.

Jim: If you look at the estimates through 2030, there's about 2 billion people who don't have access to it. If you look at the same consumption per capita, those billion people would need about 3 million barrels of LPG, between now and 2030. If you look at Tony's forecast, he's a little shy of 600,000 barrels of LPG from the US through 2030. So the Middle East will make up some of that, but at some point the US producer is going to have to step up and fill that void.

Hi, Good morning, Thanks for taking my question I had a question about the conversion and.

Where youll be offloading some of the crude volumes from what I understand Midland to Echo two is moving some volumes in the whole Midland to Echo system is relatively full.

When you move to NGL service.

Where does the crude barrel Scott.

Okay.

<unk> one.

Jim: Hi Chris, what was that organization that said propane and natural gas was a transitional? Yeah Jim, MSCI recently came out and upgraded enterprise to an A rating for their ESG score, and I think that really is a result of the stats that branches throughout. Again, if you think about what LPGs do in improving the quality of life for people in Call of the Southern Hemisphere, that is an absolute game changer in needing 3 million barrels a day of an additional LPG's between now and the end of the decade is really the reason why MSCI came out and said, OK, LPGs are now a green fuel if you will.

We can get that up to 600000 barrel 600000 barrels a day.

Yes.

Marginal difference in cost, but more than made up for what we do with southern OLED NGL service.

Okay, perfect and then.

Not to beat a.

Dead horse, but the.

The 700000 barrel per day crude oil increase.

2023.

Just wondering.

Tony from your perspective.

For <unk> and <unk> it seem like.

We had flat hydrocarbon growth in general out of the Permian just with all of the infrastructure constraints in the.

Jim: I'd like to add relative to solar and let's think about Africa, OK? It's going to happen. They're going to use it with solar, no matter how you think about it, it's not a good choice to cook and eat homes with. It simply is not. And people in Africa, they're going to get more. And natural gas and electricity are very expensive to move around. That's what we've seen over the last 10 or 12 years with LPG.

And the heat compression et cetera.

So are we.

Are you expecting a big kind of September through December Ram.

Because it seems like most of the growth that's come year to date, it's been the first quarter.

I am not mistaken, yes, I would tell you, it's very hard to count production quarter by quarter. What people are looking at is the EIA.

A numbers, which.

Jim: We get a lot of energy, not hard to move around. It's not hard, Matt. Just fill up a little. Yes, sir. Yeah, absolutely. You know, and I go back to paraphrase Daniel Yergen, this world has never done energy transition. It has only done energy addition. And I think we're going to see more of that. Great. Thank you for all the color. Appreciate it. Thank you.

By their own admission had been very very very erratic sporadic both of the above.

But through the second quarter and through the third quarter. If you said in our management meeting every Tuesday morning.

Wood here about the amount of rich gas.

It wants to come to our plants and can't wait until our plants get built so we really didn't see a massive lull I understand that that's what the EIA reported but.

Keith Stanley: Please stand by for our next question. Our next question comes from the line of Keith Stanley with Wolf Research. Yelonne, it's open. Hi. Good morning. I had a question on the quarter and then I follow up on the NGL pipe. So on the quarter, just NGL marketing has been softer this year than last year. Any drivers you'd highlight. And the frack margin too, you had a huge step up in volumes with the new frack, but the per unit margin was down a lot.

And the facts are the other thing people worried about as rig drop because the rigs kept dropping but.

You have to remember that.

We had a tremendous build in rigs in 'twenty two to just make up for what happened during COVID-19 couldnt stay like that at those levels forever.

We had to replenish inventories and you did so.

It's very hard to look and say per quarter, but look we're on we're on a path.

To exceed 600, and I don't know.

But it takes us from that path that path next year into story, well one quarter have freeze offs and one be hotter than the other yes, sir but it doesn't matter the.

Keith Stanley: Anything you'd pull out. There. You know Dr. Fragg, Zach. Now I'll start with the Fragg. So this quarter we had two turnarounds on two of our Fraggs, so that increased our cost obviously there. There is some uplift that we get from from blend margins, which were down year over year, and then ERCOT pricing, so just the hot summer hit us this year relative to last year. Linjiel Marketing, Keith, I think most of it just has to do with structure in the market on a storage, so if you look back when COVID happened, we put on obviously a lot of contango.

The calculus is so big because as Jim pointed out the base is so large.

There you have it.

Right.

Great. Thank you very much.

Thank you.

Ladies and gentlemen at this time I would like to turn the call back over to Randy for closing remarks.

Thank you for that we'd like to thank everybody for joining us today that concludes our call.

A replay of the call is available to our website via the webcast and again have a good day and I'll turn it back to you for any closing comments quanta.

Keith Stanley: Some of that was extended further long dated, and then we had some backwardation opportunities last year that frankly we just didn't see those opportunities this year. It's been less volatile in general this year. There just really hasn't been a lot of spreads. Got it, that's helpful.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Yes.

Yes.

Yes.

Jim: And then sorry I have one on the NGL pipe, so just want to confirm it's a brand new pipe, so it's a Greenfield new build. And if there's any way to give more color on what you see as the disadvantages of some of the other alternatives, like a cheaper looping of shin oak or even leveraging some of the third party capacity that's getting added just because it's a lot of capacity, I think that the market seeing getting added all at one time.

Okay.

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Jim: We looked at partial loops and we didn't think that served what we needed. We decided to just to build the entire pipe. And I'll remind you, what was shaper else capacity, 130,000 barrels a day, that 130,000 barrels a day. We've got to move on another pipe. We're getting at the shin oak, you're around 600,000 barrels a day right now. 600 and we need some of those. And frankly, we don't leverage 3040 pipes. We put it in our own. Thank you. This is Randy. We have time for one more question. Thank you.

Okay.

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Unknown Executive: Please stand by for our next question.

Okay.

Okay.

Sure.

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Dan.

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Unknown Executive: Our next question comes from the line of NEO Mitra with the bike of America. Your line is open. Hi, good morning. Thanks for taking my question. I had a question about the conversion and where you'll be offloading some of the crude volumes. From what I understand, Midland Echo 2 is moving some volumes and the whole Midland Echo system is relatively full. So when you move this NGL service, where did the crude barrels go?

Yes.

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Unknown Executive: I go in Midland Echo 1 and we can get that up to about 600,000 barrels a day. There's a marginal difference in cost, but more than made up for what we do with some of the NGL service. Okay. Perfect.

Okay.

Okay.

Okay.

Tony Chovanec: And then not to be a dead horse, but the 700,000 barrel per day crude oil increase in 2023. Just wondering, you know, Tony, from your perspective, you know, for 2Q and 3Q, it seemed like we had flat hydrocarbon growth in general out of the permeant just with all the infrastructure. Constraints and the.., and the heat, compression, et cetera. So are we, are you expecting a big kind of September through December ramp?

Tony Chovanec: Because it seems like most of the growth that's come here today has been the first quarter if I'm not mistaken. Yeah, I'll tell you, it's very hard to count production quarter by quarter. What people are looking at is the EI and A numbers, which by their own admission have been very, very, very erratic, sporadic, both, both of the above. But through the second quarter and through the quarter third quarter, if you said in our management meeting every Tuesday morning, you would hear about the amount of rich gas that wants to come to our plants and can't wait till our plants get built.

Tony Chovanec: So we really didn't see a massive law. I understand that that's what the EI reported. But the facts are, the other thing people worried about is the rig drop, you know, because the rigs kept dropping. But, you know, you have to remember that we had a tremendous build in rigs in 22 to just make up for what happened during COVID. You couldn't stay like that at those levels forever. You had to replenish inventory as you needed.

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Tony Chovanec: So it's very hard to look and say per quarter, but look, we're on a path to exceed 600 and I don't know what it takes us from that path off of that path next year in the story. Well, one quarter have freeze-offs and one be hotter than the other. Yes, sir. But it doesn't matter. The cap was just so big because it is Jim's point of the patient is so large. There you have it. Right. Okay. Thank you very much. Thank you.

Yes.

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Randy Burkhalter: Ladies and gentlemen, at this time, I would like to turn the call back over to Randy for closing remarks. Thank you, Juan. We'd like to thank everybody for joining us today.

Operator: That concludes our call. A replay of the call is available to our website via the webcast. And again, have a good day. And I'll turn it back to you for any closing comments. Thank you.

Okay.

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Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. [inaudible] Bye, bye, bye, bye, bye, bye, bye, bye. [inaudible] James Bany, James Bany, James Bany, James[inaudible][inaudible] I'm right or not, I'm not sure if I'm right[inaudible]'m not sure if I'm right or not, I'm not sure if I'm right or not, I'm not sure if I'm right or not[inaudible]'m not sure if I'm right or not, I'm not sure if I'm right or not, I'm not[inaudible] I'm not sure if I'm right or not, I'm not[inaudible] I'm not sure if I'm right or not,[inaudible] I'm not sure if I'm right or not, I'm not sure if I'm right or not, I'm not sure if I'm right or not[inaudible] The New York Times, The New York Times, The New York Times,[inaudible]

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