Q4 2023 EnLink Midstream LLC Earnings Call
Greetings and welcome to the Enlink midstream for Q2023 earnings conference call and webcast. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference.
Operator: Greetings and welcome to the EnLink Midstream 4Q 2023 earnings conference call and webcast. At this time, all participants are listening only. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Please press Star zero on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host Brian Brungardt director of Investor Relations. Thank you, Brian you may begin.
Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Brungardt, Director of Investor Relations. Thank you, Brian. You may begin. Thank you, and good morning, everyone.
Brian Brungardt: Thank you and good morning, everyone welcome to <unk> fourth quarter of 2023 earnings call.
Brian Joseph Brungardt: Welcome to EnLink's fourth quarter of 2023 earnings call. Participating on the call today are Jesse Arenivas, Chief Executive Officer; Dilanka Seimon, Executive Vice President and Chief Commercial Officer; and Ben Lamb, Executive Vice President and Chief Financial Officer. Walter Pinto, Executive Vice President and Chief Operating Officer, is also in the room to answer any questions during the Q&A session.
Brian Brungardt: Participating on the call today are Jesse ear, Nevis, Chief Executive Officer, Delbanco, Simon Executive Vice President and Chief Commercial Officer, and then Lamb Executive Vice President and Chief Financial Officer.
Brian Brungardt: Walter Pinto Executive Vice President and Chief operating Officer is also in the room to answer any questions during the Q&A session.
Brian Brungardt: We issued our earnings release and presentation. After the markets closed yesterday and those materials are on our website. A replay of today's call will also be made available on our website at investors that Enlink dot com.
Brian Joseph Brungardt: We issued our earnings release and presentation after the markets closed yesterday, and those materials are on our website. A replay of today's call will also be made available on our website at investors.enlink.com. Today's discussion will include four forward-looking statements, including expectations and predictions within the meaning of the federal securities laws. The forward-looking statements speak only as of the date of this call, and we undertake no obligation to update or revise them. Actual results may differ materially from our projections, and a discussion of factors that could cause actual results to differ can be found in our press release, presentation, and SEC files. This call also includes discussions pertaining to certain non-GAAP financial measures. Definitions of these measures, as well as reconciliation of comparable GAAP measures, are available in our press release and in the appendix of our presentation.
Brian Brungardt: Today's discussion will include forward looking statements, including expectations and predictions within the meaning of the federal Securities laws.
Brian Brungardt: The forward looking statements speak only as of the date of this call and we undertake no obligation to update or revise.
Brian Brungardt: Actual results may differ materially from our projections and a discussion of factors that could cause actual results to differ can be found in our press release presentation and our SEC files.
This call also includes discussions pertaining to certain non-GAAP financial measures definitions of these measures as well as reconciliations of comparable GAAP measures are available in our press release and the appendix of our presentation.
Brian Joseph Brungardt: We encourage you to review the cautionary statements and other disclosures made in our press release and our SEC filings, including those under the heading risk factors. We'll start today's call with a set of brief prepared remarks by Jesse, Dilanka, and Ben, and then leave the remainder of the call open for questions and answers. With that, I would now like to turn the call over to Jesse Arenivas. Thanks, Brian. Good morning
Brian Brungardt: We encourage you to review the cautionary statements and other disclosures made in our press release, and our SEC filings, including those under the heading risk factors.
Brian Brungardt: We will start today's call with a set of brief prepared remarks by Jessie the Lager and then and then leave the remainder of the call open for questions and answers.
Brian Brungardt: With that I would now like to turn the call over to Jessie are neighbors.
Jessie: Thanks, Brian and good morning, everyone. Thank you for joining us today to discuss our fourth quarter results and full.
Jesse Arenivas: Thank you for joining us today to discuss our fourth quarter results and full 2023 results. We'll also discuss our 2024 outlook, which looks like it will be another great year driven by solid business activity. Looking back at 23.
Speaker Change: 23 results.
Speaker Change: We'll also discuss our 2024 outlet, which looks like it will be another great year, driven by solid business activity.
Speaker Change: Looking back at 23.
Jesse Arenivas: I'm proud of the team's strong execution, driving a number of records despite the challenging and volatile commodity environment. Last night, we reported fourth-quarter adjusted EBITDA of $351 million and 2023 adjusted EBITDA of $1.35 billion. This marked solid growth of approximately 5% over the prior year.
Jessie: I'm proud of the team's strong execution driving a number of records, despite the challenging and volatile commodity environment.
Jessie: Last night, we reported fourth quarter, adjusted EBITDA of $351 million and 2023, adjusted EBITDA of $135 billion. This mark solid growth of approximately 5% over the prior year.
Jessie: These solid results drove free cash flow after distributions of nearly $250 million for 2000 2023.
Jesse Arenivas: These solid results drove free cash flow after distributions of nearly $250 million for 2020-23. We continue to use our robust free cash flow after distributions to return capital to our investors. Earlier this year, we announced a 6% increase in our quarterly distribution. Additionally, we fully executed our expanded $250 million common unit repurchase program.
Jessie: We continue to use our robust free cash flow after distributions to return capital to our investors.
Jessie: Earlier this year, we announced a 6% increase on our quarterly distribution.
Jessie: Additionally, we fully executed our expanded $250 million common unit repurchase program.
Jesse Arenivas: Since we began our consistent unit repurchase program in late 2021, we have repurchased approximately 9% of the common units outstanding. Ben will provide more details later in the call, but we forecast this momentum to continue into 2024. Growth this year will be led by our largest business, the Permian, followed by Louisiana, which we expect to become our second largest segment this year. The growth in those businesses will be partly offset by the impact of the non-core ORV asset sale in late 2023 and a contractual rate reset in certain legacy Oklahoma and North Texas commercial agreements. Overall, we forecast adjusted EBITDA of $1.36 billion at the midpoint of our guidance range.
Jessie: Since we began our consistent unit repurchase program in late 2021, we have repurchased approximately 9% of the common units outstanding.
Jessie: David will provide more details later in the call, but we forecast this momentum to continue into 2024.
Jessie: Our growth this year will be led by our largest business. The Permian followed by Louisiana, which we expect to become our second largest segment this year.
Jessie: The growth in those businesses will be partly offset by the impact from the non core RV asset sale in late 2023, and a contractual rate reset and certain legacy, Oklahoma and North Texas commercial agreements.
Jessie: Overall, we forecast adjusted EBITDA of 136 billion at the midpoint of our guidance range.
Jesse Arenivas: The continued strong cash flow generation, coupled with lower total capital expenditures, will drive a significant increase in free cash flow after distributions to $290 million at the midpoint of our guide. Earlier this year, we announced that the board authorized another $200 million common unit repurchase program for 2024, which represents the third consecutive year of at least $200 million of repurchase. Last night, we released an update on our COT transportation solution for ExxonMobil, following ExxonMobil's recent acquisition of Denberry. We expanded our commercial discussions to provide safe, reliable, and cost-efficient CO2 transportation to other areas across the Gulf Coast beyond the Mississippi River Corridor, in total. The industrial facilities along the Gulf Coast between Houston and New Orleans emit over 215 million metric tons of CO2 today into the abyss.
Jessie: The continued strong cash flow generation, coupled with lower total capital expenditures will drive significant increase in free cash flow after distributions to $290 million at the midpoint of our guidance.
Jessie: Earlier this year.
Jessie: We announced that the board authorized another $200 million common unit repurchase program for 2024, which represents a third consecutive year at of at least $200 million of repurchases.
Jessie: Last night, we released an update around our Sidoti transportation solution for Exxonmobil.
Jessie: Following exxonmobil as recent acquisition of Danbury.
Jessie: We expanded our commercial discussions to provide safe reliable and cost efficient Sidoti transportation to others other areas across the Gulf coast beyond the Mississippi River corridor.
Jessie: In total.
Jessie: The industrial facilities, along the Gulf Coast between Houston, and New Orleans, I met over 215 million metric tons of Cotwo today.
Jessie: Into the atmosphere.
Jessie: We're excited for this opportunity to expand our commercialization efforts with Exxon.
Jesse Arenivas: We're excited for this opportunity to expand our commercialization efforts with Exxon, as it may represent a larger investment opportunity and an expanded reach into multiple markets. EnLink and ExxonMobil continue to work closely together on CO2 transportation solutions since our initial agreement in 2022 and look forward to continuing our collaboration to help reduce carbon emissions across the Gulf Coast, in connection with the expanded evaluation, while the original transportation agreement remains in place. EnLink and Exxon Mobil have agreed to reassess the Pecan Island project's near-term role with the expectation that other projects may be prioritized ahead of the Pecan Island project.
Jessie: It may represent a larger investment opportunity and an expanded reach into multiple markets.
Jessie: Enlink and Exxonmobil continue to work closely together on Sidoti Transportation solutions since our initial agreement in 2022 and look forward to continuing our collaboration to help reduce carbon emissions across the Gulf coast.
Jessie: In connection with the expanded evaluation, while the original transportation agreement remains in place Enlink and Exxonmobil have agreed to reassess the Pecan island projects near term role with the expectation that other projects may be prioritized ahead of the Pecan Island project.
Jessie: Meanwhile, Italy continues to execute and gain expertise in energy transition and Sidoti transportation space during the fourth quarter, we achieved a milestone by bringing on <unk>.
Dilanka Seimon: Meanwhile, EnLink continues to execute and gain expertise in the energy transition and CO2 transportation space. During the fourth quarter, we achieved a milestone by bringing on line our carbon capture and transportation project at our Bridgeport facility in North Texas. Ultimately, we expect to capture up to 210,000 metric tons of CO2 emitted by our Bridgeport facility and deliver it to a permanent sequestration site developed by our largest customer in North Texas, BKV. With that, I will turn it over to Dilanka to provide an update on our evolving Louisiana sector. Thanks, Jesse, and good morning, everyone.
Jessie: Your line, our carbon capture and transportation project at our Bridgeport facility in North, Texas, ultimately, we expect to capture up to 210000 metric tons of Cotwo mended by our Bridgeport facility and deliver it to a permanent sequestration site developed by our largest customer in North Texas <unk>.
Speaker Change: With that I will turn it over to <unk> to provide an update on our evolving Louisiana segment.
Speaker Change: Thanks, Jessie and good morning, everyone.
Dilanka Seimon: Last quarter, we discussed how the Louisiana gas supply and demand market dynamics have shifted over the past year. While we continue to evaluate opportunities, I wanted to take this time to provide an update and discuss how EnLink can benefit from this shifting dynamic in three phases. In the first phase, we are focused on realizing the full value of our assets, and we stand to benefit from renewing current business at higher rates and often for longer terms. We began to see this benefit in the second half of 2023, and we expect this to continue. As contracts expire and are renewed, we estimate the value of the higher rates in 2024 will be approximately $20 million, and we see further upside in 2025 and beyond.
Speaker Change: Last quarter, we discussed how the Louisiana gas supply and demand market dynamics have shifted over the past year.
Speaker Change: While we continue to evaluate opportunities I wanted to spend this time to.
Speaker Change: To provide an update on discuss how enlink can benefit from the shifting dynamic in three phases.
Speaker Change: In the first phase we are focused on realizing the full value of assets and we stand to benefit from renewing current business at higher rates and often for longer terms.
Speaker Change: We began to see the benefit in the second half of 2023, and we expect this to continue.
Speaker Change: As contracts expire and are renewed we estimate the value of the higher rates in 2024 is approximately $20 million.
Speaker Change: And we see further upside in 2025 and beyond.
Dilanka Seimon: The second phase of growth for EnLink is focused on the bottlenecking project. We own and operate approximately 4,000 miles of pipeline across two major intrastate systems as well as the Henry Hub. And we connect to over a dozen third-party systems offering customers significant connectivity, particularly in the southern part of Louisiana. These projects are relatively quick to execute, generally less than 18 months, and provide very attractive economics, typically low single-digit EBITDA multiples. Examples include adding compression or looping short distances of existing pipelines.
Speaker Change: The second phase of growth for Enlink is focused on debottlenecking projects.
Speaker Change: Own and operate approximately 4000 miles of pipeline across two major intrastate systems as well as the Henry hub.
Speaker Change: And we connect to over a dozen third party systems offering customers significant connectivity, particularly in the southern part of Louisiana.
Speaker Change: These projects are relatively quick to execute generally less than 18 months.
Speaker Change: And provide very attractive economics, typically low single digit EBITDA multiples.
Examples include adding compression or looping short distances of existing pipelines.
Speaker Change: Beyond the quick efficient debottlenecking projects, the shifting supply and demand dynamics create a potential third phase of growth for Enlink, Louisiana system.
Dilanka Seimon: Beyond quick, efficient depot-taking projects, the shifting supply and demand dynamics create a potential third phase of growth for EnLink's Louisiana system. As LNG export capacity comes online over the next several years in Louisiana and with emerging industrial demand, such as the Blue Ammonia Project, we expect the forces impacting the markets today will only grow stronger. The rising demand for natural gas to serve this growing market may drive the need for larger projects such as new pipelines and expansions of natural gas storage to support our customers. While we are focused on meeting the needs of customers in this new environment, we remain committed to capital-efficient projects that are underwritten by strong customer commitments. In that vein, we have been evaluating opportunities to expand our natural gas storage portfolio. We currently have working storage capacity of about 11 BCF.
Speaker Change: As LNG export capacity comes online over the next several years in Louisiana and with emerging industrial demand such as blue ammonia projects.
Speaker Change: We expect the forces impacting the markets today.
Speaker Change: Only grow stronger.
Speaker Change: The rising demand for natural gas to serve this growing market may drive the need for larger projects such as new pipelines in expansion of natural gas storage to support our customers.
While we are focused on meeting the needs of customers in this new environment, we remain committed to capital efficient projects that are underwritten by strong customer commitments.
Speaker Change: In that vein, we have been evaluating opportunities to expand our natural gas storage portfolio.
Speaker Change: We currently have working natural gas storage capacity of about 11 Bcf.
Dilanka Seimon: Since the last learnings call when we mentioned this, we have progressed engineering studies and estimate that we can expand our salt storage capacity by an incremental 9 BCF and are currently marketing this capacity. We will continue to provide updates on these exciting projects in the coming quarters. But this is the latest example of longer-term opportunities to grow our Louisiana system and meet our customer needs during this period of shifting supply and demand dynamics. In short, this is an exciting time for EnLink's Louisiana system.
Speaker Change: Since the last earnings call. When we mentioned this we have progressed engineering studies.
Speaker Change: We estimate that we can expand our solid storage capacity by an incremental nine bcf.
Speaker Change: And are currently marketing this capacity we.
Speaker Change: We'll continue to provide updates on this exciting projects in the coming quarters, but this is the latest example.
Speaker Change: Of longer term opportunities to grow our Louisiana system and meet our customer needs. During this period of shifting supply.
Speaker Change: And demand dynamics.
Speaker Change: In short this is an exciting time for Enlink, Louisiana system.
Benjamin D. Lamb: We acquired this system over two decades ago and remain focused on optimizing this unique footprint over the next several years. With that, I'll turn it over to Ben to provide an overview of our operations and our financial results. Thanks, Dilanka, and good morning, everyone.
Speaker Change: We acquired this system over two decades ago and remain focused on optimizing this unique footprint over the next several years.
Speaker Change: With that I'll turn it over to Ben to provide an overview of our operations and our financial results.
Ben: Thanks, <unk> and good morning, everyone.
Benjamin D. Lamb: Let's start with the Permian, where segment profit for the fourth quarter of 2023 came in at $105.9 million, including approximately $9.6 million of gross operating expenses tied to plant relocations and $4 million of unrealized derivative gain. Excluding plant relocation OPEX and unrealized derivative activity, segment profit in the fourth quarter of 2023 decreased 1% sequentially, but grew 11% from the prior year quarter. Producer activity behind our systems remained robust, driving a record quarter for gathered volumes, with average natural gas gathering volumes approximately 6% higher sequentially and 23% higher than the prior year quarter. Turning now to Louisiana, we experienced another quarter of solid performance in the gas segment, along with strong results in the NGL segment that benefited from normal seasonality.
Ben: Let's start with the Permian where segment profit for the fourth quarter of 2023 came in at $105 $9 million, including approximately $9 6 million of gross operating expenses tied to plant relocations and $4 million of unrealized derivative gains.
Ben: Excluding plant relocation opex and unrealized derivative activity segment profit in the fourth quarter of 2023 decreased 1% sequentially, but grew 11% from the prior year quarter.
Ben: Producer activity behind our system has remained robust driving a record quarter for gathered volumes with average natural gas gathering volumes, approximately 6% higher sequentially and 23% higher than the prior year quarter.
Ben: Turning now to Louisiana, we experienced another quarter of solid performance in the gas segment, along with strong results in the NGL segment that benefited from normal seasonality.
Benjamin D. Lamb: Segment profit for the fourth quarter of 2023 came in at $103.6 million, including $0.9 million of unrealized derivative gain. Excluding the impact of unrealized derivative activity, segment profit for the fourth quarter of 2023 grew approximately 10% sequentially and grew approximately 2% compared to the prior year. During the fourth quarter, we fully exited our non-core Ohio River Valley assets for total proceeds of approximately $70 million.
Ben: Segment profit for the fourth quarter of 2023 came in at $103 $6 million, including $9 million of unrealized derivative gains excluding.
Excluding the impact of unrealized derivative activity segment profit in the fourth quarter of 2023 grew approximately 10% sequentially and grew approximately 2% compared to the prior year quarter.
Ben: During the fourth quarter, we fully exited our non core Ohio River Valley assets for total proceeds of approximately $70 million. This represents a multiple of approximately six times EBITDA.
Benjamin D. Lamb: This represents a multiple of approximately six times EBIT dollars. Moving up to Oklahoma, we delivered segment profit of $112 million for the fourth quarter of 2023, including $1.3 million of unrealized derivative gain. Excluding unrealized derivative activity, segment profit in the fourth quarter of 2023 grew approximately 1% sequentially and grew approximately 7% from the prior year quarter. During the fourth quarter, we continued to be impressed with the resilience of our business, as we saw operators remain active with rigs on our acreage, driving gathering volumes flat sequentially and approximately 15% higher compared to the prior year quarter. Wrapping up with North Texas, segment profit for the quarter was $68.6 million, including $0.7 million of unrealized derivative gains.
Ben: Moving up to Oklahoma, We delivered segment profit of $112 million for the fourth quarter of 2023, including $1 3 million of unrealized derivative gains.
Ben: Excluding unrealized derivative activity segment profit in the fourth quarter of 2023 grew approximately 1% sequentially and grew approximately 7% from the prior year quarter.
Ben: During the fourth quarter, we continued to be impressed with the resilience of our business as we saw operators remain active with rigs on our acreage driving gathering volumes flat sequentially and approximately 15% higher compared to the prior year quarter.
Ben: Wrapping up with North, Texas segment profit for the quarter was $68 $6 million, including $7 million of unrealized derivative gains.
Ben: Excluding unrealized derivative activity segment profit in the fourth quarter of 2023 decreased approximately 2% sequentially and decreased approximately 10% from the prior year quarter.
Ben: Natural gas gathering volumes were 1% lower sequentially, and 9% lower compared to the prior year quarter.
Ben: Yeah.
Ben: These solid results were in line with our expectations and drove another robust quarter with $358 million and adjusted EBITDA and $79 4 million and free cash flow after distributions.
Benjamin D. Lamb: Excluding unrealized derivative activity, segment profit in the fourth quarter of 2023 decreased approximately 2% sequentially and decreased approximately 10% from the prior year quarter; natural gas gathering volumes were 1% lower sequentially and 9% lower compared to the prior year order. These solid results were in line with our expectations and drove another robust quarter with $350.8 million in adjusted EBITDA and $79.4 million in free cash flow after distribution. For the full year 2023, EnLink delivered adjusted EBITDA of $1.35 billion and free cash flow after distributions of $247 million.
Ben: For the full year 2023, Enlink delivered adjusted EBITDA of 135 billion.
Ben: And free cash flow after distributions of $247 million.
Ben: This represents 5% growth in adjusted EBITDA over the prior year, reflecting the resilience of our diverse asset base, despite the volatile commodity price environment.
Ben: Capital expenditures at plant relocation expenses net to Enlink and investment contributions were $122 million in the fourth quarter of 2023.
Ben: On the balance sheet side, we continue to be in a very strong position with a leverage ratio of three three times at the end of the fourth quarter and we retain ample liquidity.
Benjamin D. Lamb: This represents 5% growth in adjusted EBITDA over the prior year, reflecting the resilience of our diverse asset base despite the volatile commodity price environment. Capital expenditures, plant relocation expenses, net to EnLink, and investment contributions were $122 million in the fourth quarter of 2023. On the balance sheet side, we continue to be in a very strong position with a leverage ratio of 3.3 times at the end of the fourth quarter, and we retain ample liquidity. We remain investment grade at Fitch and one notch below investment grade at both S&P and Moody's with a positive outlook at S&P.
Ben: We remain investment grade at Fitch, and one notch below investment grade with S&P, and Moody's with a positive outlook and S&P.
Ben: Consistent with our capital allocation plan to return capital to investors, we increased our quarterly common unit distribution to <unk> 13, and a quarter cents per unit in the fourth quarter, which represents a 6% increase over the fourth quarter of 2022.
Ben: During the fourth quarter the board increased our 2023 common unit repurchase authorization to $250 million.
Ben: The increase reflected our strong free cash flow generation as well as a portion of the proceeds from our sale of our noncore <unk> assets, we fully executed the expanded authorization, including <unk> pro rata share, which settled after the end of the quarter.
Benjamin D. Lamb: Consistent with our capital allocation plan to return capital to investors, we increased our quarterly common unit distribution to $0.1325 per unit in the fourth quarter, which represents a 6% increase over the fourth quarter of 2022. Additionally, during the fourth quarter, the board increased our 2023 common unit repurchase authorization to $250 million. The increase reflected our strong free cash flow generation, as well as a portion of the proceeds from our sale of our non-core ORV assets. We fully executed the expanded authorization, including GIP's pro rata share, which settled after the end of the quarter.
Ben: Following our consistent approach to repurchase common units beginning in late 2021, we have now repurchased nearly 42 million common units, representing approximately 9% of the common units outstanding at the beginning of our repurchase activity.
Speaker Change: Now, let me turn to the 2024 guidance that we announced yesterday.
Speaker Change: We are in a solid position to continue the momentum we ended the year with in 2024 is forecast to be another year of solid results from.
Speaker Change: From an adjusted EBITDA standpoint, we are forecasting a range of $1 three 1 billion to $1 $41 billion.
Speaker Change: This outlook reflects solid growth in our two largest segments, the Permian and Louisiana, while partially offset by the impact from the.
Benjamin D. Lamb: Following our consistent approach to repurchase common units beginning in late 2021, we have now repurchased nearly 42 million common units, representing approximately 9% of the common units outstanding at the beginning of our repurchase activity. Now, let me turn to the 2024 guidance that we announced yesterday. We are in a solid position to continue the momentum we ended the year with, and 2024 is forecast to be another year of solid results. From an adjusted EBITDA standpoint, we are forecasting a range of $1.31 billion to $1.41 billion. This outlook reflects solid growth in our two largest segments, the Permian and Louisiana, while partially offset by the impact of the non-core ORV asset sale in late 2023 and contractual rate resets in certain legacy North Texas and Oklahoma commercial agreements. These contracts were extended back in 2018, and the agreement included a one-time rate reset in 2024, the contract's original expiration date, to pre-agreed fees. In effect, this reset partially reverses recent years of outsized annual inflation, I believe.
Speaker Change: Core ORP asset sale in late 2023, and contractual rate resets and certain legacy North, Texas, and Oklahoma commercial agreements.
Speaker Change: These contracts were extended back in 2018 and the agreement included a onetime rate reset in 2020 for the contracts original exploration date to pre agreed fees.
Speaker Change: Fact, this reset partially reverses recent years of outsized annual inflation escalators. These contracts now expire between 2029 and 2033 with annual inflation escalators and no further rate resets.
Speaker Change: When you look through these two one time impacts the sale of the <unk> assets and the onetime contract resets our base business is forecast to grow approximately 4% at the midpoint of adjusted EBITDA guidance compared to 2023.
Speaker Change: Turning now to commodity prices, we remain approximately 90% fee based.
Speaker Change: For our 2024 guidance, we assumed average double UTI and Henry hub prices of $75 per barrel and $3 per <unk>, respectively.
Speaker Change: Like last year, we took the opportunity in the second half of 2023 to take advantage of the supportive forward curve and hedged a large majority of our 2020 for exposure to natural gas prices and wahhab basis at prices significantly above current levels.
Speaker Change: <unk> increased visibility for 2024 financial results.
Speaker Change: Accordingly, a scenario of plus or minus $5 per barrel and 50 per M. Btu impacts adjusted EBITDA by approximately $6 million and $5 million, respectively, assuming no change in our forecast volumes.
Benjamin D. Lamb: These contracts now expire between 2029 and 2033 with annual inflation escalators and no further rate recess. When you look through these two one-time impacts, the sale of the ORV assets and the one-time contract resets, our base business is forecast to grow approximately 4% at the midpoint of adjusted EBITDA guidance compared to 2023. Turning now to commodity prices, we remain approximately 90% fee-based. For our 2024 guidance, we assumed average WTI and Henry Hub prices of $75 per barrel and $3 per MMBTU, respectively. Like last year, we took the opportunity in the second half of 2023 to take advantage of the supportive forward curve and hedged a large majority of our 2024 exposure to natural gas prices and WAHA basis at prices significantly above current levels, providing increased visibility for 2024 financial. Accordingly, a scenario of plus or minus $5 per barrel and $0.50 per MMBTU impacts adjusted EBITDA by approximately $6 million and $5 million, respectively, assuming no change in our forecast volume, taking guidance down to the segment level and focusing on the midpoints of the ranges we provide.
Speaker Change: Taking guidance down to the segment level and focusing on the midpoint of the ranges we provided.
Speaker Change: We are projecting another year of significant growth for our Permian business with segment profit for 2024 forecast to be $455 million, including plant relocation expenses, representing an increase of approximately 15%.
Speaker Change: As a reminder, our tiger two processing facility is expected to come online in the second quarter of 2024.
Speaker Change: Louisiana segment profit for 2024 is forecast to be $420 million representing.
An increase of approximately 7%.
Speaker Change: The increase is mainly driven by the improving fundamentals in our natural gas business that <unk> spoke about earlier.
Speaker Change: Excluding the 2023 contribution from the <unk> assets that we sold Louisiana growth will be even higher.
Speaker Change: In Oklahoma, we expect the activity from the Devon, Dow JV, along with a little activity from other customers will keep volumes approximately flat from 2024 compared to 2023. However.
Speaker Change: However, Oklahoma segment profit for 2024 is forecast to be $390 million.
Speaker Change: <unk> a decline of approximately 8% driven in part by the one time rate reset I talked about earlier.
Speaker Change: Finally, North Texas segment profit for 2024 is forecast to be $240 million, representing a decline of approximately 13%.
Speaker Change: This was driven by the onetime rate reset, but also reflects a conservative view on volumes given the current gas price environment.
Speaker Change: Yeah.
Speaker Change: The growth in our business. The last several years has been impressive and our 2024 outlook reflects the transformation of our business.
Speaker Change: Back in 2019, Oklahoma and North, Texas represented over 60% of our segment profit mix today, However, the Permian and Louisiana represent approximately 60% of expected 2020 for segment profit.
Benjamin D. Lamb: We're projecting another year of significant growth for our Permian business, with segment profit for 2024 forecast to be $455 million, including plant relocation expense, representing an increase of approximately 15%. As a reminder, our Tiger 2 processing facility is expected to come online in the second quarter of 2024. Louisiana segment profit for 2024 is forecast to be $420 million, representing an increase of approximately 7%.
Speaker Change: Fed shortly the largest drivers of our growth are associated gas production in the Permian and downstream demand pull markets in Louisiana.
Speaker Change: While our guidance is based on the most current producer drilling plans, we recognize the extreme volatility in natural gas prices may cause producers to delay their drilling and completion plans and thereby impact our volume expectations.
Speaker Change: We estimate a hypothetical six month completion deferral by major customers in Oklahoma, and North, Texas, both gas oriented basins would have an aggregate 2024 impact of approximately $20 million.
Benjamin D. Lamb: The increase is mainly driven by the improving fundamentals in our natural gas business that Dilanka spoke about earlier. Excluding the 2023 contribution from the ORV assets that we sold, Louisiana growth would be even higher. In Oklahoma, we expect the activity from the Devon Dow JV, along with a little activity from other customers, will keep volumes approximately flat in 2024 compared to 2023. However, Oklahoma's segment profit for 2024 is forecast to be $390 million, representing a decline of approximately 8%, driven in part by the one-time rate reset that I talked about earlier. Finally, North Texas segment profit for 2024 is forecast to be $240 million, representing a decline of approximately 13%.
Speaker Change: As we've said before though longer term, we remain very bullish on natural gas demand and the need for Oklahoma and North, Texas to help supply that growing market in the coming years.
Speaker Change: On the investment front total capital expenditures plus operating expenses associated with the Tiger two plant relocation net to Enlink and.
Speaker Change: In investment contributions are forecast to be between $435 million and $485.
Speaker Change: As we have previously discussed we remain focused on capital efficient high return projects.
I want to point out that our capital spending outlook includes approximately $50 million in spending for Ccs projects with Exxonmobil.
Speaker Change: As Jesse described in his opening remarks. This number may change as we and Exxon work towards finding the optimal solution for the Ccs market and the ways in which enlink will participate in that solution.
Speaker Change: With that caveat in mind from a free cash flow perspective, we expect a significant increase compared to 2023 with forecast free cash flow after distributions in the range of $265 million to $315 million.
Speaker Change: As we disclosed in January our board reauthorized, a $200 million common unit repurchase program for 2024 for the third consecutive year.
Benjamin D. Lamb: This is driven by the one-time rate reset, but it also reflects a conservative view on volumes, given the current gas price environment. The growth in our business over the last several years has been impressive, and our 2024 outlook reflects a transformation of our business. Back in 2019, Oklahoma and North Texas represented over 60% of our segment profit mix.
Speaker Change: There is the potential to see this number rise as the year goes on as it did last year as we gain more clarity on some of the moving pieces, including Exxon related Ccs projects.
Speaker Change: In summary, the Enlink team delivered solid results in 2023, and we expect the momentum to continue in 2024. Despite the recent volatility our assets are well positioned to grow led by our two largest segments, the Permian and Louisiana with that I'll turn it back over to Jesse.
Thank you Ben in summary, I am proud of the quick execution, expanding our Louisiana assets, the bigger and broader Ccs opportunity as we work with Exxonmobil and others to address cotwo emitted into the atmosphere today and the resiliency resiliency of our assets driving growth for our business in 2024.
Benjamin D. Lamb: Today, however, the Permian in Louisiana represents approximately 60% of expected 2024 second profit. Said shortly, the largest drivers of our growth are associated gas production in the Caribbean and downstream demand pull markets in Louisiana. While our guidance is based on the most current producer drilling plans, we recognize the extreme volatility in natural gas prices may cause producers to delay their drilling and completion plans, and thereby impact our volume expectations. We estimate a hypothetical six-month completion deferral by major customers in Oklahoma and North Texas, both gas-oriented bases, would have an aggregate 2024 impact of approximately $20 million. As we've said before, though, longer term, we remain very bullish on natural gas demand and the need for Oklahoma and North Texas to help supply that growing market in the coming years. On the investment front, total capital expenditures plus operating expenses associated with the Tiger 2 plant relocation have met EnLink, and investment contributions are forecast to be between $435 million and $485 million.
Speaker Change: And beyond.
With that you may now open the call for questions.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue you.
Speaker Change: You May press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you.
Speaker Change: First question comes from the line of Spiro <unk> with Citi. Please proceed with your question.
Spiro: Thanks, operator, good morning team.
Spiro: Maybe want to start with something we're getting a few questions on this morning.
Spiro: Related to John Island, just curious if you give some more details on what.
Spiro: Prioritization of other projects could look like there as far as I can tell you've already started spending some capital on that project. So curious what are some of the range of outcomes there and when would you be able to expect to just update us on that.
Benjamin D. Lamb: As we have previously discussed, we remain focused on capital-efficient, high-return projects. I want to point out that our capital spending outlook includes approximately $50 million of spending for CCS projects with ExxonMobil. As Jesse described in his opening remarks, this number may change as we and Exxon work toward finding the optimal solution for the CCS market and the ways in which EnLink will participate in that solution. With that caveat in mind, from the free cash flow perspective, we expect a significant increase compared to 2023, with forecast free cash flow after distribution in the range of $265 million to $315 million. As we disclosed in January, our Board reauthorized the $200 million Common Unit Repurchase Program for 2024 for the third consecutive year.
Spiro: Hey, Spiro, it's Jesse I appreciate the question.
Spiro: First let me start by saying, we're extremely excited about the opportunity in the expanded market.
Jesse Ear: We're going to be looking for mutually beneficial opportunities with Exxon for.
Jesse Ear: To gain a larger share of that addressable market expanding outside of the Mississippi River corridor.
Jesse Ear: What that entails is we've identified as we've said in the past right. We believe that the <unk> acquisition.
Jesse Ear: Lead to more opportunities for Enlink.
Jesse Ear: And this is an example.
Jesse Ear: And optimization of our existing agreement to find the most cost efficient most timely solution for them for those initial volumes.
Benjamin D. Lamb: There is the potential to see this number rise as the year goes on, as it did last year, as we gain more clarity on some of the moving pieces, including Exxon-related CCS projects. In summary, the EnLink team delivered solid results in 2023, and we expect the momentum to continue in 2024. Despite the recent volatility, our assets are well positioned to grow, led by our two largest segments, the Permian and Louisiana. With that, I'll turn it back over to Jesse.
Jesse Ear: With respect to timing.
Jesse Ear: We both have obligations under the existing agreement.
Jesse Ear: So we both have our highly incentive to get this worked through very quickly.
Jesse Ear: So from a timing perspective, we hope to update you on the path forward very soon.
Jesse Ear: With respect to the capital spend most of that those dollars were spent on permitting right of way acquisition.
Jesse Ear: We have taken a step back as we reassess and so we will not be incurring future spending until we identify the most optimized solution.
Jesse Arenivas: Thank you, Ben. In summary, I'm proud of the quick execution expanding our Louisiana assets, the bigger and broader CCS opportunity as we work with Exxon Mobil and others to address CO2 emitted in the atmosphere today, and the resiliency of our assets driving growth for our business in 2024 and beyond. With that, you may now open the call for questions. Thanks. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question. You may press star two if you would like to remove your question from the question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.
Speaker Change: Okay understood thanks for that.
Speaker Change: Just maybe moving on or sticking with this topic and thinking about expanding beyond that Mississippi River corridor.
Speaker Change: I know you guys have talked about I think something in the order of 30 million tons per annum within discussion projects. There just curious if we can get an update on that and as you think about your competitive position beyond that corridor I know one of the main selling points here was a lot of brownfield assets in the ground that you can repurpose as you expand beyond that I don't think <unk> got as much of that so curious how youre thinking about some of the return multiples.
Speaker Change: Outside of that corridor.
Speaker Change: Yes, I think from a return multiple perspective, I think we you would expect those to compete with our traditional midstream business. So theres multiples will have to be competitive.
Operator: One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Spiro Dounis with Citi. Please proceed with your question. Thanks, operator. Morning, team.
Speaker Change: I think where we have a competitive advantage again as our decades long experience, both in Louisiana, and as we expand into Texas The Gulf Coast area is.
Spiro Michael Dounis: Maybe want to start with something we're getting a few questions on this morning related to Pecan Island. Just curious if you could give us some more details on what the prioritization of other projects could look like there. As far as I can tell, you've already started spending some capital on that project. So, curious, what are some of the range of outcomes there, and when would you be able to expect to update us on that? Hey, Spiro, it's Jesse.
Speaker Change: Is our ability to.
Speaker Change: Execute on agreements.
Speaker Change: On construction projects operations.
Speaker Change: Oh two pipes, we are now.
Speaker Change: In the phase of our North Texas assets. So we've got the experience there I think the relationship with Exxonmobil, there's a mutually beneficial relationship and that we are.
Speaker Change: A pipeline infrastructure company as we set out to be the transporter of choice that is materializing and the value add there is going to be timely execution experienced customer relationships. So I think we do have value add and I think it's recognized by Exxon.
Jesse Arenivas: I appreciate the question. First, let me start by saying, you know, we're extremely excited about the opportunity in the expanded. We're going to be looking for mutually beneficial opportunities with Exxon to gain a larger share of that trust, expanding out what that And all that details is, we've identified, as we've said in the past, right, we believe that, and Denberry Atkins, leads to more opportunities. And this is an example of, and Optimization, With respect to timing, you know, we both have obligations under the existing agreement. So we are both highly incented to get this work through very quickly. So from a timing perspective, we hope to update you on the path forward very soon. With respect to the capital spend, most of that money was spent on acquiring right-of-way acquisitions. We have taken a step back as we reassess.
Speaker Change: Mobile.
Speaker Change: Great I'll leave it there for today. Thank you for the time guys. Thanks.
Speaker Change: Thanks sure.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Brian Reynolds with UBS. Please proceed with your question.
Brian Reynolds: Hi, good morning, everyone maybe.
Brian Reynolds: Maybe to touch on just the Permian growth cadence a little bit a lot of M&A amongst some of your counterparties in the Midlands.
Brian Reynolds: There should be some more delaware growth at least thats, where its forecasted going into this year and then you have matterhorn coming into service in the back half. So it would be great. If you could just maybe help us.
Brian Reynolds: Take apart the Permian, there and your asset base and as we think about Permian growth cadence across your footprint. This year. Thanks.
Jesse Arenivas: And so we will not be incurring future spending until we identify the most optimal way of expanding beyond that Mississippi River corridor. I know you guys have talked about, I think, something in the order of 30 million tons per end within the discussion projects there. Just curious if we can get an update on that. And as you think about your competitive position beyond that corridor, I know one of the main selling points here was a lot of brownfield assets in the ground that you can repurpose as you expand beyond. I don't think you've got as much of that as you should.
Speaker Change: Yeah, Hey, good morning, Brian.
Speaker Change: Ian.
Speaker Change: Look you are right there in your in your commentary if you look at the driver of our Permian growth for 2023, it was largely in the Midland gas segment.
Speaker Change: This year, we expect to see more of it come from the Delaware gas side with the Tiger two plant coming into service just in time.
Speaker Change: In the second quarter.
Speaker Change: This year.
Jesse Arenivas: So curious how you're thinking about some of the return multiples outside that corridor. Yeah, I think from a return multiple perspective, I think we would expect those to compete with our traditional, so those multiples will have to be competitive. I think where we have a competitive advantage, again, is our decades-long experience, both in Louisiana and as we expand into the Gulf Coast Area, our ability to execute on agreements on construction projects, and operations of CO2 pipes. You know, we are now in the phase of our North Texas assets, so we've got the experience there. I think the relationship with ExxonMobil, there's a mutually beneficial relationship in that we are, and Pipeline Infrastructure Company, as we set out to be the transporter of choice, is materializing, and the value-add there is going to be timely and expeditious. So I think we do have a value-add, and I think it's recognized. Great. I'll leave it that way for today. Thanks for the time, guys. Thanks!
Speaker Change: In terms of Matterhorn.
Speaker Change: It will be in service in the third quarter, but as a reminder, we treat that as an equity method investment and so youre not seeing that in the guidance for segment profit for for Permian, What Youre seeing there in segment profit for Permian as all of our own Permian operations, the Matterhorn JV will hit.
Speaker Change: Below the line so to speak.
Speaker Change: Great Super helpful.
Speaker Change: Maybe to follow up on some of the <unk> questions. I believe last quarter, you kind of talked about an 80% MTP a market opportunity in Louisiana, which hopefully you're going to capture $300 million.
Speaker Change: EBITDA is an opportunity set just given that we're two five times that.
Speaker Change: Are you still looking to capture kind of 50% of market share like could could this business ultimately make up about 20% of your ultimate earnings mix or are you looking to make it even more substantial than that thanks.
Speaker Change: Yes.
Speaker Change: So what we identified was really not a percentage of the market share when we talked about it just worked out that 40 was 50%, but those were identified projects that we were working with our customers and that includes exxonmobil and beyond.
Spiro Michael Dounis: Our next question comes from the line of Brian Reynolds with UBS. Please proceed with your question. Hi, good morning, everyone.
Brian Patrick Reynolds: Maybe to touch on just the Permian growth, create some cadence a little bit, you know, a lot of M&A amongst some of your counterparties in the Midlands. You know, there should be some more Delaware growth, at least that's where it's forecasted going into this year. And then you have Matterhorn coming into service in the back half.
Speaker Change: We're identifying fraud.
Speaker Change: Put a marker out there on a percent of.
Speaker Change: The total addressable market, but certainly now that we have expanded into multiple geographic regions.
Speaker Change: And a much larger addressable market, we do anticipate and are optimistic that this business gets bigger than the initial $300 million business that we identified earlier.
Brian Patrick Reynolds: So it'd be great if you could just maybe help us, you know, break apart the Permian there and your asset base. And as we think about, you know, Permian growth cadence across your footprint for this year. Yeah, Higgins and Ryan.
Speaker Change: Great. Thanks appreciate the color this morning. Thanks.
Thank you our.
Speaker Change: Our next question comes from the line of Jeremy Tonet with J P. Morgan. Please proceed with your question.
Hey, this is Noah <unk> on for Jeremy.
Unnamed Speaker: You're right there in your own. It was largely in the midland gas sector. This year, we expect to see more, y'all.
Noah: I was just wondering if you had any additional comments on progress with incremental Ccs partners other than Exxon.
Unnamed Speaker: In terms of Matterhorn, it will be in search. [inaudible] But as a reminder, we treat that. We're not seeing that.
Speaker Change: We continue.
The discussions.
Noah: With shell Oxy public announcements we've made those are progressing I think these have taken a little longer than we would've anticipated.
Unnamed Speaker: Great, super helpful. And maybe I can follow up on some of the CCUS questions. I believe last quarter, you kind of talked about an 80% MTPA market opportunity in Louisiana, which, you know, hopefully, you're going to capture, you know, 300 million of EBITDA as an opportunity set. You know, just given that we're two and a half times that, are you still looking to capture kind of 50% of the market share? Like, you know, could this business ultimately make up, you know, not 20% of your ultimate earnings mix? Are you looking to make it, you know, even more substantial than that? So you know, what we identified is really not a percentage of the market share when we talked about it, it just worked out to that 40 was 50%.
Noah: But I think that's for a couple of reasons. One is the uncertainties around the 45 key regs and then Louisiana primacy I think a lot of those uncertainties are behind us and we're optimistic that these things will move forward in 2024, but again those are progressing.
Very nicely.
Speaker Change: Thanks, that's helpful and as a quick follow up on the contract roles wherever the contract rolls and what do you see them rolling out into 2025.
Speaker Change: Yeah, Hey, Noah it's been so these contracts.
Noah: The original.
Noah: No.
Noah: Devon contracts that were put in place when we formed Enlink way back in 2014.
Noah: And we extended them in 2018 for an additional five years of term at that time. They would have expired. This year in 2024, we pushed them out to 2029 and one of them has even been extended again sensitive and it expires now in 2023.
Unnamed Speaker: But those were identified projects that we were working on with our customers, and that includes ExxonMobil and beyond. Those were identified projects not in the... put a marker out there on a percent of the Total Addressable Market, but certainly now that we have expanded into multiple geographic regions and a much larger address. [inaudible] Great. Thanks. Appreciate the cover this morning.
Noah: So we just agreed back at the time in 2018 that ft contracts original expiration date, the rates reset to pre agreed numbers and that's what's happened here in the first quarter of 2024. So the rate reset has occurred its a one time item its not recurring.
Noah: We won't have.
Noah: A meaningful further impact.
Noah: In 2025.
Speaker Change: That's helpful. Thank you guys.
Speaker Change: Thank you.
Brian Patrick Reynolds: Thanks. Thank you. Our next question comes from the line of Jeremy Tonet with J.P. Morgan. Please proceed with your question. Hey, this is Noah Katz on behalf of Jeremy.
Speaker Change: Our next question comes from the line of Zachman Evren with Tudor Pickering Holt. Please proceed with your question.
Zachman Evren: Hey, guys. Thanks for taking my question just one on hedging it sounds like Youre pretty well protected on the natural gas side looking to Ngls and crude.
Noah Katz: I was just wondering if you had any additional comments on progress with incremental CCS partners other than Exxon. You know, we continue the discussions with Shell, and Oxy, you know, the public announcements we've made. Those are progressing. You know, I think these have taken a little longer than we would have anticipated, but I think that's for a couple reasons. One is the uncertainty around the 45Q regs and then, you know, Louisiana private. I think a lot of those uncertainties are behind us, and we're optimistic that, you know, these things will move forward in 2024, but again, those are progressive. Thanks, that's helpful. And as a quick follow-up on the contract rules, where are the contract rules, and what do you see them rolling out into 2025? Yeah, I know that.
Zachman Evren: Would it still be the thought process that you guys had 100% down to 25% throughout the year or is that hedging changed as well.
Zachman Evren: Hey, Jack this is Ben.
Ben: Generally that's right. The programmatic approach that you described is our approach.
Ben: I will say, though we've also gotten ahead for this year on our net.
Speaker Change: Diane exposure because that market is driven by many of the same forces that drive the natural gas market.
Speaker Change: In the in the prepared remarks, I mentioned that a change of $5 on <unk> either way moves our moves are.
Speaker Change: <unk> by about $6 million all else being healthy.
Speaker Change: So it's not a huge driver frankly, either way for us.
Speaker Change: The bigger impact is on producer activity and we gave you some guidance around that as well.
Unnamed Speaker: So these contracts were the original Devon ones put in place when we formed EnLink way back... I know one of them has even been extended again.
Speaker Change: Perfect I appreciate that and then the last one is just on the contracts that are rolling off in Louisiana. It seems like you guys are seeing pretty good upside from the rate resets.
Unnamed Speaker: So we just agreed back in the time, in 2018, that at the contract's original expiration date, the rates would reset to pre-agreement levels, which has happened here in the first quarter. So the rate reset has occurred. It's a one-time item; it's not meaningful. It's helpful.
Speaker Change: Give a percent con.
Speaker Change: Contracts left that are maybe lower rate legacy contracts that you might see additional upside in 'twenty five and beyond.
Speaker Change: Hi.
Speaker Change: The longer you use that in correctly.
Unnamed Speaker: Thank you, guys. Thank you. Our next question comes from the line of Zack Van Everen with Tudor Pickering, please proceed with your questions. Hey guys, thanks for taking the questions. Just one on hedging. It sounds like you're pretty well protected on the natural gas side.
Speaker Change: Seeing good success in renewing existing contracts at higher rate.
Speaker Change: Most of those transactions are done, but a little bit more to go and Thats been Ben mentioned earlier.
Speaker Change: Got it great for budget.
Speaker Change: Okay perfect. Thanks, guys.
Thank you.
Speaker Change: Our next question comes from the line of Kurt <unk> with Wells Fargo. Please proceed with your question.
Unnamed Speaker: Flipping to NGLs and crude should still be the thought process that you guys hedge 100% down to 25% throughout the year. Generally, that's right, the programmatic approach that you described....
Kurt: Thanks, Good morning, I guess, just going back to Ccs can you maybe elaborate on how Exxon is delineating, we're thinking about new Ccs projects in the Gulf coast between.
Unnamed Speaker: I will say, though, in the prepared remarks, that change of $5 on WTI either way, $6,000,000.00. The bigger impact is on producer equity. Perfect, appreciate that. And then the last one is just on the contracts that are rolling off in Louisiana. It seems like you guys are seeing pretty good upside from the rate resets.
Kurt: Working with you guys versus <unk> I guess, what are kind of the key factors there as they think about the opportunity set.
Kurt: Yeah, Hi, Brian it's Jesse Thanks.
Jesse Ear: Yes, I can't speak for Exxon, but broadly speaking you've got two systems.
Jesse Ear: <unk> been very and the Green line.
Jesse Ear: Also came with additional sequestration sites, if you look on a map.
Jesse Ear: Our system's intersect that green line in multiple areas. So I think as I said earlier, we're looking for mutually beneficial opportunities to.
Unnamed Speaker: Can you give a percent of contracts left that are maybe lower-rate legacy contracts that you might see additional upside in 25 and beyond? Hi, it's Dilanka. As you stated correctly, we are seeing good success in renewing the existing contracts at higher rates. Most of those transactions are done, but there is a little bit more to go. And as Ben mentioned earlier, we've baked that uplift into our 2020 forecast. Okay, perfect. Thanks, guys.
Jesse Ear: To gain more market share right. So that's going to be how can we do this quicker how can we get these quicker to market and how can we get this optimized from a cost perspective returns perspective. So it's a very collaborative effort I think they're looking at this as a broader opportunity.
Jesse Ear: Again, utilizing debt and berry assets with Enlink assets provide unique opportunities to move forward.
Zackery Lee Van Everen: Thank you. Our next question comes from the line of Kurt Rees Satish with Wells Fargo. Please proceed with your question. Thanks. Good morning.
Speaker Change: Got it.
Speaker Change: And then maybe just I guess switching gears.
Speaker Change: Gas storage just wondering if you could kind of elaborate on the discussions that youre, having with customers there for potential brownfield storage expansion in Louisiana.
Praneeth Satish: I guess just going back to CCS, can you maybe elaborate on how Exxon is delineating or thinking about new CCS projects in the Gulf Coast between working with you guys versus Denbury? I guess what are kind of the key factors there as they think about the opportunity? Hi Praneeth, it's Jesse.
Speaker Change: Do you think the current market rate is high enough to support three to five year contracts.
Speaker Change: On that expansion.
Speaker Change: Maybe if you could just kind of ballpark what the cost of that expansion would be and then finally is there a scenario where you.
Jesse Arenivas: Thanks. I think, Just, I can't speak for Exxon, but broadly speaking... You know, you've got two systems, you know, the acquisition of Denberry and Green also came with additional sequestration. If you look on a map, you know, EnLink, our systems intersect that green line in multiple areas. So I think, as I said earlier, we're looking for a mutually beneficial way to gain more market share, right? So that's going to be, how can we do this quicker? How can we get these quicker to market? How can we get this optimized from a cost and returns perspective?
Speaker Change: Take some of this capacity yourself and marketed.
Speaker Change: Thanks for the question, it's John here.
Speaker Change: Here.
John: During the last call there is significant market interest for natural gas storage driven by multiple things commodity volatility increasing LNG exports digit requires natural gas storage to manage operational issues.
John: And increasing demand.
John: As well so.
Jesse Arenivas: So it's a very collaborative effort. I think they're looking at this as a broader opportunity. Again, utilizing the Denberry assets with the EnLink assets could provide unique, Got it. And then maybe just, I guess, switching gears to gas storage, just wondering if you could kind of elaborate on the discussions that you're having with customers there for potential brownfield storage expansion in Louisiana. Do you think the current market rate is high enough to support, you know, three to five-year contracts on that expansion? Maybe if you could just kind of ballpark what the cost of that expansion would be. And then finally, is there a scenario where you take some of this capacity yourself and market it? Thanks for the question. It's Dilanka here.
John: The interest level is quite high in terms of our response to that between our three natural gas storage facilities that are in operation today.
John: In storage networking and Sorrento.
John: We are looking at a mix.
John: Brownfield and Greenfield.
John: Project and trying to optimize what.
John: What is the best solution to meet the customer demand in that timeline. So I don't have great cost.
John: The second one.
John: Find out from the initial engineering studies.
John: At nine Bcf.
John: From a lot 11 Bcf today.
John: And we didn't get the Mark and dreams.
John: I mean just cost.
John: We'd be getting.
John: Definitely.
John: Very attractive projects through a mixture of brownfield and some greenfield and brownfield one of the benefits we get.
Dilanka Seimon: As I alluded to during the last call, there is significant market interest for natural gas storage driven by multiple things, commodity volatility, increasing LNG exports, which require natural gas storage to manage operations. The interest level is quite high in terms of our response to that between our three natural gas storage facilities that are in operation today and Allen Storage, Nipul, Envea, and Sorrento. We are looking at a mix of... Brownfield and Greenfield projects and trying to optimize what is the best solution and meet customer demand. I don't have great cost estimates, just the fact that what we found out from the initial engineering studies is that we can expand this to about 9 BCF from about 11 B.C.F.
John: Leverage pipeline connectivity that already exists.
John: That becomes quite significant losses brand you'd given all of the infrastructure. So combination of that would be the optimized solution for us.
Speaker Change: Got it thank you.
Speaker Change: Thank you. Our next question comes from the line of Christopher Jeffrey with Mizuho Securities. Please proceed with your question.
Christopher Jeffrey: Hi, Brian maybe just to follow up on that last question and confirm.
Christopher Jeffrey: The.
Christopher Jeffrey: Opportunities in the brownfield expansion.
Christopher Jeffrey: Currently captured in that 'twenty four.
Dilanka Seimon: today, and we think at the market rate, that are being discussed. Definitely, we have very attractive projects through a mixture of brownfields and some greenfields. The brownfields, one of the benefits is, of course, we get leverage pipeline connectivity that already combination.
Christopher Jeffrey: Capex guide that you've given or where you're kind of looking for some of that in 'twenty just general timeline opportunity.
Christopher Jeffrey: Yeah.
Sure.
Christopher Jeffrey: In natural gas storage development and all of the Capex comes in.
Christopher Jeffrey: Eight of that timeline.
Christopher Jeffrey: And how much capex in 2020 points.
Christopher Jeffrey: Slow start engineering studies permitting some of the Capex comes in 'twenty five and beyond.
Dilanka Seimon: Got it. Thank you. Thank you. The next question comes from the line of Christopher Jeffrey with Mizuho Securities. Please proceed with your question. Everyone, maybe just to follow up on that last question and confirm if the opportunities for brownfield expansion in Louisiana are currently captured in that 24 CAPEX guide that you've given, or are you kind of looking for some of that? Here are, In natural gas storage development, a lot of the capex comes in a little bit to the mid of that timeline, so we don't have much capex in 2024, folks on engineering studies and permitting.
Speaker Change: Got it.
Speaker Change: And then maybe just another looking at the maintenance Capex for the 24 guide it looks like a decent step up from 23 any color there what's driving that.
Speaker Change: Really a lot of our maintenance capex is on maintaining our compression equipment.
And that happens on a schedule as machines crew hours at some point you get to the point, where you need to do a minor overhaul and at some point you get to where you need to do a major overhaul. So it's nothing more than a heavier year, particularly in north, Texas and Oklahoma.
Unnamed Speaker: Some of the CapEx comes in at 25. Got it. And then maybe just another look at the maintenance CapEx for the 24 guide. It looks like a decent step up from 23. Any color there?
Speaker Change: On a scheduled maintenance.
Speaker Change: Great. Thank you Rob.
Rob: Thank you there are no further questions at this time I'd like to turn the floor back over to Jesse Irina.
Unnamed Speaker: Let's try that. Yeah, you know, really, a lot of our machines accumulate hours where you need to do a major overhaul. So it's nothing more than, for your year, particularly in North Texas.
Jesse Irina: For closing comments.
Jesse Irina: Thank you Melissa for facilitating our call. This morning, and thank everyone for being on the call today and for your support as always we appreciate your continued interest and investment in Enlink.
Unnamed Speaker: Great, thanks a lot. Thank you. There are no further questions at this time. I'd like to turn the floor back over to Jesse Arenivas for closing comments.
Jesse: And we look forward to updating you with our first quarter results in May and.
Jesse: In the meantime, we wish you well stay healthy and have a great day.
Jesse Arenivas: Thank you, Alyssa, for facilitating our call this morning, and thank everyone for being on the call today and for your support. As always, we appreciate your continued interest and investment in... And we look forward to updating you on our first quarter results. In the meantime, we wish you well, stay healthy, and have a great day. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. BF-WATCH TV 2021, Bye!
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Jesse: Yeah.
Jesse: Uh-huh.
Jesse: Hum.
Jesse: Hum.
Jesse: Hmm.
Jesse: Mhm.
Jesse: [music].
Jesse: Uh-huh.
Jesse: Hum.
Jesse: Yes.
Jesse: Hum.
Jesse: Hum.
Jesse: [music].
Jesse: Oh.
Jesse: [music].
Jesse: Hum.
Jesse: Hmm.
Jesse: Uh-huh.
Jesse: Okay.
Jesse: Okay.
Jesse: [music].
Jesse: Okay.
Jesse: Yeah.