Q4 2023 Plains All American Pipeline LP Earnings Call
Okay.
Operator: Good day, and thank you for standing by. Welcome to the PAA and PAGP fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.
Good day, and thank you for standing by.
Welcome to the PAA and PAGP fourth quarter 2023 earnings conference call.
At this time all participants are in a listen only mode.
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Operator: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Blake Fernandez. Vice President of Investor Relations, please go ahead. Thank you, Daniel.
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Fernandez.
Vice President of Investor Relations. Please go ahead.
Thank you Daniel Good morning, and welcome to Plains, All American fourth quarter 2023 earnings call.
Blake Fernandez: Good morning, and welcome to Plains All American's fourth quarter 2023 earnings call. Today's slide presentation is posted on the Investor Relations website under the News and Events section at Plains.com, and 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. An overview of today's call is provided on slide 3. A condensed consolidating balance sheet for PAGP and other reference materials are in the appendix. 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. Thank you, Blake. Good morning, everyone, and thank you for joining us.
Today's slide presentation is posted on the Investor Relations website under the news and events section at Plains Dot Com.
A 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.
An overview of today's call is provided on slide three a condensed consolidating balance sheet for PAGP and other reference materials are in the appendix.
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.
Thank you Blake good morning, everyone and thank you for joining US today, we reported fourth quarter and full year results exceeding expectations in both our crude oil and NGL segments. We've made considerable progress towards our long term strategy, while demonstrating continuous execution of our goals and initiatives.
Willie Chiang: Today we reported fourth quarter and full year results exceeding expectations in both our crude oil and NGL segments. We've made considerable progress towards our long-term strategy while demonstrating continuous execution of our goals and initiatives. In summary, fourth-quarter and full-year adjusted EBITDA attributable PAA was $737 million and $2.71 billion, respectively, with full-year results exceeding the midpoint of our initial guidance by approximately $210 million, or 8%. We lowered our long-term leverage ratio target range to 3.25 to 3.75 times, and we ended 2023 with a leverage ratio of 3.1 times. Our efforts to enhance the balance sheet were recognized by the credit rating agencies with two recent upgrades to MID BBB.
In summary, fourth quarter and full year, adjusted EBITDA attributable PAA was $737 million and $2 $71 billion, respectively with full year results exceeding the midpoint of our initial guidance by approximately $210 million or 8%.
We lowered our long term leverage ratio target range to $3 two 5% to 375 times and we ended 2023 with a leverage ratio of three one times.
Our efforts to enhance the balance sheet are recognized by the credit rating agencies with two recent upgrades to mid Triple B <unk>.
Willie Chiang: Additionally, we completed several win-win strategic transactions both in our crude oil and NGL segments, including three Permian-gathering bolt-on transactions, the sale of our interest in a Canadian fractionation facility, and the recent divestiture of approximately 600 crude oil railcars for proceeds of approximately $40 million. These transactions are representative of our ongoing efforts to optimize our asset base and streamline our operations while generating attractive returns per unit. The strong EBITDA results, along with the recent bolt-on transactions and lower leverage, helped underpin a $0.20 per unit annualized increase in our common unit distribution level, which will be payable later this month and represents a 19% increase in the annualized distribution relative to 2023 levels. Turning to slide four, it should come as no surprise that our 2024 key focus areas remain very consistent with last year. Our strong operational and equity performance over the past year only serves to reaffirm our strategy, most notably our focus on generating meaningful free cash flow. Additionally, our commitment to capital discipline and a clear and concise capital allocation framework focused on increasing the return of capital to equity holders while maintaining a strong balance sheet and financial flexibility.
Additionally, we completed several win win strategic transactions in both of our both of our both in our crude oil and NGL segments.
And including three Permian gathering bolt on transactions the sale of our interest in a Canadian fractionation facility and the recent divestiture of approximately 600 crude oil railcars for proceeds of approximately $40 million.
These transactions are representative of our ongoing efforts to optimize our asset base and streamline our operations, while generating attractive returns for unit holders.
The strong EBITDA results along with the recent bolt on transactions and lower leverage helped underpin a 'twenty.
Per unit annualized increase in our common unit distribution level, which will be payable later this month and represents a 19% increase in the annualized distribution relative to 2023 levels.
Turning to slide four it should come as no surprise that our 2024 key focus areas remain very consistent with last years, our strong operational equity performance over the past year only serves to reaffirm our strategy, most notably our focus on generating meaningful free cash flow.
Our commitment to capital discipline, and a clear and concise capital allocation framework focused on increasing return of capital to equity holders, while maintaining a strong balance sheet and financial flexibility.
Willie Chiang: As highlighted on slide 5, we expect adjusted EBITDA attributable to PAA of $2.625 to $2.725 billion for 2024. This reflects year-over-year growth in our crude oil segment, underpinned by continued permiant production and tariff volume growth, as well as contributions from recent bolt-on acquisitions. Our guidance also factors in a reduction in our NGL segment, primarily driven by lower forecasted frac spreads year over year, as shown on slide six.
As highlighted on slide five we expect adjusted EBITDA attributable to PAA of $2 65 to $2 75 billion for 2024.
This reflects year over year growth in our crude oil segment underpinned by continued Permian production and tariff volume growth as well as contributions from recent bolt on acquisitions.
Our guidance also factors in a reduction in our NGL segment, primarily driven by lower forecasted frac spreads year over year.
As shown on slide six we anticipate 2020 for Permian crude oil production growth to be between two to 300000 barrels a day exit to exit.
Willie Chiang: We anticipate 2024 Permian crude oil production growth to be between two to 300,000 barrels a day, exit to exit, with the Delaware Basin driving the majority of the growth. Our updated forecast assumes an average of 300 to 320 horizontal rigs, and as part of our routine fundamentals forecasting process, we will continue monitoring our assumptions as the year progresses. Our Permian JB system is well-positioned with more than 4.4 million long-term dedicated acres and operating leverage to provide customers with midstream solutions from the wellhead to demand centers. As we show on slide 7, we expect to capture approximately 275,000 barrels a day of incremental gathering tariff volumes for the full year 2024. For our long-haul systems, we continue to expect high utilization of our corpus-bound assets, a volume step-up on Basin Pipeline, and an MVC step-up on Wink2Web. In our MGL segment, we continue to focus on optimizing the business and improving the durability of our earnings. During 2023, we closed the sale of our JV interest in Kier Fort Sask, and we sanctioned a 30,000 barrel day de-bottleneck of the Plains Fort Sask complex. The DeBottleneck Project remains on budget and unchanged in service date of mid-2025.
With the Delaware basin, driving the majority of the growth.
Our updated forecast assumes an average of 300 to 320 horizontal rig rigs and as part of our routine fundamentals forecasting process. We will continue monitoring our assumptions as the year progresses.
Our Permian JV system is well positioned with more than $4 4 million long term dedicated acres and operating leverage to provide customers with midstream solutions from the wellhead to demand centers.
As we show on slide seven we expect to capture approximately 275000 barrels a day of incremental gathering tariff volumes for the full year 2024 for.
For a long haul systems, we continue to expect high utilization on our corpus found assets a volume step up on basin pipeline and an MVC step up on Wink to Webster.
In our NGL segment, we continue to focus on optimizing the business and improving the durability of our earnings.
During 2023, we closed the sale of our JV interest in care for SaaS, and we sanctioned a 30000 barrel a day debottleneck of the planes for SaaS complex to <unk>.
The bottleneck project remains on budget and unchanged in service date of mid 2025 with that I'll turn the call over to al.
Al Swanson: With that, I'll turn the call over to Al. Thanks, Willie. We reported a fourth quarter adjusted EBITDA of $737 million, which includes crude oil segment benefits from Canadian market-based opportunities and increased volumes across our systems, primarily in the Permian, along with MGL segment benefits from stronger seasonal sales and higher real life fraction. For the full year, we reported adjusted EBITDA of $2.71 billion.
Thanks, Willie we reported fourth quarter adjusted EBITDA of $737 million, which includes crude oil segment benefit from Canadian market based opportunities and increased volumes across our systems, primarily in the Permian along with NGL segment benefit from stronger seasonal sales and higher <unk>.
Realized frac spread for the full year, we reported adjusted EBITDA of $2 $71 billion.
Al Swanson: Slide 13 and 14 in today's appendix contain walks which provide details on our fourth quarter. Summary of our 2024 guidance and key guidance assumptions are on slide 8. Looking at 2024 compared to 2023, and as illustrated by the EBITDA walk on slide 9, we expect adjusted EBITDA of $2.625 to $2.725 billion with year-over-year growth in our crude oil segment, partially offsetting commodity price headwinds in our NGO. Growth in our crude oil segment is primarily driven by anticipated tariff volume increases, higher fees from tariff escalators, and full-year contributions from bolt-on acquisitions. However, this is partially offset by our assumptions of fewer market-based opportunities.
Strong full year performance was primarily driven by higher realized frac spread market based opportunities strong base business performance and contribution from bolt on acquisitions.
Slides 13, and 14 in today's appendix contains walk which provide details on our fourth quarter performance.
Summary of our 2024 guidance key guidance assumptions are on slide eight looking at 2024 compared to 2023 and as illustrated by the EBITDA walk on slide nine we expect adjusted EBITDA of 2625 to $2 $75 million with year over year growth in our crude oil.
Partially offsetting commodity price headwinds and our NGL segment.
Growth in our crude oil segment is primarily driven by anticipated tariff volume increases higher fee from tariff escalators and full year contribution from bolt on acquisitions.
This was partially offset by our assumption of fewer market based opportunities.
Al Swanson: We expect lower year-over-year NGL segment adjusted EBITDA driven by lower forecasted frac spreads, partially offset by higher C3 plus spec product sales in 2020. I would note that our C3 Plus spec product sales volumes are approximately 90% hedged for the year at the mid $0.60 per gallon. We remain disciplined with our capital investment, with approximately $375 million of growth capital and approximately $230 million of maintenance capital expected for the year, net to PAA. This includes capital for POPJV well connections and intrabasin improvements, as well as an increase in our capital related to our previously announced Fort Fass Debaltment Project, as illustrated on slide 10, and in addition. In the Capital Discipline, we remain committed to significant returns on capital and maintaining financial flexibility.
We expect lower year over year NGL segment, adjusted EBITDA, driven by lower forecasted frac spreads, partially offset by higher C. III plus spec product sales in 2024 I.
I would note that our C III plus spec product sales volumes are approximately 90% hedged for the year in the mid 60 <unk> per gallon level.
We remain disciplined with our capital investments with approximately $375 million of growth capital and approximately $230 million of maintenance capital expected for the year net to PAA. This includes capital for pop JV, well connection and intra basin improvement as.
Well as an increase in our capital related to our previously announced fourth SaaS Debottleneck project as illustrated on Slide 10 and in addition.
Two of capital discipline, we remain committed to significant returns of capital and maintaining financial flexibility for 2024, we expect to generate $1 $65 billion of adjusted free cash flow, excluding changes in assets and liabilities with approximately 115 billion to be allocated to common and preferred.
Al Swanson: For 2024, we expect to generate $1.65 billion of adjusted free cash flow, excluding changes in assets and liabilities, with approximately $1.15 billion to be allocated to common and preferred distribution, inclusive of their respective increases, resulting in $500 million of adjusted free cash flow after distributions available for value-creating opportunities, including potential bolt-on acquisitions or net debt reduction. Regarding our senior note maturity profile, we have $750 million of notes maturing in November 2024, which we would expect to refinance all or a portion of during the year. With that, I'll turn the call back to Al. Ongoing geopolitical turmoil continues to drive market volatility, along with potential impacts on energy and economic policy.
<unk> inclusive of their respective increases, resulting in $500 million of adjusted free cash flow after distributions available for value, creating opportunities, including potential bolt on acquisitions or net debt reduction.
Regarding our senior note maturity profile, we have $750 million of notes maturing in November 2020 for which we would expect to refinance.
All or a portion of during the year with that I'll turn the call back to Willy Thanks Al.
Ongoing geopolitical turmoil continues to drive market volatility along with potential impacts to energy and economic policy.
Despite this environment planes as well positioned today and going forward to continue delivering value to our unit holders.
As we show on Slide 11, we've made meaningful progress on our long term goals and initiatives.
To continue to reposition to position ourselves to be the partner employer and the investment of choice.
Willie Chiang: Despite this environment, Plains is well positioned today and going forward to continue delivering value to our unit holders. As we show on slide 11, we've made meaningful progress on our long-term goals and initiatives to continue to reposition ourselves to be the partner, employer, and the investment of choice. In summary, our balance sheet is much stronger, with year-end 2023 leverage at 3.1 times.
In summary, our balance sheet is much stronger with year end 2023 leverage at three one times.
We continue to demonstrate capital discipline and patience as we look at additional opportunities to grow the business organically and inorganically through accretive and synergistic bolt on acquisitions and last but not least we remain focused on increasing return of capital to our unitholders. We believe the world needs North American energy supply.
Long term and that our business will perform well in both the near term and longer term environment I'll turn the call back over to Blake, who can lead us into Q&A. Thanks, Willie as we enter the Q&A session. Please limit yourself to one question and one follow up.
Willie Chiang: We continue to demonstrate capital discipline and patience as we look at additional opportunities to grow the business organically and inorganically through creative and synergistic, full-time acquisitions. And last but not least, we remain focused on increasing the return of capital to our unit. We believe the world needs North American energy supply in the long term and that our business will perform well in both the near-term and longer-term. I'll turn the call back over to Blake, who can lead us into Q&A. Thanks, Willie.
For those with additional questions. Please feel free to return to the queue.
This will allow all.
Participants.
An opportunity to ask questions in our available time. This morning. The IR team will also be available to address any additional questions. You may have with that Daniel I'll turn the call over to you.
Thank you.
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Blake Fernandez: 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 all participants an opportunity to ask questions in our available time this morning. The IR team will also be available to address any additional questions you may have. With that, Daniel, I'll turn the call over to you. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
In the interest of time, we ask that you. Please limit yourself to one question and one follow up please standby, while we compile the Q&A roster.
Okay.
Our first question comes from Michael Blum with Wells Fargo. Your line is now open.
Hi, Michael.
Hey, good morning.
I wanted to ask a little bit on the 24 guidance.
Your Permian basin level growth forecast.
Close to your own gathering.
Gathering volume growth estimate.
Just wondering if you could speak to that is that a function of your market share in that basin is that just a coincidence and then.
Operator: In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster, and many more. Thank you. Thank you. Our first question comes from Michael Blum with Wells Fargo. Your line is now open. Hi, Michael.
The guidance also assumes.
Pretty nice jump in western volumes year over year. So I wonder if you can talk about what's driving that as well.
Yes, Michael this is Willie.
75, maybe for clarity, it's composed of two factors one.
The M&A bolt on transaction volumes that we did.
We added last year and Thats about 150.
Michael Blum: Hey, good morning. I want to talk a little bit about the 24 guidance, your Permian Basin Level Growth Forecast, pretty close to your own gathering volume growth estimate. And I'm just wondering if you could speak to that. Is that a function of the Market Chair in the Basin? Is that just a coincidence?
1000 barrels a day and then growth from the growing basin, which is about 125000 barrels a day.
And on the Western volumes, Jeremy you want to comment on that.
If you're speaking about the Delaware basin volumes AOS electric in California that was due to some downtime at the beginning of last year. So that's basically just normalizing to the second half of the year runway and shutdown from California refineries pushing more volume. So it's a combination of those two things.
Willie Chiang: And then the guidance also assumes a pretty nice jump in Western volumes every year. So I wonder if you can talk about what Yeah, Michael, this is Willie. The 275, maybe for clarity, it's composed of two factors. One, the M&A, the bolt-on transaction volumes that we added last year, and that's about 150,000 barrels a day, and then growth from the growing basin, which is about 125,000 barrels. And on the western volumes, Jeremy, do you want to comment on that? Yeah, if you're speaking about Delaware Basin volumes being... I was due to some downtime at the beginning of last year, so it's basically just normalizing to the second half of the year runway. And some shut downs from California refineries, which pushed more volumes into the pipe, so it's a combination. Okay, perfect; I appreciate all that.
Okay perfect I appreciate all of that and then just wanted to ask it seems like the open season on Gray Oak is moving forward. So just wanted to get your views on how you see that impacting.
You are re contracting efforts on cactus and then just generally on overall supply versus takeaway out of the basin.
Sure. So what I would say first it's very open season, we expect it to be successful.
Where.
Canadian App constructive dialogue with our customers and see no reason why that's going to impact our re contracting negotiations as far as takeaway from the basin types of corpus and our self full length lifts are still full you have some flex on a few pipelines in the area of it is based on growth that will tighten, but it's a constructive market people know where they want it right.
Their barrels in the future in network and we will continue to be positive on the long haul pipes as time goes.
Yes.
Thank you.
Thank you one moment for our next question.
Willie Chiang: And then just wanted to ask, it seems like the open season on gray oak is moving forward. So just wanted to get your views on how you see that impacting your recontracting efforts on cactus and then just generally on overall supply versus take. Sure, so what I would say first is that it's a great open season.
Okay.
Our next question comes from Brian Reynolds with UBS. Your line is now open.
Hi, Good morning, everyone maybe to follow up on Michael's question on just the 300000 barrels of Delaware growth, which you bifurcated between some organic and inorganic year over year.
Just given high level claims is 50% of the market share in the Permian.
Willie Chiang: We expect it to be successful. We're continuing to have constructive dialogue with our customers and see no reason why that's going to impact our recontracting negotiations. As far as take-away from the basin, pipes to Corpus are still full, and linked whips are still full. We have some flex on a few pipelines in the area, but as the basin grows, it will tighten.
Which I think youre more highly leveraged the Delaware just kind of curious if you can help us kind of square out kind of that gathering and long haul guide a little bit more do you see outside gathering share opportunities in the Delaware just given that more growth is expected to come from there in 2004.
Yeah, I think Willie outlined the sources of the gathering growth.
Willie Chiang: But it's a constructive market. People know where they want to bring their barrels in the future, and we would be happy to be positive for the long haul. Thank you.
Midland versus Delaware, it's a function of activity. So if you look at the number of rigs working in the Delaware is probably 170 to 180, plus a 120 working Midland when you offset declines in new production. That's what yields the growth you had significant growth in the fourth quarter of last year as you would imagine it to be slower in the first half stronger in the second half.
Operator: One moment for our next question. Our next question comes from Brian Reynolds with UBS. Your line's now open. Hi, good morning, everyone.
But it's consistent with some of the public E&P that.
Guidance, so far this year. So the Delaware basin growth is a function of activity, we do have a stronger position in the Delaware basin, so that impacts us disproportionately so I'd say that PFS for the long haul guide I think you were referring to the fourth quarter versus the full year long haul numbers in but I would say.
Brian Reynolds: Maybe to follow up on Michael's question on just the 300,000 barrels of Delaware growth, which you bifurcated between some organic and inorganic year over year, you know, just given, you know, high level Plains is 50% of the market share in the Permian, of which I think you're more highly leveraged than Delaware. I'm just kind of curious if you can help us kind of square out kind of that gathering and long haul guide a little bit more, you know, do you see, you know, outside gathering share opportunities, you know, in Delaware, just given that, you know, more growth is expected to come from there in 24. So I think Willie outlined the sources of the gathering growth, but specifically Midland versus Delaware. It's a function of activity.
There is we had outsized contribution based on in the fourth quarter at a more normalized view for the year next year.
I appreciate all of that maybe as my follow up so what's the capital allocation planes enters 24 with a similar tier one free cash flow yield in this space similar to 23 last year, we saw that reduction and some opportunistic M&A along with the distribution bump so kind of curious as we look ahead to 'twenty four preferences of that excess.
Cash and specifically on M&A do you see a similar amount of like bolt on opportunities and 24 are they more limited at this juncture, it's where debt reduction might be the perfect. Thanks.
Yes.
Jeremy Goebel: So if you look at the number of rates working in Delaware, it's probably 170 to 180. You have closer to 120 working in Midland. When you offset declines in new production, that's what yields growth. You had significant growth in the fourth quarter of last year, so you would imagine it to be slower in the first half and stronger in the second half, which is consistent with some of the public E&Ps that have guided so far. So the Delaware Basin growth is a function of activity. We do have a stronger position in the Delaware Basin, so that impacts it. So I'd say that's that piece.
Sure This is al.
Our focus will be to.
Continue to look at potential to make investments that are accretive to our valuation. We're hopeful that we'll be successful on some bolt on acquisitions, but we don't know we feel in the near term if we arent successful with that again.
Again, continuing to reduce debt is not a bad alternative pending that opportunity set we do not specifically believe that we need to continue to reduce debt. However.
Our priority will continue to be to focus on investing returning more cash through distributions and looking for other value.
Opportunities around using that cash flow.
Al Swanson: As for the long haul guy, I think you were referring to the fourth quarter versus the full year long haul number. What I would say there is that we had an outside contribution from Bateson in the fourth quarter and a more normalized... Appreciate all that.
Hey, Brian This is Willie maybe I'll add something to what al said.
When you think about the evolution of where we are.
Not saying anything people don't know, but it's pretty remarkable where the industry has gone as far as shifting to an export market a lot of capital has gone into the industry in the last decade, and I think what we're seeing right now is really.
Al Swanson: Maybe as my follow-up switch to capital allocations, you know, Plains enters 24 with a similar, you know, tier one free cash flow yield in the space similar to 23. Last year, we saw debt reduction and some opportunistic M&A along with the distribution bump. So, you know, kind of curious as we look ahead to 24 preferences for that excess cash, and specifically on M&A, do you see a similar amount of, like, full-time opportunities in 24? Or are they, you know, more limited at the juncture where, you know, debt reduction might be the preference? Sure, this is Al.
Kind of.
A change in the business cycle focus on returns, which really is going to reinforce.
More opportunities for asset sales consolidation and really to address your question I do think they're going to be more opportunities in there.
And frankly, we just need to be very patient and capture at our asset base. As you know is well situated to be able to capture synergies across the system.
And many of the basins, we operate but particularly the Permian and the key now is to stay very disciplined and.
And at the right valuations.
I think we can add we can add bolt ons, just as we did last year.
Great. Thanks, I'll leave it there good morning.
Al Swanson: Our focus will be to continue to look at the potential to make investments that are accretive to our valuation. We're hopeful that we'll be successful on some bolt-on acquisitions, but we don't know. We feel in the near term, if we aren't successful with that, then again, continuing to reduce debt is not a bad alternative, pending that opportunity set. We do not specifically believe that we need to continue to reduce debt
Thanks, Brian.
Thank you one moment for our next question.
And our next question comes from Keith Stanley with Wolfe. Your line is now open.
Hi, good morning.
Could you maybe on on Cactus, just give a little more color on where you are at working.
To re contract that pipeline timing of when you hope to resolve it and and high level goals for that and I guess, just big picture, how youre thinking about.
Al Swanson: However, our priority will continue to be to focus on investing, returning more cash through distributions, and looking for other value opportunities around using that cash. Hey, Brian, this is Willie. Maybe I'll add something to what Al said, you know, when you think about the evolution of where we are, I'm not saying anything people don't know, but it's pretty remarkable where the industry has gone as far as shifting to an export market. A lot of capital has gone into the industry in the last decade. And I think what we're seeing right now is really kind of a change in the business cycle, a focus on returns, which really is going to reinforce more opportunities for asset sales, consolidation, and really to address your question, I do think there are going to be more opportunities in there, and frankly, we just need to be very patient and capture them.
A desire to have contracts with medium term duration versus operating the pipeline on a less contracted basis, depending on where price settles out.
Keith This is Jeremy.
I'd say as it can.
Destructive for us to have those dialogues now versus where it was the last couple of years, we expect to give you guys an update on that this year, but for competitive reasons. It doesn't make sense to right now what I would say is it is usually a mix and it's largely we have to clear the basin. These pipes needing to move the barrels everyday and the owners.
The capacity on that pipeline should be someone with ratable export takeaway, because thats, where I was going so and a lot of respects. It makes sense to contract those pipelines with the third parties that will be exportable barrel. So we serve the function of aggregating barrels from the lease to the market Center, we have the liquidity in our terminal they like to partner with US it's matching up.
Al Swanson: Our asset base, as you know, is well situated to be able to capture synergies across the system in many of the basins we operate, but particularly in the Permian, and the key now is to stay very disciplined, and at the right valuations, you know, I think we can add bolt-ons just as we did last year. Great, thanks. I'll leave it there. Enjoy the rest of your morning.
The supply on one end with their takeaway on the other so it needs to have a striking a good balance of contracting with third parties.
Some marketing opportunities, but for us, it's more weighted to contracting and partnering up with the off takers like Wink to Webster the refiners like on our corpus pipelines as the exporters.
And Keith just to make a reinforce the point that Jeremy.
Willie Chiang: Thanks, Brian. Thank you. One moment for our next question, and our next question comes from Keith Stanley with Wolf. Your line's now open. Hi, good morning.
Many people, we talked to think that Neil.
Our partners could disappear we've got great partners on this line folks that are shipping and so.
Keith Stanley: Could you maybe, on Cactus, just give a little more color on where you are at working to recontract that pipeline timing of when you hope to resolve it and, and high-level goals for that. And I guess just big picture how you're thinking about, you know, a desire to have contracts with medium-term duration versus operating the pipeline on a less contracted basis, depending on where price settles out. Keith, this is Jeremy.
The way I would couch that says we've got a great relationship with our partners and the shippers on the line and this is just a normal course of business that you have to go on renegotiation in negotiations to as far as term and tariff.
Got it thanks.
Second question just.
The company has had really good market based results the past two years on Canadian crude spreads and NGL market dynamics.
It's slide slide nine youre, assuming fewer market based opportunities in 2024.
Jeremy Goebel: What I would say is it's constructive for us to have this dialogue now versus where it was the last couple years. We expect to give you guys an update on that this year, but for competitive reasons, it doesn't make sense to do it right now. What I would say is there's usually a mix, and it's largely because we have to clear the basin. These pipes need to move barrels every day.
Is that a function of their specific areas, where you just see less opportunity. This year or is it just conservatism built in slash kind of a lack of visibility at this point just how you would characterize that bucket on market based opportunities.
Yes, so market based opportunities.
Jeremy Goebel: And the owners of the capacity on that pipeline should be someone with rateable export takeaway because that's where it's going. So in a lot of respects, it makes sense to contract those pipelines with the third parties that will be exporting the barrels. So we serve the function of aggregating barrels from the lease to the market center. We have liquidity in our terminals. They like to partner with us. It's matching up the supply on one end with their takeaway on the other. So it needs to have a strike, a good balance of contracting with third parties, and some marketing opportunities.
You can't predict them theyre very difficult to figure out when something might happen. Some of this is weather some of it's other asset reliability theres all kinds of things that factor into this.
And we've been pretty conscious of not trying to forecast in a large capture for things that we don't know and that's going to happen. So one of the fundamental changes. This year is we have not.
Not we but the industry has trans mountain that starting up that could impact the opportunities for.
For crude market opportunities. So we factor all this in and to answer. Your question. We don't have a tremendous amount of we have a modest amount of of market opportunities that we have captured that we think we can probably cap catch the answer is if there are opportunities out there and our ethos and DNA to capture markets.
Jeremy Goebel: But for us, it's more weighted to contracting and partnering up with the offtakers like in Wing-to-West, or it's the refiners like on our corpus pipelines. And Keith, just to reinforce the point that Jeremy made, many people we talked to think that, you know, our partners could disappear. We've got great partners on this line, folks that are shipping. And so the way I would phrase this is, we have a great relationship with our partners and the shippers on the line. And this is just a normal course of business that you have to go on in renegotiation negotiations as far as term and tariff are concerned. Got it, thanks. Second question just... The company's had really good, market-based results in the past two years on Canadian crude spreads and NGL market dynamics. I think it's slide nine.
Got the broad assets and a company with people that focus on this everyday.
And so if there are opportunities out there we will capture it but it's very difficult to predict exactly where they happen and again this year's budget.
Budget is based on a modest amount of market opportunities and Thats frankly, why we move towards the range to give people kind of a.
A range of thought of what those might be.
I hope that helps.
It does thank you.
Thank you.
Thank you one moment for our next question.
And our next question comes from Jean Salisbury with Bernstein. Your line is now open.
Jeremy Goebel: You're assuming fewer market-based opportunities in 2024. Is that a function of there being specific areas where you just see less opportunity this year? Or is it just conservatism built in slash some kind of lack of visibility at this point?
Hi, Good morning can you talk through the puts and takes of TNF starting up on plans at various assets and Canada, or Canada crude pipeline to Cushing et cetera.
Jeremy Goebel: Just how you would characterize that bucket of market-based opportunities. Yeah. So market-based opportunities, you can't predict them. They're very difficult to figure out when something might happen.
Hi, Jean Ann Good morning, Jeremy.
Yes.
It's a function of time, so it's not just linear but at startup you would imagine there'd be less market based opportunities, but there'll be the opportunity for more production growth in the basin. It will offset some current flows like rail from the Williston our exports of heavy from the Gulf Coast first and then Youll have replacement of an RFP.
Jeremy Goebel: Some of this is weather, some of it's other asset reliability, and there's all kinds of things that factor into this. And we've been pretty conscious of not trying to forecast in a large scale for things that we don't know that's going to happen. So one of the fundamental changes this year is that we have, not we, but the industry has Trans Mountain that's starting up that could impact the opportunities for crude market opportunities. So we factor all this in.
And Youll have replacement of production growth in Canada. So in that initial period there'll be less market based opportunities depending upon the flows that go west if its lighter barrels or heavy barrels that could impact flows to the Midwest of basin barrels or other light barrel. So there are opportunities, we're going to have to wait for the startup and transition into <unk>.
Jeremy Goebel: And to answer your question, we don't have a tremendous amount of, we have a modest amount of market opportunities that we have identified that we think we can probably catch. The answer is, if there are opportunities out there, it's in our ethos and DNA to capture markets. We've got broad assets and a company with people that focus on this every day. And so if there are opportunities out there, we'll capture them, but it's very difficult to predict exactly where they will happen.
All capacity that can be raised and what those flows will impact all of those components, but we have a flexible system. We're touching all parts of that value chain. So if its fee based growth on the gathering systems. We're excited about that as the base and tightened again in market opportunities come back that's fine for us too, but we'll be there wherever the opportunity presents itself.
Yeah.
Jeremy Goebel: And again, this year's Budget is based on a modest amount of market opportunities, and that's frankly why we moved towards the range to give people kind of a range of thought of what those might be. I hope that helps.
Okay. Thank you for that.
Just to kind of similar follow up some back some Bakken contracts begin to roll this year on double H and dapple going out of the Bakken do you anticipate any major change in how much back and create makes its way kind of.
Jeremy Goebel: One moment for our next question. And our next question comes from Gene Salisbury with Bernstein. Your line is now open. Hi, good morning. Can you talk through the puts and takes of PMX starting up on Plains' various assets, Canada, your Canadian crude pipelines, flows to Cushing, etc.?
The west boundaries down to saddle horn, or the Cushing market or other things that could impact claims as EBITDA.
Sure. So there's a few things that impacted their certain gathering systems that feed south uncertain that feed into the Apple system.
But outside of those Jeff all barrels I think it will just be competitive between the groups that heads out.
Jeremy Goebel: Good morning, Jeremy. It's a function of time, so it's not just linear, but at startup, you would imagine there'd be fewer market-based opportunities. But there'll be the opportunity for more production growth in the basin. It will offset some current flows like rail from Williston or exports of heavy crude from the Gulf Coast first. And then you'll have replacement of, in our opinion, you'll have replacement of production growth in Canada. So in that initial period, there'll be fewer market-based opportunities. Depending upon the flows that go west, if it's lighter barrels or heavy barrels, that could impact flows to the Midwest of basin barrels or other light barrels. So there are opportunities.
Groups that head to the Gulf Coast.
So were their patient we talk to our customers.
Saddle Horn is largely full from DJ basin that had some movements from guarantee and those opportunities are presenting themselves and so we'll continue to work with shippers to bring in south of it makes sense, but there should be plenty barrels to go around in that area.
Great. That's all for me Thanks, Jamie.
Thank you.
One moment for our next question.
Our next question comes from Neel Mitra with Bank of America. Your line is now open.
Hi, Good morning, I wanted to touch on the 90%.
GL frac spread what are hedged for 24, obviously.
Spreads have trended up lately.
Jeremy Goebel: We're going to have to wait for it to start up and transition into full capacity that can be reached and how those flows will impact all those components. But we have a flexible system. We're touching all parts of that value chain. So if it's fee-based growth on the gathering systems, we're excited about that. As the basin tightens again, and market opportunities come back, that's fine for us too, but we'll be there wherever the opportunities are. Okay, thank you for that. And just a kind of similar follow-up, some Bakken contracts began to roll this year on Double H and DAPL going out of the Bakken. Do you anticipate any major change in how much Bakken crude makes its way on the westbound route down to Saddlehorn or the Cushing Market or other things that could impact Plains of Zivida? Sure, so there are a few things that impact it.
Was wondering.
If you were able to catch some of that.
The incremental hedges, we put on and how are you looking at perhaps hedging more than usual and.
Maybe going up to 100% if you're content with the with.
With Frac spread environment right now.
So Neil the first thing is it's really backward dated and until natural gas prices. It takes a few weeks ago. It was substantially lower so this is relatively new and its much higher in the front and I think 2025 50 657.
And profit could be at 80, so that's.
Backwardation prevents a lot of forward hedging.
Our hedges are consistent with what al said in the mid <unk> at roughly 90% and what you can say is that the hedging profile for us is somewhat consistent with the forward market. So were higher hedged in the front end lower hedged in the back end of the year that's helpful.
Okay.
And then second question Jeremy maybe.
Maybe just if there's a way to kind of bridge, where the Midland and the H.
Jeremy Goebel: There's certain gathering systems that feed south and certain that feed into the DAPL system, but outside of those jump ball barrels, I think it'll just be competitive between the groups that head south and the groups that head to the Gulf Coast and Batoka. So we're patient; we talk to our customers. Saddle Horn is largely full from DJ Basin. It has some movements from Guernsey, and those opportunities are presenting themselves, and so we'll continue to work with shippers to bring them south if it makes sense, but there should be plenty of barrels to go around in that area. Great, that's all for me. Thanks, Jeremy.
Spread is right now for 25 and.
Where youre looking to contract and how how we should look at it.
On a contract basis versus a spread basis.
Sure.
Signing up these contracts.
What I would tell you most of these contracts are for the latter half of 'twenty five and forward. So we're not really looking at the 25 market, we're looking more whereas the constructive long term rate to ship barrels from the <unk>.
Permian to the Gulf Coast.
Between us and the shippers, but we're having constructive dialogue and we're less worried about $24 25, and more what the long term rate is after the contracts roll.
Jeremy Goebel: Thank you. One moment for our next question. Our next question comes from Neal Mitra with Bank of America. Your line is now open. Hi, good morning.
And when you talk to your Counterparties.
Thanks, Mike.
Or are you looking longer.
Neal Dingmann: I wanted to touch on the 90% of NGL frack spreads that are hedged for 24. Obviously, frack spreads have been rising lately. I was wondering if you're able to catch some of that with the incremental hedges you put on, and how are you looking at perhaps hedging more than usual and, you know, maybe going up to 100% if you're content with this frack spread environment right now? Uh, Sunil, first thing, it's really backwardated, and until natural gas prices tanked a few weeks ago, it was... This is relatively new, and it's much higher in the front.
And then that I think will okay. Neal what I would suggest is we will give you an update later in the year and give you more information.
Okay. Thank you.
Thank you and one moment for our next question.
Our next question comes from Jeremy Tonet with Jpmorgan Securities. Your line is now open.
Hey, guys. This is Rob <unk> on for Jeremy.
For my first one I just wanted to ask on more color on the 2020 for interface and in long haul volumes. It looks like the 24 guide is down versus the <unk> 23 rates. So if you could discuss drivers there and then maybe a second part to that question to the long haul shipments include the 50000 barrel per day shipments that have already been prepaid.
Jeremy Goebel: I think 2025 is $.56, $.57, and prompt could be at $.80. So that backwardation prevents a lot of forward hedging. Our hedges are consistent with what Al said in the mid-60s at roughly 90%, and what you can say is that our hedging profile for us is somewhat consistent with the forward market. So we're higher hedged in the front and lower hedged in the back end of the year, if that's helpful. OK. And then, second question, Jeremy, maybe just if there's a way to kind of bridge where the Midland MEH spread is right now for 25 and where you're looking to contract and how we should look at it on a contract basis versus a spread basis when you're signing up these contracts. Sure, what I would tell you, Neal, is most of these contracts are for the latter half of 25 and forward, so we' The Permian to the Gulf Coast.
I'm going to go back and look for your question here. So you said interface on volumes on the guide versus long haul. So I'm looking at Q4 long haul and intra basin and then for next year.
I would say, there's probably some noise in that Q4 had a bunch of flush production.
Some of that volume with Wink to Webster connecting and it went to tender volume will go in that direction, which is actually a positive thing. It does have a shorter haul tariffs and that leads for integrated movements on our gathering system. So I'd say this is all consistent with our guidance and constructive for volume growth out of the Delaware Basin.
And then the long haul side I believe I answered that question earlier. It was just a surge in basin production in the fourth quarter and more normalized for the rest of the year.
Sure.
Great. Thanks, and then for the second one it looks like claims is approaching the long term distribution coverage target.
So just could you walk through how you guys think about distributions progression from here maybe.
Jeremy Goebel: And so that's between us and the shippers, but we're having constructive dialogue, and we're less worried about 24 and 25 and more about what the long-term rate is after the contract. And when you talk to your counterparties, are these 3- to 5-year contracts typically, or are you looking longer? I think we'll... Neal, what I would suggest is we'll give you an update later in the year and give you more information. Very good. Thank you. Thank you, and one moment for our next question. Our next question comes from Jeremy Tenet with JPMorgan Securities. Your line is now open. Hey guys, this is Vrath and Redillon for Jeremy.
Maybe versus a step up in that flattening out or a more ratable moderate step up.
In the future.
Well I think our current guidance.
For this year shows a 190%.
Coverage, so we've got a bit ago.
Our our stated approach will be <unk> 15, a year until we hit the 160%.
And then DCF growth.
We will drive future increases there so.
We haven't provided guidance for 25% or 26 yet.
With this $9.
19, or 20% increase we just did we're still at 190% coverage.
Got it thank you.
Yes.
Thank you.
One moment for our next question.
Okay.
Yes.
Our next question comes from <unk>.
Sunil Sibal with Seaport Global your line is now open.
Yes, hi, good morning, everybody.
Jeremy Goebel: For my first one, I just wanted to ask for more color on the 2024 intrabasin and long haul volumes. Looks like the 24 guide is down versus the 4Q23 rates. So if you could discuss drivers there, and it's maybe a second part to that question, do the long haul shipments include the 50,000 barrels per day shipments that have already been prepaid? I'm going to go back and look for your question here. So you said interbasin volumes on the guide first, long haul. So I'm looking at Q4 long haul and interbasin, and then for next year. You know, I would say there's probably some noise in that.
So I just wanted to dwell a little bit on your gathering volumes could you give us a sense of your gathering volumes in Permian.
Roughly what percentage of that comes from our dedicated acreage.
Okay great.
Competing for volumes.
Hey, Sunil this is Willie.
I don't know if you were on earlier, but the overall gathering volume increases of 275000 barrels a day 150 of its from the bolt ons that we did at the remainder of the growth of 125000 is all really all Delaware basin growth.
Jeremy Goebel: Q4 has a bunch of flush production. Some of that volume with Wink to Webster connecting in at Wink, some of the volume will go in that direction, which is actually a positive because those are shorter-haul tariffs and that leads to integrated movements on our gathering sites. So I'd say this is all consistent with our guidance and constructive for volume growth out of the dental. And then on the long haul side, I believe I answered that question earlier; it was just the surge in basin production in the fourth quarter and more normalized. Great, thanks.
Okay.
Referring to your current gathering volumes.
I was curious you know.
And pardon me and he's got a good sense of what all comes from your dedicated acreage.
Pardon me and versus Hey, Craig is there may be competing for those gathering Rotterdam.
I would say the vast majority is associated with the $4 4 million acres that will be referenced in the script better dedicated systems.
Understood.
And then on the M&A front it seems like you divested some assets.
Jeremy Goebel: And then for the second one, looks like Plains is approaching the long-term distribution coverage target. So just could you walk through how you guys think about distribution progression from here, maybe versus step up and then flattening out or a more rateable moderate step up in the future? Well, I think our current guidance for this year shows 190 percent coverage, so we've got a bit to go. Our stated approach will be 15 cents a year until we hit 160%, and then DCF growth will drive future increases there. So we haven't provided guidance for 25 or 26 yet.
In 2023.
Would you give us a sense of you know from an opportunistic M&A perspective did you see the most value.
<unk> our asset base.
So Neil that's probably something we're going not going to comment on all of what else I can assure you that we look at.
We run models on all kinds of different things, we will look at all the different assets and opportunities to create value for our unit holders and on the same token.
We look to optimize our own asset base as we've as we've proven over the last number of years. So it is a dynamic dynamic activity that happens every day, it's really hard to to focus on valuations in different basins swap that maybe we can follow up with you on the ops offline and see if we can't answer your question a little bit better.
Jeremy Goebel: But yeah, with this 19 or 20% increase we just did, we're still at 100%. Yeah, thank you. Thank you. One moment for our next question. Sunil Sibal with Seaport Global, your lines are now open. Yeah, hi, good morning, everybody.
Yes.
Got it thanks.
Thank you.
Thank you.
One moment for our next question.
Okay.
Our next question comes from Neil.
Neal Dingmann.
True Securities. Your line is now open.
Good morning, guys. Thanks for the time My question, maybe for you al just on Permian volume expectations.
Sunil Sibal: So I just wanted to dwell a little bit on your gathering volumes. Could you give us a sense of your gathering volumes in the Permian? Roughly, you know, what percentage of that comes from your dedicated acreage versus acreage where you may be competing for volumes? Hey Sunil, this is Willie.
Good job you mentioned, the rig count, which continues to be nice and stable, but to me what seems to get a bit losses improved continued D&C efficiencies that have since to result in more volumes even with these similar levels. So I'm. Just wondering do you all continue to see this type of upside as I do EBIT.
Willie Chiang: I don't know if you were on earlier, but the overall gathering volume increased by 275,000 barrels a day, or 150 if it's from the bolt-ons that we did. The remainder of the growth, 125,000, is really all Delaware Basin. Okay, now I was actually referring to your current gathering volumes. I was curious, you know, in Permian, is there a good sense of what all comes from your dedicated acreages in Permian versus acreages where you may be competing for those gathering volumes? Neal, I would say the vast majority is associated with the 4.4 million acres that Willie... understood.
If the if the D&C if the rigs say stay relatively stable are you still expecting some nice volume upside on your part.
I think our forecast is consistent with what the industry is doing today, but they are all working to get better. If you look at oil in place targets and they are achieving.
Teething in first recoveries less than 10%.
Trying to get higher than that and if they do that that would be where a big movement would be.
I would say, though is consistent with our view of supply and demand and current D&C practices I would agree with you that theres, probably been 10% efficiency of just drilling and completion time since the steadying out of the rig count stood at 300 rigs is probably doing the rework of close to 330 rigs 12 months ago, but as.
Willie Chiang: And then on the MLA front, seems like you divested some assets in 2023. Could you give us a sense of, you know, from an opportunistic M&A perspective, where do you see the most value, either basin-wise or asset-wise? Sunil, that's probably something we're not going to comment on all the what-ifs.
Far as recoveries I think recovery.
Our view of efficiencies are built into our forecast this year, but longer term our bet would be on the U S. E&ps that they would figure out how to get higher recoveries.
Willie Chiang: I can assure you that we look at, and run models on all kinds of different things. We look at all the different assets and opportunities to create value for our unit holders. And on the same token, we look to optimize our own asset base, as we've proven over the last number of years. So it's a dynamic activity that happens every day. It's really hard to focus on valuations in different basins.
Okay great.
Yes, Neil remember, we do a top down assessment. We also we have our connection forecast as kind of a bottoms up and so we factor all of that together and that's where we got our number from.
Great point.
Youll have that detail then my second question is just maybe on the NGL segment, specifically it looks like just wondering how youre thinking about is.
Is the sort of level now the propane were through to see a bit through the CS. It seems to me do you think we'll have more propane pricing pressure and just I guess I'm. Just wondering how you think that's going to impact the regional basis differentials and maybe some more spot opportunities you all might have.
Willie Chiang: So we'll have to, maybe we can follow up with you offline and see if we can answer your question a little bit better. Got it. Thanks. Thank you. Thank you, and one moment for our next question. Our next question comes from Neal Dingmann with True Securities. Your line is now open. Morning, guys.
Sure I think that's a function of location so.
Neal Dingmann: Thanks for the time. My question, maybe for you, Al, is just on permeant volume expectations. You all did a good job.
For SaaS is limited on fractionation capacity, which is why we're expanding in our peer so there could be some pressure on Y grade prices. There I'd say in the Gulf Coast production growth will continue on the NGL side is associated gas and other gas grows sources grow.
Al Swanson: You mentioned the rig count, which continues to be nice and stable. But to me, what seems to get a bit lost is the continued improved D&C efficiencies that happen to result in more volumes, even with these similar levels. So I'm just wondering, do you all continue to see this type of upside as I do, even if the D&C, if the rigs stay relatively stable, are you still expecting some nice volume upside on your part? I think our forecast is consistent with what the industry is doing today, but they're all working to get better. If you look at oil in place targets, and they're achieving less than 10% in the first recovery. We're trying to get higher than that. And if they do that, that would be where a big movement would start.
So there needs to be some expansion of dock capacity in Fracs in the Gulf Coast, you could see some issues there, but in a lot of those locations, where we sell our ngls, they're structurally short and inability to bring additional capacity into so we will continue to try to sell into those markets and maximize the basis.
Okay. Thank you guys.
Thank you one moment for.
Our next question.
And our next question comes from John Mccain with Goldman Sachs. Your line is now open.
Hey, good morning, Thanks for the time.
Wanted to touch again on Permian crude.
On your you've commented on your bottoms up estimates I'd be curious if you could give us a bit of a read on what youre seeing for private versus public activity and I think also related last year on the call. You just gave a bit of your sensitivity to changes in basin production.
Al Swanson: What I would say, though, is consistent with our view of supply and demand in current DMT practices. I would agree with you that there's probably been 10% efficiency in just drilling completion time since the steadying out of the rig count. So these 300 rigs are probably doing the work of close to 330 rigs 12 months ago.
From an EBITDA basis, maybe just a refresh on that too. Thanks.
John on your first question.
First of all we're not going to disclose any information for our customers, but generally a lot of the private inventory has been sold into the public hands and so the privates are now buying back from the independence.
Al Swanson: But as far as recoveries are concerned, I think recoveries and our view of efficiencies are built into our forecast this year. But longer term, our bet would be on the US EMPs that they would figure out how to get higher recoveries. Yeah, great detail. Yeah, Neal, remember, we do a top-down assessment. We also have our connection forecast, it's kind of a bottoms-up approach, and so we factor all that together, and that's where we got our numbers.
Her loved assets and starting to redevelop again, but I can.
Focus on the public has been consolidated to look at their growth forecast and that's largely consistent with our forecast.
Okay.
And as far as the EBITDA refresh I'm not sure I caught that question, Yes, I guess last year on the call you said.
Maybe like a 100000 barrel a day swing for the basin would be like a $10 million to $15 million EBITDA impact just curious if that number is still fair for 'twenty four or are there some.
Al Swanson: Great point. Yeah, that's good. You all have that detail.
Al Swanson: And then my second question is just, maybe on the NGL segment specifically, it looks like, just wondering how you're thinking about the sort of level now that propane, you know, we're through the season, a bit through the season. Seems to me, you know, do you think we'll have more propane pricing pressure? And just, I guess I'm just wondering how you think that's going to impact the regional basis differentials and, you know, maybe some more spot opportunities you all might have. Sure, I think that's a function of location, so... Fort Sask is limited in fractionation capacity, which is why we're expanding in our piers. So there could be some pressure on wide grain prices there. I'd say in the Gulf Coast, production growth will continue on the NGL side as associated gas and other gas sources grow.
Other moving pieces in there to refresh.
Yes, Sir that's consistent with the contracting profile, we have theres not a lot of turn on the contracts. So it doesn't really change much.
And then just just a follow up.
Staying on the same theme, but when you guys did the orix buying part of the narrative was hey, eventually over time, we should be able to use this bigger footprint to floor flow more volumes into our long haul side. Just curious if you could give us a bit of an update there and maybe if we look at your ratio kind of gathering to la.
Long haul volumes going forward, maybe how that ratio changes from here or.
We're not one.
One thing is I wouldn't consider the Oregon volume right. That's our partner in the when we merge those assets together I just want to make sure we're clear on that.
Second the JV done exactly what we thought we would and I would say it bolstered our relationship with our customers across the basin and giving us the opportunity to provide integrated economics, but as for the markets will dictate where barrels flow and pricing dictates, where they flow and so we.
Al Swanson: And so there needs to be some expansion of dock capacity and fracs in the Gulf Coast. So you could see some issues there, but in a lot of the locations where we sell our NGLs, they're structurally short and unable to bring additional capacity in. So we'll continue to try to sell into those markets as much as we can. Okay, thank you, guys. Thank you. One moment for our next question, and our next question comes from John Mackay with Goldman Sachs. Your line is now open. Hey, good morning.
We have strong relationships and ability to contract our pipes, but they can only be self Ole Enzo barrels have to flow in other directions, as well and we're completely comfortable with that.
Alright, that's clear I appreciate the time today. Thank you.
Yes.
Thank you.
One moment for our next question.
Our next question comes from Theresa Chen with Barclays. Your line is now open.
Good morning.
John Mackay: Thanks for your time. I wanted to touch again on Permian Crude, just on your, you know, you commented on your bottom-up estimates. I'd be curious if you could give us a bit of a read on what you're seeing for private versus public activity.
A quick follow up related to <unk> earlier question on San.
<unk> impact on our crude marketing business.
I'm completely understanding that.
Differentials to both mid Con and Gulf coast should be constrained, especially on landfill, but as <unk> deliver barrels to the west coast backing out some of the middle East and Latin imports given your liquids infrastructure business, there as well as your marketing preference is that potential.
Jeremy Goebel: And I think also related, last year on the call, you just gave a bit of your sensitivity to changes in basin production from an EBITDA basis. Maybe just a refresh on that too. Thanks. So John, your first question, private versus public. We're not going to disclose any information from our customers.
Jeremy Goebel: But generally, a lot of the private inventory has been sold into public hands. And so the privates are now buying back the independents' lesser-loved assets and starting to redevelop. But I'd focus on the public.
Really a source of upside to crude marketing in 2024.
Relative to opportunities in 2023 as those waterborne imports are backed out flows in differentials change on California.
Jeremy Goebel: It's been consolidated to look at their growth forecast, and that's largely. And as far as the EBITDA refresh, I'm not sure I caught that. Yeah, I guess last year on the call, you said maybe a 100,000 barrels a day swing for the basin would be like, you know, a 10 to $15 million EBITDA impact. Just curious if that number is still fair for 24.
Yeah.
Theresa This is Willie it's a complex question that.
Thats hard to put up put a pen to what I. What I can assure you is that we have a very flexible system and that wherever flows will go.
I think we'll be able to adapt to that and capture value perhaps in different parts of our system.
Long term I look at this as very.
Jeremy Goebel: There are some other moving pieces in there to refresh. Yes, sir. That's consistent with the contracting profile we have. There's not a lot of turn in the contract.
Very constructive because with more takeaway capacity to the west coast.
I think it allows.
Better price signal to producers to be able to produce more short term, we could see some headwinds, but I can assure you that we will adapt to that whatever the markets are we're going to try to look and see how we can use our assets to capture capture value.
Jeremy Goebel: And then just to follow up, kind of staying in the same theme, but when you guys did the Oryx buy-in, part of the narrative was, hey, eventually, over time, we should be able to use this bigger footprint to flow more volumes into our long-haul side. Just curious if you could give us a bit of an update there, and maybe if we look at your ratio of kind of gathering to long-haul volumes going forward, maybe how that ratio changes from here or not. Thanks. Well, one thing is I wouldn't consider the Oryx buy-in, right?
Thank you.
Thanks Teresa.
Thank you and one for next question.
Yeah.
Our next question comes from.
Tim Schneider with the Schneider Capital Group. Your line is now open.
Hey, good morning, guys, it's been a while how are you.
Hi, Tim.
Thanks for all the color on the Permian quick question for me kind of higher level question.
Jeremy Goebel: That's our partner, and we've merged those assets together, so I just want to make sure we're clear on that. But second, the JV's done exactly what we thought it would, and I would say it's bolstered our relationship with our customers across the basin and given us the opportunity to provide integrated economics. But as for the markets, we'll dictate where barrels flow, and pricing dictates where they flow. And so we... We have strong relationships and the ability to contract our pipes, but they can only be so full, and so barrels have to flow at other times, and Lowe.
On a sector strategic initiatives, so we've seen a tonnage.
M&A activity on the upstream side, we like some of these blockbuster transactions.
Two questions for you on this number one how do you view.
Upstream M&A, specifically kind of her plans and for the midstream sector.
Good for you bad for you kind of neutral in the second follow up I have to that is how do you think upstream M&A. This large scale large scale upstream remember they ultimately trickles.
Midstream sector, because we haven't really seen.
Any blockbuster transactions there right we've seen one big deal over the last call. It 12 to 18 months that had some call it tax attributes to it or is it more so smaller bolt ons and thats the way to go so just curious as to what your thoughts on that.
Jeremy Goebel: Thank you. Thank you. I'm glad to be here.
Operator: Thank you. It's been a pleasure. All right. Thank you. Thank you. Thank you. Thank you. All right. That's clear.
Well, Tim short answer on the question for upstream consolidation and the impact on planes with our.
Operator: I appreciate your time today. Thank you. Thank you.
Teresa Chen: One moment for our next question. Our next question comes from Teresa Chen with Barclays. Your line is now open.
Our asset base and the relationships, we have I don't think its going to be a material impact on us we work with.
Willie Chiang: Morning, I had a quick follow-up related to Jinan's earlier question on TMX's impact on your crude marketing business. I completely understand that, you know, the differentials to both MidCon and Gulf Coast should be constrained, especially upon line fill. But as TMX delivers barrels to the West Coast, you know, backing out some of the Middle East and Latin imports and giving your liquids infrastructure business there, as well as your marketing presence, is that potentially a source of upside to crude marketing in 2024 relative to opportunities in 2023 as those waterborne imports are backed out and the flows and differentials change in California? You know, Teresa. This is Willie.
If not all most of the large players.
So we've got volumes that flow on our systems today and their type of contracts and the way I think about it is if you if you have stronger counter parties.
In tougher environments.
We're fine if they want to develop the Permian in a more thoughtful and efficient way.
Because we were a long term company and we want to be around for a long time, so whether or not the production comes this year next year or the following year the.
The stability is probably a very positive thing for us and then when you think about.
The midstream my observations are I do think the upstream has been ahead of us.
Willie Chiang: It's a complex question that's hard to put a pin on, but what I can assure you is that we have a very flexible system and that wherever flows will go, I think we'll be able to adapt to that and capture value, perhaps in different parts of our system, you know, in the long term. I look at this very constructively because, with more takeaway capacity on the West Coast, I think it allows a better price signal to producers to be able to produce more. In the short term, we could see some headwinds, but I can assure you that we'll adapt to that.
I do think there'll be some more consolidation assets are probably the easiest way to go and again as we as you look at the landscape. There has been some M&A in the midstream, but I think we are in the part of the business cycle, where there are more opportunities to to be bigger and be stronger not that we arent a large enterprise but will value.
Different opportunities as we go always with the unit holder in mind.
Alright, thank you.
Thanks, Tim.
Thank you.
I'm showing no further questions at this time I would now like to turn the call back over to management for closing remarks.
Operator: Whatever the markets are, you know, we're going to try to look and see how we can use our assets to capture value. Thank you. Thanks, Teresa.
Well listen thanks to all of you for your interest in Plains, and we will look forward to updating you as the year progresses, everyone have a nice weekend. Thank you.
Operator: Thank you, and one moment for our next question. Our next question comes from Tim Schneier with the Schneier Capital Group. Your line is now open. Hey, good morning, guys. It's been a while. How are you?
This.
Today's conference call. Thank.
Thank you for participating.
May now disconnect.
Tim Schneier: Hi Tim. Quick, thanks for all the color on the Permian. Quick question for me, kind of a higher-level question on a sector strategic initiative. So we've seen a ton of M&A activity on the upstream side; we always have some of these blockbuster transactions. So I have two questions for you on this. Number one, how do you view upstream M&A, specifically for Plains and for the midstream sector? Is that good for you, bad for you, or kind of neutral?
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Willie Chiang: And the second follow-up I have to that is, how do you think upstream M&A, this large-scale upstream M&A ultimately trickles down to the midstream sector? Because we haven't really seen any blockbuster transactions there, right? We've seen one big deal over the last 12 to 18 months that had some tax attributes to it, or is it more so smaller bolt-ons, and that's the way to go? So just curious as to what your thoughts are on that.
Willie Chiang: Well, Tim, short answer on the question about Upstream Consolidation and the Impact on Plains. With our asset base and the relationships we have, I don't think it's going to have a material impact on us. We work with, if not all, most of the large players. So we've got volumes that flow on our systems today, and they're tied to contracts. And the way I think about it is, if you have stronger counterparties in tougher environments, we're fine if they want to develop the Permian in a more thoughtful and efficient way because we're a long-term company, and we want to be around for a long time. So whether or not production comes this year, next year, or the following year, the stability is probably a very positive thing for us. And then when you think about the midstream, my observations are that I do think the upstream is a bit ahead of us. I do think there will be some more consolidation. Assets are probably the easiest way to go.
Willie Chiang: And again, as you look at the landscape, there has been some M&A in the midstream, but I think we are in the part of the business cycle where there are more opportunities to be bigger and stronger. Not that we aren't a large enterprise, but we'll evaluate different opportunities as we go, always with the unit holder in mind. All right, thank you. Thanks, Jim. Thank you. I'm showing no further questions at this time. I would now like to turn the call back over to management for closing remarks. Well, listen, thanks to all of you for your interest in Plains, and we will look forward to updating you as the year progresses. Everyone have a nice weekend. Thank you. This concludes today's conference call. Thank you for participating; you may now disconnect.