Q4 2023 Plains GP Holdings LP Earnings Call

Okay.

Good day, and thank you for standing by.

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.

Speaker Change: Welcome to the PAA and PAGP fourth quarter 2023 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. Well then, here is an automated message advising you of your hand. 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 Fernandes. Vice President of Investor Relations. Please go ahead.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one one on your telephone.

Speaker Change: Then here an automated message advising her hands raised.

Speaker Change: To withdraw your question. Please press star one one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your speaker today.

Speaker Change: Fernandez.

Fernandez: Vice President of Investor Relations. Please go ahead.

Blake Fernandes: Thank you, Daniel. 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 two; 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.

Fernandez: Thank you Daniel Good morning, and welcome to Plains, All American fourth quarter 2023 earnings call.

Speaker Change: Today's slide presentation is posted on the Investor Relations website under the news and events section at Plains Dot Com.

Speaker Change: <unk> 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.

Speaker Change: 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.

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

Willie C. W. Chiang: 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 C. W. Chiang: And thank you for joining us. Today, we report 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.

Willie C. W. Chiang: 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%.

Willie C. W. Chiang: 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.

Willie C. W. Chiang: Our efforts to enhance the balance sheet were recognized by the credit rating agencies with two recent upgrades to mid Triple B <unk>.

Willie C. W. 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 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 the return of capital to equity holders while maintaining a strong balance sheet and financial flexibility.

Willie C. W. Chiang: Additionally, we completed several win win strategic transactions in both of our both of our both in our crude oil and NGL segments.

Willie C. W. Chiang: 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.

Willie C. W. Chiang: These transactions are representative of our ongoing efforts to optimize our asset base and streamline our operations, while generating attractive returns for unit holders.

Willie C. W. Chiang: The strong EBITDA results along with the recent bolt on transactions and lower leverage helped underpin a 20 <unk> 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 distributions relative to 2023 levels.

Willie C. W. Chiang: 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 or.

Willie C. W. Chiang: 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 C. W. Chiang: As highlighted on slide five we expect adjusted EBITDA attributable to PAA of $2 65 to $2 75 billion for 2024.

Willie C. W. 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.

Willie C. W. Chiang: 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.

Willie C. W. Chiang: 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 C. W. Chiang: We anticipate 2024 Permian crude oil production growth to be between 200,000 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.

With the Delaware basin, driving the majority of the growth.

Willie C. W. Chiang: 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.

Willie C. W. Chiang: 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.

Willie C. W. Chiang: 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.

Willie C. W. Chiang: For a long haul systems, we continue to expect high utilization on our corpus found assets a volume step up on based on pipeline and an MVC step up on Wink to Webster.

Willie C. W. Chiang: Volume Step-Up on Basin Pipeline and an MVC Step-Up on Wink-to-Webster. 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 de-bottleneck project remains on budget and unchanged in service date of mid 2025.

Willie C. W. Chiang: In our NGL segment, we continue to focus on optimizing the business and improving the durability of our earnings.

Willie C. W. Chiang: During 2023, we closed the sale of our JV interest in care <unk> SaaS and we sanctioned a 30000 barrel a day debottleneck of the planes for SaaS complex.

Al Swanson: The Debottleneck project remains on budget and unchanged in service date of mid 2025 with that I'll turn the call over to al. Thanks, Willie We reported fourth quarter adjusted EBITDA of $737 million, which includes crude oil segment benefit from Canadian market based opportunities.

Al Swanson: And 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.

Al Swanson: Increased volumes across our systems, primarily in the Permian along with NGL segment benefit from stronger seasonal sales and higher realized frac spread for the full year, we reported adjusted EBITDA of $2 $71 billion strong full year performance was primarily driven by higher realized frac spread mark.

Al Swanson: The strong full-year performance is primarily driven by higher realized frac spreads, market-based opportunities, strong base business performance, and contributions from bolt-on equity. Slides 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. This is partially offset by our assumption of fewer market-based opportunities.

Al Swanson: Based opportunities strong base business performance and contribution from bolt on acquisitions.

Al Swanson: Slides 13, and 14 in today's appendix contains walk which provide details on our fourth quarter performance.

Al Swanson: A summary of our 2020 for guidance and 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.

Al Swanson: Partially offsetting commodity price headwinds and our NGL segment.

Al Swanson: Growth in our crude oil segment is primarily driven by anticipated tariff volume increases.

Al Swanson: <unk> from tariff escalators and full year contribution from bolt on acquisitions.

Al Swanson: 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% edged for the year in 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.

Al Swanson: 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.

Al Swanson: I would note that our <unk> plus spec product sales volumes are approximately 90% hedged for the year in the mid 60 <unk> per gallon level.

Al Swanson: 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.

Al Swanson: Well as an increase in our capital related to our previously announced fourth SaaS Debottleneck project as illustrated on Slide 10, and in addition to.

Al Swanson: This includes capital for POPJV well connections and intrabasin improvements, as well as an increase in our capital related to our previously announced Fort Sass Debaltment Project, as illustrated on slide 10, and in addition. Through the 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 $1.15 billion to be allocated to common and preferred distribution, inclusive of the respective increases resulting in $500 million of adjusted free cash flow after distribution 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, 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.

Al Swanson: 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: <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.

Al Swanson: Regarding our senior note maturity profile, we have $750 million of notes maturing in November 2020 for which we would expect to refinance.

Al Swanson: All or a portion of during the year with that I'll turn the call back to Willy.

Willy: Thanks Al.

Willy: Ongoing geopolitical turmoil continues to drive market volatility along with potential impacts to energy and economic policy.

Willy: Despite this environment planes as well positioned today and going forward to continue delivering value to our unit holders.

Willy: As we show on Slide 11, we've made meaningful progress on our long term goals and initiatives.

Willy: To continue to reposition to position ourselves to be the partner employer and the investment of choice.

Willy: In summary, our balance sheet is much stronger with year end 2023 leverage at three one times.

Willy: 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 unit holders. We believe the world needs North American energy supply.

Willie C. W. 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, and we 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.

Willy: 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.

Blake: For those with additional questions. Please feel free to return to the queue.

Blake: This will allow all participants an.

Blake: The 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.

Willie C. W. 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.

Daniel: Thank you.

Speaker Change: A reminder to ask a question. Please press star one one on your telephone and wafer your name to be announced.

Speaker Change: To withdraw your question. Please press star one one again.

Speaker Change: 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.

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

Michael Blum: Hey, good morning.

Michael Blum: I wanted to ask a little bit on the 24 guidance.

Blake Fernandes: 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 11 again.

Michael Blum: Your Permian basin level growth forecast, it's pretty close to your own gathering volume growth estimate and I was just wondering if you could speak to that or is that a function of your market share in that basin is that just a coincidence and then.

Michael Blum: The guidance also assumes.

Michael Blum: Pretty nice jump in western volumes year over year. So I wonder if you can talk about what's driving that as well.

Michael Blum: Yes, Michael this is Willie.

75, maybe for clarity, it's composed of two factors one.

Willie C. W. Chiang: The M&A bolt on transaction volumes that we do.

Willie C. W. Chiang: We added last year and Thats about 150.

Willie C. W. Chiang: 1000 barrels a day and then growth from the growing basin, which is about 125000 barrels a day.

Willie C. W. Chiang: And on the Western volumes, Jeremy you want to comment on that.

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

Jeremy: And Youre speaking about Delaware basin volumes, AOS and <unk>.

Jeremy: And in California that was due to some downtime at the beginning of last year. So that's basically just normalizing to the <unk>.

Jeremy: Second half of the year runway and shutdown from California, refineries, which pushed more volumes on the pipe. So it's a combination of those two things.

Michael Blum: Hey, good morning. I want to talk a little bit about the 24 guidance, your Permian Basin Level Growth Forecast, which is 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 Market Share in the Basin? Is that just a coincidence?

Speaker Change: Okay perfect I appreciate it all of that and then just wanted to ask it seems like the open season on Gray Oak is moving forward.

Speaker Change: Just wanted to get your views on how you see that impacting your.

Speaker Change: You are re contracting efforts on cactus and then just generally on overall supply versus takeaway out of the basin.

Willie C. W. 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... California, that 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 on the pipe, so it's a combination. Okay, perfect. I appreciate all that.

Speaker Change: Sure. So what I would say first as ray of open season, we expect it to be successful.

Speaker Change: Where.

Speaker Change: Canadian abstract the 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 evidence base and growth that will tighten, but it's a constructive market people know where they want it right.

Speaker Change: Our barrels in the future in network and we will continue to be positive on the long haul pipes as time goes.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Our next question comes from Brian Reynolds with UBS. Your line is now open.

Brian Reynolds: 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.

Brian Reynolds: Given our high level plains is 50% of the market share in the Permian.

Brian Reynolds: 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 'twenty four.

Willie C. W. 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. So what I would say first is a great open season. 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 is concerned, pipes to Corpus are still full. Linked whips are still used.

Brian Reynolds: Yeah, I think Willie outlined the sources of the gathering growth.

Brian Reynolds: Midland versus Delaware, it's a function of activity. So if you look at the number of rigs working in the Delaware is probably a 170 to 180.

Brian Reynolds: 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, which is consistent with some of the public E&P guys.

Brian Reynolds: 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 pays us 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.

Willie C. W. Chiang: We have some flex on a few pipelines in the area, but as the basin grows, it will tighten. But it's a constructive market. People know where they want to bring their barrels in the future, and be positive for the long haul. Thank you.

Operator: One moment for our next question. Our next question comes from Brian Reynolds with UBS. Your line is now open. Hi, good morning, everyone.

Brian Reynolds: There is we had outsized contribution based on in the fourth quarter at a more normalized view for the year next year.

Speaker Change: I appreciate all of that maybe as my follow up so what's the capital allocation no claims 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.

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. 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. 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.

Speaker Change: Cash and specifically on M&A do you see a similar amount of like bolt on opportunities in 'twenty four or they are more limited.

Speaker Change: I'm sure, it's where debt reduction might be the perfect. Thanks.

Al Swanson: Sure This is al.

Speaker Change: Our focus will be to.

Al Swanson: 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.

Al Swanson: 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.

Willie C. W. Chiang: 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 what is consistent with some of the public E&Ps that have guided growth 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. So I'd say that's that piece.

Al Swanson: Our priority will continue to be to focus on investing returning more cash through distributions and looking for other value.

Al Swanson: Opportunities around using that cash flow.

Will: Hey, Brian This is willing maybe I'll add something to what al said.

Willing: When you think about the evolution of where we are.

Willing: 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.

Al Swanson: As for the long-haul guide, I think you were referring to the fourth quarter versus the full-year long-haul number. What I would say there is we had an outside contribution from Bateson in the fourth quarter, a more normalized, I appreciate all that. Maybe as my follow-up switch to capital allocation, 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.

Willing: Lot of capital has gone into the industry in the last decade, and I think what we're seeing right now is really.

Willing: Kind of.

Willing: A change in the business cycle focus on returns, which really is going to reinforce.

Willing: More opportunities for asset sales consolidation and really to address your question I do think they're going to be more opportunities in there.

Willing: 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.

Willing: And at the right valuations.

Willing: I think we can add we can add bolt ons, just as we did last year.

Speaker Change: Great. Thanks, I'll leave it there Joe good morning.

Joe: Thanks, Brian.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from Keith Stanley with Wolfe. Your line is now open.

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, you know, 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.

Keith Stanley: Hi, good morning.

Keith Stanley: 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.

Keith Stanley: A desire to have contracts with medium term duration versus operating the pipeline on a less contracted basis, depending on where price settles out.

Willie C. W. Chiang: 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.

Jeremy: Keith This is Jeremy.

Jeremy: Say as <unk>.

Jeremy: Instructive 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 need to move barrels everyday and the owners.

Jeremy: And the capacity on that pipeline should be someone with ratable export takeaway, because thats, where its going so and a lot of respect 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.

Jeremy: 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.

Willie C. W. Chiang: 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, 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.

Jeremy: Some marketing opportunities, but for us, it's more weighted to contracting and partnering up with the off takers like Wink to Webster as the refiners like on our corpus pipelines as the exporters.

Jeremy: And Keith just to make a reinforce the point that Jeremy made.

Speaker Change: Many people, we talked to think that.

Speaker Change: Our partners could disappear we've got great partners on this line folks that are shipping and so.

Operator: Thanks, Brian. Thank you. One moment for our next question, and our next question comes from Keith Stanley with Wolf. Your line is now open. Hi, good morning.

Speaker Change: I would couch this as 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.

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.

Speaker Change: Got it thanks.

Second question just.

Speaker Change: The company has had really good market based results the past two years on Canadian crude spreads and NGL market dynamics.

Speaker Change: Slide slide nine you are sending fewer market based opportunities in 2024.

Speaker Change: 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.

Jeremy L. Goebel: What I would say is it's constructive for us to have this dialogue 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 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.

Speaker Change: Yes, so market based opportunities.

Speaker Change: 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 reliably theres all kinds of things that factor into this.

Speaker Change: And we've been pretty conscious of not trying to forecast in a large capture for things that we don't know that's going to happen. So one of the fundamental changes. This year is we have not.

Jeremy L. 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 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. But for us, it's more weighted to contracting and partnering up with the offtakers, like in Wing-to-Webster, it's the refiners, like on our corpus pipelines, it's the exporters. And Keith, just to reinforce the point that Jeremy made, many people we talked to think that, you know, our partners could disappear.

Speaker Change: Not we but the industry has trans mountain that starting up that could impact the opportunities for.

Speaker Change: 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.

Speaker Change: Got the broad assets and a company with people that focus on this everyday.

Speaker Change: And so if there are opportunities out there, we'll capture it but it's very difficult to predict exactly where they happen and again this year's budget.

Speaker Change: 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 range of thought of what those might be.

Jeremy L. Goebel: We've got great partners on this line, folks that are shipping. And so the way I would couch this is 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 through renegotiation negotiations as far as term and tariff.

Speaker Change: I hope that helps.

Speaker Change: It does thank you.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

And our next question comes from Jean Salisbury with Bernstein. Your line is now open.

Keith Stanley: 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, 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 kind of a lack of visibility at this point, just how would you 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.

Jean Ann Salisbury: Hi, Good morning can you talk through the puts and takes is starting up on planes as various assets and Canada, or Canada crude pipeline to Cushing et cetera.

Jean Ann Salisbury: Hi, Jean Ann Good morning, Jeremy.

Jean Ann Salisbury: Yes.

Jean Ann Salisbury: 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 our opinion youll.

Jean Ann Salisbury: 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 hub basin barrels or other light barrel. So there are opportunities, we're going to have to wait for the startup and transition into full.

Jeremy L. 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, and it could impact the opportunities for crude market opportunities. So we factor all this in.

Jean Ann Salisbury: Assay 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.

Jeremy L. 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, you know, 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.

Speaker Change: Okay. Thank you for that and 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 the.

Speaker Change: The west boundaries down the saddle horn or the Cushing market or other things that can impact plaintiffs EBITDA.

Speaker Change: Sure. So there's a few things that impacted certain gathering systems that feed south uncertain that feed into the Apple system, but outside of those Jeff all barrels I think it'll just be competitive between the groups that heads out in the group said head to the Gulf Coast and that's okay.

Jeremy L. 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.

Speaker Change: So were their patient we talk to our customers.

Jean Ann Salisbury: Thank you. Thank you. Thank you.

Speaker Change: 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.

Jeremy L. Goebel: One moment for our next question. And our next question comes from Jean Salisbury with Bernstein. Your line is now open. Hi, good morning. Can you talk through the puts and takes of TMX starting up on Plains' various assets, Canada, your Canadian crude pipelines, flows to Cushing, etc.?

Speaker Change: Great. That's all for me Thanks, Jamie.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Neel Mitra with Bank of America. Your line is now open.

Jeremy L. Goebel: Good morning, Jeremy. Ed. 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 they're lighter barrels or heavy barrels, that could impact flows to the Midwest of basin barrels or other light barrels.

Neel Mitra: Hi, Good morning, I wanted to touch on the 90% of NGL Frac spread what are hedged for 24, obviously crack spreads have trended up lately.

Neel Mitra: I was wondering.

Neel Mitra: If you were able to catch some of that.

Neel Mitra: The incremental hedges, we put on and how are you looking at perhaps hedging more than usual and.

Neel Mitra: Maybe going up to 100% if you're content with the with.

Neel Mitra: With Frac spread environment right now.

Speaker Change: 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 in its.

Jeremy L. Goebel: So there are opportunities. 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.

Speaker Change: Much higher in the front and I think 2025 is $56 57.

Speaker Change: And perhaps could be at 80, so that.

Speaker Change: Backwardation prevents a lot of forward hedging.

Jeremy L. Goebel: 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. And as the basin tightens again and market opportunities come back, that's fine for us too. But we'll be there wherever the opportunity is. 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.

Speaker Change: 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 fraud and lower hedged in the back end of the year. If that's helpful.

Speaker Change: Okay.

Speaker Change: And then second question Jeremy maybe.

Jeremy: Maybe just if there is a way to kind of bridge, where the Midland mch.

Jeremy: Spread is right now for 25 and.

Jeremy L. Goebel: Do you anticipate any major change in how much Bakken crude makes its way kind of the westbound route down to Saddlehorn or the Cushing Market or other things that could impact the Plains of Zibitda? Sure. So there's a few things that impact it. There are 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.

Jeremy: Where youre looking to contract and how how we should look at it.

Jeremy: On a contract basis versus a spread basis when you are.

Jeremy: Signing up these contracts.

Speaker Change: Sure 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>.

Speaker Change: Permian to the Gulf Coast, and so that's 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 L. Goebel: So we're patient. We talk to our customers. Saddlehorn's largely full from DJ Basin.

Jeremy L. Goebel: 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.

Speaker Change: And when you talk to your.

Speaker Change: Counterparties.

Speaker Change: Thanks, Mike.

Speaker Change: Or are you looking longer.

Speaker Change: And on 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.

Jeremy L. Goebel: Great, that's all for me. Thanks, Jeremy. Thank you. One moment for our next question. Our next question comes from Neil Mitra with Bank of America. Your line is now open. Hi, good morning.

Speaker Change: Okay. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you and one moment for our next question.

Speaker Change: Our next question comes from Jeremy Tonet with Jpmorgan Securities. Your line is now open.

Neil Mitra: I wanted to touch on the 90% of NGL frac spreads that are hedged for 24. Obviously, frac spreads have trended up lately, and I was wondering if you're able to catch some of that with the incremental hedges you put on.

Robin Ready: Hey, guys. This is robin ready on for Jeremy.

Robin Ready: First of all 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, right. 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 L. Goebel: 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, this frac spread environment right now? Sunil, first thing, it's really backward.

Speaker Change: 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.

Jeremy L. Goebel: And until natural gas prices tanked a few weeks ago, it was, Our hedges are consistent with what Al said in the mid-60s at roughly 90%, and what you could say is that the 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. Okay. 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, Nilo, is most of these contracts are for the latter half of 2025 and forward, so we' 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 typically three to five-year contracts, or are you looking longer?

Speaker Change: I would say, there's probably some noise in that Q4 had a bunch of flush production.

Speaker Change: 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 would say this is all consistent with our guidance and constructive for volume growth out of the Delaware Basin.

Speaker Change: 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.

Speaker Change: Yes.

Speaker Change: Great. Thanks, and then for the second one it looks like claims is approaching the long term distribution coverage target.

Speaker Change: So just could you walk through how you guys think about distributions progression from here maybe.

Speaker Change: Maybe versus a step up in that flattening out or a more ratable moderate step up.

Speaker Change: In the future.

Speaker Change: Well I think our current guidance.

Speaker Change: For this year shows the 190%.

Speaker Change: Coverage, so we've got a bit to go.

Speaker Change: Our our stated approach will be 15 cents a year until we hit the 160%.

Speaker Change: And then DCF growth will drive future increases there so.

Speaker Change: We haven't provided guidance for 25% or 26 yet.

Jeremy L. Goebel: I think we'll, Neil, what I would suggest is we'll give you an update later in the year and give you more information. Thank you. Thank you, and one moment for our next question. Our next question comes from Jeremy Tonet with JP Morgan Securities. Your line is now open. Hey guys, this is Vratham Reddy on behalf of Jeremy.

Speaker Change: With this.

Speaker Change: $919 or 20% increase we just did we're still at 190% coverage.

Speaker Change: Got it thank you.

Yes.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from <unk>.

Speaker Change: Sunil Sibal with Seaport Global your line is now open.

Sunil Sibal: Yes, hi, good morning, everybody.

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 Permian.

Vratham Reddy: 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, as 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.

Sunil Sibal: Roughly what percentage of that comes from our dedicated acreage.

Sunil Sibal: Yes.

Speaker Change: We are competing for volumes.

Speaker Change: Hey, Sunil this is Willie.

Willie C. W. Chiang: 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.

Willie C. W. Chiang: Okay.

Willie C. W. Chiang: Referring to your current gathering volumes.

Speaker Change: I was curious you know and Permian you've got a good sense of what all it comes from your dedicated acreage.

Jeremy L. 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 leaves for integrated movements on our gathering. 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.

Speaker Change: Pardon me and versus Hey, Craig is there may be competing for those gathering volumes.

Speaker Change: I would say the vast majority is associated with the $4 4 million acres that will be referenced in the script that are dedicated.

Speaker Change: Understood.

Speaker Change: And then on the <unk>.

Speaker Change: India front it seems like you divested some assets.

Speaker Change: In 2023.

Speaker Change: Could you give us a sense of yes, no from an opportunistic M&A perspective bid.

Speaker Change: Do you see the most value.

Speaker Change: <unk> our asset base.

Jeremy L. 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 a 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.

So Neil that's probably something we're going to not going to comment on all of what if I can assure you that we look at we.

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.

Speaker Change: 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 swapped out maybe we can follow up with you on the offline and see if we can't answer your question a little bit better.

Jeremy L. Goebel: 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.

Speaker Change: Got it thanks.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Neil.

Jeremy L. Goebel: But yeah, with this, you know, 19 or 20% increase we just did, we're still at 100%. Yeah, thank you. Thank you. One moment for our next question. Our next question comes from Sunil Sibal with Seaport Global. Your line is now open. Yeah, hi, good morning, everybody.

Neil: Neal Dingmann.

Neil Dingmann: True Securities. Your line is now open.

Neil Dingmann: Good morning, guys. Thanks for the time My question, maybe for you al just on Permian volume expectations.

Neil Dingmann: Good job you mentioned, the rig count, which continues to be nice and stable, but to me what seems to get a bit loss as the improved continued D&C efficiencies that happens 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.

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.

Neil Dingmann: If the if the D&C if the rigs say stay relatively stable are you still expecting some nice volume upside on your part.

Willie C. W. Chiang: I don't know if you were on earlier, but the overall gathering volume increases are 275,000 barrels a day; 150 of it's from the bolt-ons that we did. The remainder of the growth, 125,000 is all 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? Neil, I would say the vast majority is associated with the 4.4 million acres that will...

Neil Dingmann: 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.

Neil Dingmann: Achieving first recoveries less than 10%.

Neil Dingmann: Trying to get higher than that and if they do that that would be where a big movement would be at what I would say, though is consistent with our view of supply and demand and current D&C practices I would agree with you that there is probably been 10% efficiency of just drilling and completion time defense.

Neil Dingmann: Steadying out of the rig count. So thats 300 rigs is probably doing the rework of close to 330, <unk> 12 months ago, but as far as recoveries I think recoveries.

Willie C. W. 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 MLA 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.

Neil Dingmann: 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.

Speaker Change: Okay, great. Thank you Joe.

Speaker Change: 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 that together and that's where we got our number from.

Speaker Change: Great point.

Sunil Sibal: 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. Maybe we can follow up with you offline and see if we can answer your question a little bit better. You got it.

Speaker Change: 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.

Speaker Change: Is the sort of level now the propane were through to see a bit through the season.

Speaker Change: 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.

Neil Dingman: Thanks. Thank you. Thank you and one moment for our next question. Our next question comes from Neil Dingman with True Securities. Your line is now open. Morning, guys.

Speaker Change: Sure I think that's a function of location so.

Speaker Change: For SaaS is limited on fractionation capacity, which is why we're expanding in our peer so there could be some pressure on <unk> 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 to grow.

Al Swanson: Thanks for the time. My question, maybe for you, Al, is just on permian volume expectations. You all did a good job.

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 DNC efficiencies that, you know, happen to result in more volumes, you know, even with these similar levels. So I'm just wondering, do you all continue to see this type of upside as I do, you know, even if the DNC, 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 what they're achieving in first recovery is less than 10%, we're trying to get higher than that. And if they do that, that would be where a big movement starts.

Speaker Change: 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 the 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 basis.

Speaker Change: Okay. Thank you guys.

Speaker Change: Thank you one moment for our next question.

John Edwards: And our next question comes from John Mccain with Goldman Sachs. Your line is now open.

John Edwards: Hey, good morning, Thanks for the time.

John Edwards: Wanted to touch again on Permian crude.

John Edwards: 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 D&T 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.

John Edwards: From an EBITDA basis, maybe just to refresh on that too. Thanks.

John Edwards: So Jon on your first question.

Al Swanson: But as far as recoveries, 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 E&Ps that they would figure out how to get higher recoveries and in great detail. Yeah, Neil, remember, we do a top-down assessment. We also have our connection forecast, it's kind of a bottoms up. And so we factor all that together. And that's where we got our number. Great point. Yeah, that's good. You all have that detail.

John Edwards: Private 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 lesser loved assets and starting to redevelop again, but I'd focus on the public has been consolidated to look at their growth.

John Edwards: Forecast and that's largely consistent with our forecast.

John Edwards: Okay.

John Edwards: 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.

John Edwards: 100000 barrel a day swing for the basin would be like.

Neil Dingman: And then my second question is maybe on the NGL segment, specifically, it looks like. Just wondering how you think about the sort of level now that propane, you know, we're through the season, a bit through the season, seems to me, do you think we'll have more propane pricing pressure? And I guess I'm just wondering how 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.

John Edwards: $10 million to $15 million EBITDA impact just curious if that number is still fair for 'twenty four or theres. Some.

John Edwards: Other moving pieces in there to refresh.

Speaker Change: 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.

Speaker Change: And then just a follow up.

Speaker Change: 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.

Jeremy L. Goebel: So... Fort Sask is limited in fractionation capacity, which is why we're expanding our piers. So there could be some pressure on why grade 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. And so there needs to be some expansion of dock capacity and fracs in the Gulf Coast. So you could see some issues there.

Speaker Change: Long haul volumes going forward, maybe how that ratio changes from here or.

Speaker Change: We're not.

Speaker Change: One thing is I wouldn't consider the oryx 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.

Speaker Change: Second the JV has done exactly what we thought we would and I would say, it's 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.

Jeremy L. Goebel: 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. Okay, guys. Thank you. One moment for our next question, and our next question comes from John McKay with Goldman Sachs. Your line is now open. Hey, good morning.

Speaker Change: We have strong relationships and the ability to contract our pipes, but they can only be self old Enzo barrels have to flow in other directions as well.

John McKay: Thanks for the 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 gave us a bit of a read on what you're 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 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 for our customers. But generally, a lot of the private inventory has been sold into public hands.

Speaker Change: Completely comfortable with that.

Speaker Change: Alright, that's clear I appreciate the time today. Thank you.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Theresa Chen with Barclays. Your line is now open.

Theresa Chen: Good morning.

Theresa Chen: A quick follow up related to <unk> earlier question on San.

Theresa Chen: <unk> impact on your crude marketing business.

Completely understanding that.

Theresa Chen: Differentials to both mid Con and Gulf coast should be constrained, especially upon landfill, but as TNX 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 presence is there.

Jeremy L. Goebel: And so the privates are now buying back from the independents, less loved assets, and starting to redevelop them. But I focus on the public that'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, um, maybe a 100,000 barrel 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.

Theresa Chen: Potentially 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 the California.

Theresa Chen: Yeah.

Theresa Chen: Theresa This is Willie it's a complex question that.

Willie C. W. Chiang: Thats hard to put a 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.

Willie C. W. Chiang: I think we'll be able to adapt to that and capture value perhaps in different parts of our system.

Jeremy L. Goebel: There are some other moving pieces in there to refresh. The answer that's consistent with the contracting profile we have, there's not a lot of turn in the contract. So that's, Okay. And then just to follow up, kind of staying in the same theme.

Willie C. W. Chiang: Long term I look at this is <unk>.

Willie C. W. Chiang: Very constructive because with more takeaway capacity to the west coast.

Jeremy L. Goebel: 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?

Willie C. W. Chiang: I think it allows.

Willie C. W. Chiang: Better price signals 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.

Speaker Change: Thank you.

Speaker Change: Thanks Teresa.

Speaker Change: Thank you and one for next question.

Speaker Change: Yeah.

Speaker Change: Our next question comes from.

Speaker Change: Tim Schneider with the Schneider Capital Group. Your line is now open.

Tim Schneider: Hey, good morning, guys, it's been a while how are you.

Jeremy L. 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 did exactly what we thought it would.

Tim Schneider: Hi, Tim.

Tim Schneider: Thanks for all the color on the Permian quick question for me kind of higher level question.

Tim Schneider: On a sector strategic initiatives, so we've seen a tonnage.

Jeremy L. Goebel: 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, they will dictate where barrels flow, and pricing dictates where they flow. And so we have strong relationships and the ability to contract our pipes, but they can only be so full, and so barrels have to flow another way, and more. Thank you. All right, that's clear.

Tim Schneider: M&A activity on the upstream side, we always have some of these blockbuster transactions.

Speaker Change: Two questions for you on this number one how do you view upstream.

Speaker Change: Upstream M&A, specifically kind of her plans and for the midstream sector is that good for you back 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 sort of midstream sector, because we haven't really seen.

Speaker Change: Many 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.

John McKay: 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. Morning, I had a quick follow-up related to Jean Anne's earlier question on TMX's impact on your crude marketing business. Completely understanding 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.

Speaker Change: Waller bolt ons and Thats the way to go so just curious as to what your thoughts on that.

Speaker Change: Well, Tim short answer on the question for upstream consolidation and the impact on planes.

Tim Schneider: Our asset base and the relationships, we have I don't think its going to be a material impact on us we work with.

Tim Schneider: If not all most of the large players.

Tim Schneider: 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 counterparties.

Tim Schneider: In tougher environments.

Tim Schneider: We're fine if they want to develop the Permian in a more thoughtful and efficient way.

Tim Schneider: 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.

Willie C. W. Chiang: It's a complex question that's hard to put a pin on. 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, long term, I look at this as very constructive because with more takeaway capacity to 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.

Tim Schneider: The stability is probably a very positive thing for us.

Tim Schneider: And then when you think about.

Tim Schneider: The midstream my observations are I do think the upstream has been ahead of us.

Tim Schneider: 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 we'll evaluate.

Tim Schneider: Different opportunities as we go always with the unit holder in mind.

Willie C. W. Chiang: 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.

Speaker Change: Alright, thank you.

Speaker Change: Thanks, Tim.

Speaker Change: 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.

Tim Schneier: 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?

Speaker Change: 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.

Willie C. W. Chiang: Hi Tim. 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, really seen 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?

Speaker Change: This concludes today's conference call.

Speaker Change: Thank you for participating you may now disconnect.

Speaker Change: [music].

Willie C. W. Chiang: And the second follow-up question I have is, how do you think upstream M&A, this large-scale upstream M&A ultimately trickles through 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 C. W. Chiang: Well, Tim, short answer to 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 C. W. 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.

Tim Schneier: 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.