Q1 2024 ONEOK Inc Earnings Call
Operator: Good day, and welcome to the ONEOK First Quarter 2024 Earnings Conference Call and Webcast. All participants will be in listen-only mode.
Good day and welcome to the one first quarter 'twenty 'twenty four earnings conference call and webcast.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Andrew Ziola, Vice President of Investor Relations. Please go ahead.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star keys, followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two please.
Please don't discipline is being recorded.
Now I'd like to turn the conference over to Andrew <unk>, Vice President of Investor Relations. Please go ahead.
Andrew J. Ziola: Thank you, Megan, and welcome to ONEOK's first quarter 2024 earnings call. We issued our earnings release and presentation after the markets closed yesterday, and those materials are on our website.
Andrew: Thank you Meghan and welcome to <unk> first quarter 2024 earnings call.
Andrew: We issued our earnings release and presentation. After the markets closed yesterday and those materials are on our website.
Andrew J. Ziola: After our prepared remarks, management will be available to take your questions.
Andrew: After our prepared remarks management will be available to take your questions.
Andrew J. Ziola: Statements made during this call that might include ONEOK's expectations or predictions.
Andrew: Statements made during this call that might include one ups expectations or predictions should be considered forward looking statements and are covered by the safe Harbor provision of the securities acts of 1933 in 1934.
Andrew J. Ziola: Should be considered forward-looking statements and are covered by the Safe Harbor Provision
Andrew J. Ziola: 1933-1934 Actual results could differ materially from those projected in forward-looking statements. For discussion of factors that could cause actual results to differ, please refer to our SEC file. Just a reminder for Q&A, we ask that you limit yourself to one question and a follow-up to fit in as many of you as possible.
Andrew: Actual results could differ materially from those projected in forward looking statements for a discussion of factors that could cause actual results to differ please refer to our SEC filings.
Andrew: Just a reminder for Q&A, we ask that you limit yourself to one question and a follow up to fit in as many of you as we can.
Andrew J. Ziola: and as many of you as we can.
Andrew: With that I'll turn the call over to Pierce Norton, President and Chief Executive Officer peers. Thanks, Andrew.
Pierce H. Norton: With that, I'll turn the call over to Pierce Norton, President and Chief Executive Officer. Pierce?
Pierce H. Norton: Morning, everyone and thank you for joining us on today's call.
Pierce H. Norton: Thanks, Andrew. Good morning, everyone, and thank you for joining us. On today's call, This is Walt Hulse, the Chief Financial Officer, Treasurer, and Executive Vice President, Investor Relations and Corporate Development, and Sheridan Swords, Executive Vice President, Commercial Liquids and Natural Gas Gathering and Process. Also available to answer your questions are Chuck Kelley, Senior Vice President, Natural Gas Pipelines, and Kevin Burdick, our Executive Vice President and Chief Enterprise Services Officer. Yesterday, we announced first-quarter 2024 earnings and increased our full year 2024 financial guidance.
Pierce H. Norton: As Walt Hulse, Chief Financial Officer, Treasurer, and Executive Vice President Investor Relations and corporate development.
Pierce H. Norton: And Sheridan swords executive Vice President commercial liquids and <unk>.
Speaker Change: Natural gas gathering and processing.
Speaker Change: Also available to answer your questions are Chuck Kelly Senior Vice President of natural gas pipelines, and Kevin Burdick, Executive Vice President and Chief Enterprise Services Officer.
Speaker Change: Yesterday, we announced first quarter 2024 earnings and increased our full year 2024 financial guidance.
Pierce H. Norton: Solid results during the first quarter were supported by higher year-over-year volumes in the Rocky Mountain region, and contributions from the refined products segmentation. The efforts of our employees were highlighted once again as we were able to effectively manage through the winter weather during the quarter. Heating degree days were actually higher than normal in January, but it was the temporary acute cold and excessive wind that caused a deviation from normal operations.
Speaker Change: Solid results during the first quarter were supported by higher year over year volumes in the Rocky Mountain region and contributions from the refined products and crude segment.
Speaker Change: The efforts of our employees were highlighted once again as we were able to effectively manage through the winter weather during the quarter heating.
Speaker Change: Heating degree days were actually higher than normal in January but it was the temporary acute cold and excess of wind it caused a deviation from normal operations.
Pierce H. Norton: Volumes have rebounded across our systems, and we're continuing to see volume trends higher, providing additional confidence in our expectations for the remainder of the year. Our increase to 2024 financial guidance was driven by two primary key factors. First, favorable industrial fundamentals across our systems, which is supply and demand, that are contributing to volume growth and providing significant momentum for the remainder of 2024 and into 2025. And second, the continued confidence in our ability to realize meaningful, commercial, and cost-centered objectives. We remain focused on the integration efforts following the acquisition of Magellan last year. Our management team has spent the past several months meeting with employees and visiting assets across all of our operations.
Speaker Change: Volumes have rebounded across our systems and we're continuing to see volume trends higher.
Speaker Change: Regarding additional confidence in our expectations for the remainder of the year.
Speaker Change: Our increased to 2024 financial guidance was driven by two primary key factors.
Speaker Change: First favorable industrial fundamentals across our systems, which is supply and demand.
Speaker Change: That are contributing to volume growth and providing significant momentum for the remainder of 2024 and into 2025.
Speaker Change: And second the continued confidence in our ability to realize meaningful commercial and cost synergies.
Speaker Change: We remain focused on the integration efforts following the acquisition of Magellan last year. Our management team has spent the past several months meeting with employees and visiting assets across all of our operations our employees see the value of our combined businesses and are excited about the opportunities ahead.
Pierce H. Norton: Our employees see the value of our combined businesses and are excited about the opportunities ahead. Through collaboration between business segments and the innovation of our employees, we are on pace to exceed our 2024 Synergy Goals, while, most importantly, putting safety first.
Speaker Change: Through collaboration between business segments, and the innovation of our employees, we are on pace to exceed our 2020 for synergy goals.
Speaker Change: While most importantly, putting safety first.
Pierce H. Norton: We also see growth across our systems from producer productivity, favorable commodity prices, and continued demand for our products and services. Or, as we previously mentioned, favorable industrial fundamentals. One potential significant source of future natural gas demand is expected to be an increase in power generation required to serve AI-driven data centers. ONEOK, like other natural gas pipeline operators, will play a role. We have already had conversations with several of our large electric power generation customers and power developers who anticipate the need for additional natural gas transportation to address this future AI data center-related power demand.
Speaker Change: We also see growth across our systems from producer productivity favorable commodity prices and continued demand for our products and services, whereas we previously mentioned favorable industrial fundamentals.
Speaker Change: One potential significant source of future natural gas demand is expected to increase in power generate generation required to serve AI driven data centers one.
Speaker Change: One O like other natural gas pipeline operators will play a role.
Speaker Change: We have already had conversations with several of our large electric power generation customers and power developers, who anticipate the need for additional natural gas transportation to address this future AI data center related power demand.
Pierce H. Norton: As the need for future power generation increases, domestic natural gas demand is projected to increase. This is going to affect the entire midstream value chain, and ONEOK is positioned to play a meaningful role. Today, we serve numerous natural gas-fired power plants across our system, and many of those customers are looking to expand, some related to AI, and others to address general power demand. We also continue to see supported demand and fundamentals for NGLs and refined products across our system.
Speaker Change: As the need for future power generation increases domestic natural gas demand is projected to increase this is going to affect the entire midstream value chain and one oak is positioned to play a meaningful role today, we serve numerous natural gas fired power plants across our system and many of those customers are looking to.
Speaker Change: To expand some related to AI and others to address general power demand.
Speaker Change: We also continued to see supported demand and fundamentals for the Ngls and refined products across our system.
Pierce H. Norton: Ethane remains a highly preferred feedstock for petrochemical facilities, NGO export strengths continue, and seasonal refined product demand for travel and agriculture is picking up. We remain focused on expanding and extending our systems in ways that align with our customers and the market's needs. ONEOK, now larger in scale, will continue to support our efforts to help address domestic and international energy demand, contribute to the energy security of our nation, and maintain our critical role in the long-term energy transformation. Thank you.
Speaker Change: Ethane remains a highly preferred feedstock for the petrochemical facilities NGL export strength continue.
Speaker Change: And a seasonal refined product demand for travel and agriculture is picking up.
Speaker Change: We remain focused on expanding and extending our systems in ways that align with our customers and the market's needs.
Speaker Change: Now larger in scale will continue to support our efforts to help address domestic and in international energy demand contributed to the energy security of our nation and maintain our critical role in the long term energy transformation with that I'll turn the call over to Walt.
Walter S. Hulse: Thank you Pearce.
Walter S. Hulse: As Pierce mentioned, we increased our 2024 financial guidance expectations. We increased our 2024 net income midpoint to $2.88 billion and increased our adjusted EBITDA midpoint by $75 million to $6.175 billion. This new guidance also brings up the low end of our original range, reflecting the strong fundamentals across our business. We remain confident in our synergy expectations.
Walt: As Bruce mentioned, we increased our 2024 financial guidance expectations.
Walter S. Hulse: We increased our 2024 net income midpoint to $2 $88 billion and increased our adjusted EBITDA midpoint by $75 million to $6 175 billion.
Walter S. Hulse: This new guidance also brings up the low end of our original range, reflecting the strong fundamentals across our businesses.
Speaker Change: We remain confident in our synergy expectations, our updated guidance still assumes we will meet or exceed our mid point of one point, sorry of $175 million in cost and commercial synergies in 2024.
Walter S. Hulse: Our updated guidance still assumes we will meet or exceed our midpoint of $175 million in cost and commercial synergies in 2020. We continue to expect that additional annual synergies will meet or exceed $125 million in 2025. Additionally, our total 2024 capital expenditure guidance remains unchanged at $1.75 billion to $1.95 billion. Now, for a brief overview of our first quarter financial performance. ONEOK's first quarter 2024 net income totaled $639 million, or $1.09 per share, and Adjusted EBITDA for the period totaled $1.44 billion.
Speaker Change: We continue to expect that additional annual synergies will meet or exceed our $125 million in 2025.
Speaker Change: Additionally.
Speaker Change: Our total 2024 capital expenditure guidance remains unchanged.
Speaker Change: 175 billion to $1 $95 billion.
Sheridan C. Swords: Results were driven primarily by higher NGL and natural gas processing volumes in the Rocky Mountain region, increased transportation services in the natural gas pipeline segment, and contributions from the refined products and crude segments. We saw higher consolidated operating costs in the quarter, primarily related to the timing of planned maintenance turnarounds, higher property insurance premiums, and operational growth. Of note, this was the first quarter the refined products and crude segment was allocated its full share of corporate costs.
Speaker Change: Now for a brief overview of our first quarter financial performance.
Speaker Change: One of the first quarter 2024, net income totaled $639 million or $1.09 per share and adjusted EBITDA for the period totaled $144 billion.
Speaker Change: Results were driven primarily by higher NGL and natural gas processing volumes in the Rocky Mountain region increased transportation services and the natural gas pipeline segment and contributions from our refined products and crude segments.
Speaker Change: We saw higher consolidated operating costs in the quarter, primarily related to the timing of planned maintenance turnarounds higher property insurance premiums and operational growth.
Speaker Change: Of note. This was the first quarter the refined products and crude segment was allocated its full share of corporate costs, therefore, compared with the fourth quarter 2023.
Sheridan C. Swords: Therefore, compared with the fourth quarter 2023, we saw an increase in operating costs for that segment and a decrease in operating costs for the other business segments as they received a lower allocation of corporate. As of March 31, we had no borrowings outstanding under a $2.5 billion credit agreement, and our run rate net debt to EBITDA ratio was 3.8 times. As it relates to capital allocation, We remain focused on delivering long-term value for our stakeholders through a balanced combination of high-return capital projects, dividend growth, debt reduction, and share repurchase.
Speaker Change: An increase in operating costs for that segment and a decrease in operating cost for the other business segments as they received a lower allocation of corporate costs.
Speaker Change: As of March 31, we had no borrowings outstanding under our $2 5 billion credit agreement and our run rate net debt to EBITDA ratio was three eight times.
Speaker Change: As it relates to capital allocation, we remain focused on delivering long term value for our stakeholders through a balanced combination of.
Speaker Change: [noise] high return capital projects dividend growth debt reduction and share repurchases.
Sheridan C. Swords: As previously discussed, we continue to see share repurchases as an important part of our capital allocation strategy and remain committed to utilizing our $2 billion share repurchase program over the next 4 years. We have significantly de-levered our business in recent years while still completing high-return capital growth projects. After successfully closing a transformational acquisition, we are well positioned to continue returning value to investors through a strategic and balanced capital allocation approach. I'll now turn the call over to Sheridan for a commercial.
Speaker Change: Previously discussed we continue to see share repurchases as an important part of our capital allocation strategy and remain committed to utilizing our $2 billion share repurchase program over the next four years.
Speaker Change: We have significantly de Levered, our business in recent years, while still completing high return capital growth projects and successfully closing a transformational acquisition.
Speaker Change: We are well positioned to continue returning value to investors through a strategic and balanced capital allocation approach I'll now turn the call over to Sheridan for a commercial update.
Sheridan: Thank you will.
Sheridan C. Swords: Beginning with the natural gas liquid segment, first quarter NGL volumes increased 12% in the Rocky Mountain region year over year, including the effect of the mid-January winter weather. Volumes fully recovered in February and have continued to accelerate. April volumes averaged more than 400,000 barrels a day from the region, driven by record propane plus volumes on our system and modest ethane recovery levels. The Elk Creek Pipeline expansion remains on track for an early first quarter 2025 completion, increasing ONEOK's total NGL capacity from the basin to 575,000 barrels per day.
Sheridan: Beginning with the natural gas liquids segment.
Sheridan: First quarter NGL volumes increased 12% in the Rocky Mountain region year over year.
Sheridan: Including the effect of the mid January winter weather vol.
Sheridan: Volumes fully recovered in February and has continued to accelerate.
Sheridan: April volumes averaged more than 400000 barrels a day from the region driven by record propane plus volumes on our system and modest ethane recovery levels.
Sheridan: Bell Creek pipeline expansion remains on track for an early first quarter 2025 completion, increasing one <unk> total NGL capacity from the basin got 575000 barrels per day.
Sheridan C. Swords: Enabling Continued Volume Growth and Provided Needed MGL Takeaway Capacity. Mid-continent region NGL volumes reflect the effects of first quarter winter weather and a full quarter without the low margin volumes from the contract expiring in November of 2023. We expect to continue replacing the expired contracts volume with barrels at market base rates ramping through 2024. Why gas-to-crude ratios remain, making ethane the most preferred feedstock of the petrochemical industry, and ethane exports remain highly utilized.
Sheridan: Enabling continued volume growth and provided needed NGL takeaway capacity.
Sheridan: Mid continent region NGL volumes to reflect the effects at first quarter winter weather and a four and a full quarter without the low margin volumes from the contract expiring in November of 2023.
Sheridan: We expect to continue replacing the expiring contracts volume with barrels at market based rates ramping through 2024.
Sheridan: Why gas to crude ratios remain making ethane the most preferred feedstock at the petrochemical industry and ethane exports remain highly utilized.
Sheridan C. Swords: These dynamics could provide tailwinds for ethane recovery throughout the remainder of the year. Our current guidance includes modest incentivized ethane recovery in the Rocky Mountain region. Moving on to the refined products and crude segment, we continue to see healthy business fundamentals and consistent performance. First quarter refined product volumes increased compared to the first quarter of 2023. From a liquid to blending perspective, volume and margins were in line with our expectations for the quarter.
Sheridan: These dynamics could provide tailwind for ethane recovery throughout the remainder of the year.
Sheridan: Our current guidance includes modest incentivized ethane recovery in the Rocky Mountain region.
Sheridan: Moving on to the refined products and crude segments.
Sheridan: We continued to see healthy business fundamentals and consistent performance.
Sheridan: First quarter refined product volumes increased compared to the first quarter 2023.
Sheridan: From a liquids blending perspective volume and margins were in line with our expectations for the quarter.
Sheridan C. Swords: With gasoline and diesel demand typically lower in the first quarter, we expect volumes to ramp up in the coming months as we see a pull from agricultural activity and summer driving demand. Refined product volumes will also benefit from our pipeline expansion to El Paso, which is now fully complete. The majority of the 30,000 barrels per day expansion is contracted under a firm, long-term agreement. Moving on to the natural gas gathering and processing segment. Rocky Mountain Region processing volumes increased 9% year-over-year, including the effect of winter weather during the quarter. However, by the end of January, volumes had recovered to levels achieved prior to the extreme cold.
Sheridan: With gasoline and diesel demand typically lower in the first quarter, we expect volumes to ramp in the coming months as we see a pull from agricultural activity and summer driving demand.
Sheridan: We find product volumes will also benefit from our pipeline expansion to El Paso, which is now fully complete.
Sheridan: The majority of the 30000 barrels per day expansion is contracted under firm long term agreements.
Sheridan: Moving on to the natural gas gathering and processing segment.
Sheridan: The Rocky Mountain region processing volumes increased 9% year over year, including the effect of winter weather during the quarter.
Sheridan: By the end of January volumes had recovered to levels achieved prior to the extreme cold.
Sheridan C. Swords: Since then, our process volumes have continued to increase, averaging nearly 1.6 BCF per day in April. There are currently 38 rigs in the Boylston Basin, with 20 on our dedicated acreage. We expect additional rigs to return as we are now into spring and for the trend of drilling longer laterals to continue. Stable rig activity and longer laterals, coupled with continued strength in our gas-to-oil ratios and additional producer efficiencies, provide a compelling backdrop for significant Rocky Mountain Region volume growth in 2024.
Sheridan: Since then our process volumes have continued to increase averaging nearly one six bcf per day in April.
Sheridan: There are currently 38 rigs in the Williston basin with 20 on our dedicated acreage.
Sheridan: We expect additional rigs to return as we are now into spring and for the trend of drilling longer laterals to continue.
Sheridan: Stable rig activity and longer laterals, coupled with continued strength in our gas to oil ratios and additional producer efficiencies provide a compelling backdrop for significant Rocky Mountain region volume growth in 2024.
Sheridan C. Swords: In the Mid-Continent region, we are currently seeing more than 40 rigs in Oklahoma, with 6 operating on our egg rigs. With current gas prices, we expect producers to continue concentrating activity in the oilier and NGL-rich areas in the region, in the Natural Gas Pipeline segment. We benefited from higher equity natural gas sales and increased firm and interruptible transportation in the first quarter. Natural gas storage continues to be in high demand.
Sheridan: In the mid continent region. We're currently seeing more than 40 rigs in Oklahoma with six operating on our acreage with current gas prices. We expect producers to continue concentrating activity in the oil and NGL rich areas in the region.
Sheridan: In the natural gas pipeline segment.
Sheridan: We benefited from higher equity natural gas sales and increased firm and interruptible transportation in the first quarter.
Sheridan: Natural gas storage continues to be in high demand our.
Sheridan C. Swords: Our current expansion projects include reactivating 3BCF, a previously idled storage facility in Texas, and further expanding our injection capabilities in Oklahoma, enabling us to market an additional 4 BCF working. The Texas project will be fully in service in the third quarter of 2024, and the Oklahoma expansion will be completed in the second quarter of 2025. Both projects have firm contracts extending beyond 2030. Pierce, that concludes my remarks.
Sheridan: Our current expansion projects, including reactivating three Bcf, a previously idled storage in Texas and further expanding our injection capabilities in Oklahoma.
Sheridan: Enabling us to market, an additional four bcf of working capacity.
Sheridan: The Texas project will be fully in service in the third quarter of 2024.
Sheridan: And the Oklahoma expansion will be completed in the second quarter of 2025.
Sheridan: Both projects have firm contracts extending beyond 2030.
Sheridan: Pierce that concludes my remarks.
Pierce H. Norton: Thank you, Walt and Sheridan. As you have heard, Strength across our businesses is indicating a solid 24 and is already providing momentum into 2025. Before we take questions, I want to once again acknowledge our employees for your continued dedication and exceptional performance in the first quarter. Specifically, I'd like to recognize those of you who responded to the winter weather across our operations in January and our employees in Texas and Oklahoma who were personally affected by or helped respond to the Texas Panhandle Smokehouse Creek Fire in late February and early March.
Speaker Change: Thank you Walton and Sheridan.
Speaker Change: As you have heard.
Speaker Change: Strength across our businesses is indicating a solid 24.
Speaker Change: <unk> already providing momentum into 2020.
Speaker Change: Before we take questions I want to once again acknowledge our employees for your continued dedication and exceptional performance in the first quarter specifically.
Speaker Change: Specifically I'd like to recognize those of you who responded to the winter weather across our operations in January and our employees in Texas, and Oklahoma, who were personally affected or helped respond to the Texas Panhandle Smokehouse Creek fire in late February and early March.
Pierce H. Norton: Our focus on reliable and responsible operations and on supporting our communities is particularly highlighted during events like these. I'm proud to work with individuals and teams who demonstrate a service mentality by being ready and willing to rise to the challenge. We're looking forward to the rest of 2024 and beyond, and with that operator, we are now ready for questions. We will now begin the call.
Speaker Change: Focus on reliable and responsible operations.
Speaker Change: And on supporting our communities is particularly highlighted during the events like these.
Speaker Change: I am proud to work with individuals and teams, who demonstrate a service mentality being ready and willing to rise to the challenge.
Speaker Change: We're looking forward to the rest of 2024 and beyond.
Speaker Change: With that operator, we are now ready for questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Jeremy Tonet of J.P. Morgan. Please go ahead.
Speaker Change: We will now begin the question and answer session.
Speaker Change: Ask a question you May press Star then one on your telephone keypad.
Speaker Change: You are using a speakerphone. Please pick up your handset before pressing the keys is that any time. Your question has been addressed and he would like to withdraw. Your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Jeremy Tonet with J P. Morgan. Please go ahead.
Jeremy Bryan Tonet: Hello, Good morning.
Jeremy Bryan Tonet: Good morning, Jeremy.
Jeremy Bryan Tonet: Just wanted to start off with the guidance increase, if I could, and wanted to dig into the component pieces there. When you're talking about volumes seeming like they're rebounding and stronger, just wondering if you could break down where across the system that is, if that's really the Bakken or other parts of the portfolio you're seeing better than expected strength. And at the same time, you talked about the synergy realization maybe being better than expected or more confident, and I was just wondering if you could dig in a little bit more, give a little bit more details on what the component drivers of that are as well.
Jeremy Bryan Tonet: Just wanted to start off with the guidance increase if I could I wanted to dig into the component pieces there when.
Jeremy Bryan Tonet: When you're talking about volumes seem like a rebound in stronger just wondering if you could break down where across the system that is if that's really the bakken or other parts of the portfolio youre seeing better than expected strength and at the same time, you talked about the synergy realization maybe being.
Jeremy Bryan Tonet: Better than expected or more confidence and just wondering if you could dig in a little bit more would've been more details on what the component drivers to that are as well.
Speaker Change: Sure Jeremy this shirt sure. Unfortunately, we think about volume across our system is a lot of it is coming out of the Bakken, we're seeing a strong volume as we come out of winter and with the rigs that we have running we see that increasing strongly throughout the year. So that gives us a lot of confidence on our volume expectations.
Sheridan C. Swords: Jeremy, this is Sheridan. Sure. The first thing we think about volume across our system is that a lot of it is coming out of the Balkans. We're seeing strong volumes as we come out of winter, and with the rigs that we have running, we see that increasing strongly throughout the year, so that gives us a lot of confidence in our volume expectations range that we'll be more on the higher end of that.
Speaker Change: That will be more on the higher end of that.
Sheridan C. Swords: We also in a refined product segment, we're also seeing good volume into the El Paso market as our expansion was completed and came online, and for May, that expansion is already on allocation. So we feel good about that complete expansion and continue to see that go through the remainder of the year. So those are two areas where we're really seeing volume increase. As we think about synergies, synergies we've got in this company together and people working together, we are finding more and more synergies out there that we can execute on, and we will continue to see that growth through the remainder of the year, which gives us even more momentum as we move into the 2025 timeline.
Speaker Change: We also in our refined product segment. We're also seeing good volume into the El Paso market as our <unk>.
Speaker Change: Expansion was completed and came online in for May that be.
Speaker Change: That expansion is already on allocation. So we feel that that complete expansion and continuing to see that go through the remainder of year. So those are two areas, where we're really seeing volume increase as we think about synergies synergies. We got in this company together and people working together, we are finding more and more synergies out there that we can execute on and we will continue.
Speaker Change: Do you see that growth through the remainder of the year, which gives us even more momentum as we move into the two.
Sheridan C. Swords: The other thing that we have going on is that in the first quarter, we also had two large planned turnarounds, one in the refined product segment at our Corpus Christi terminal and the other one in our NGL segment at the NB1 fractionator. Those are one-time events that really pushed up our operating costs in the first quarter that we won't see for the remainder of the year. So those are a lot of things that give us confidence in raising our guidance.
Speaker Change: 2020, but online.
Jeremy Bryan Tonet: I think that we have going on in the first quarter. We also had two large planned turnarounds one in the refined products segment at our refined products crude segment at our Corpus Christi terminal and the other one and our NGL segment at the N. B one fractionator that was a onetime event that really pushed up.
Jeremy Bryan Tonet: Our operating cost in the first quarter that we won't see for the remainder of the year. So those are a lot of the things that give us confidence on raising our guidance.
Speaker Change: Got it that's helpful. There. Thank you and then pivoting in your remarks, I think you touched on the potential for data centers to be a tailwind for the business over time, and just wanted to unpack that a little bit more do you see that as kind of a general thing that helps.
Speaker Change: It helps natural gas demand overall or do you see the potential I guess for data centers are materializing proximate to your footprint, where in Oklahoma West, Texas, What have you where there could be more I guess direct opportunities.
unknown: more, I guess, direct opportunities.
Pierce H. Norton: Jeremy, this is Pierce. I think it's kind of all of the above. If you go back the last 20 years, the electrical generation load between things that were added as far as devices that you have to charge versus the efficiencies that we got from LED heights and those kind of things pretty much offset one another, so it's been really flat for the last 20 years. But for the first time in a couple of decades, we're seeing a lot of momentum for needing more energy for these data centers.
Speaker Change: Yes, Jeremy. This is this is Pierre so I think it's kind of all of the above.
Speaker Change: There's.
Pierre: If you go back the last 20 years.
Pierre: Electrical generation load.
Pierre: <unk> things that were added as far as devices that you have to charge versus the efficiencies that we got from Leds Heights, and those kind of things pretty much offset one another so it's been really flat for the last 20 years.
Pierce H. Norton: A natural, quick solution to that is natural gas, so we do see that that's going to increase natural demand here specifically over the next half decade here and probably even more. It's located right beside the AI data center, so it's yet to be seen exactly how that works. We've seen some interest in different areas of our system, and it's something that we're going to continue to focus on and see just what the pace of that's going to be, but I think it's kind of all of the above.
Pierre: Kind of for the first time in a couple of decades, we're seeing a lot of momentum for meeting more energy for the status centers.
Speaker Change: And a natural.
Speaker Change: Quick solution to that is natural gas. So we do see that that's going to increase natural demand here specifically over the next.
Speaker Change: Half decade here and probably even more.
Speaker Change: When you look at it.
Speaker Change: Yet to be seen.
Speaker Change: Which area is is actually.
Speaker Change: More which meetings that you put a data center next to where electricity is already there and they've got enough.
Speaker Change: Enough capacity to generate the load.
Speaker Change: Or you switch over to putting a data center close to say a pipeline, where you can literally generate electricity.
Speaker Change: A natural gas fired generation facility. This dislocated right beside the AI data center, so yet to be seen exactly how that comes you know we've seen some.
Speaker Change: Some interest in different areas.
Speaker Change: Our system.
Speaker Change: And it's something that we're going to continue to focus on and to see just what the pace of that is going to be but I think it's it's kind of all of the above.
unknown: That's helpful. Thanks. So on that last point, you're in current conversations with potential customers that could be proximate to your assets. Just want to make sure I have that right.
Speaker Change: That's helpful. Thanks, So on that last point you are in current conversations with potential customers that could be proximate to your to your assets just want to make sure I have that right.
unknown: Yes, we are. And it's whether or not it's proximate to our assets. Or, you know, we serve quite a few utilities. So we've had a lot of calls from utilities as well. It's yet to be seen exactly what kind of infrastructure is going to be needed in both cases.
Speaker Change: Yes, we are.
Speaker Change: And whether or not it's proximate to our asset or.
Speaker Change: We serve part a few utilities. So we've had a lot of calls from utilities as well its yet to be seen exactly what kind of infrastructure is going to be needed in both cases.
Speaker Change: Okay.
unknown: Got it, understood. Thank you very much.
Speaker Change: Got it understood. Thank you very much.
Speaker Change: Thank you.
Spiro Michael Dounis: Our next question comes from Spiro Dounis with Citi. Please go ahead.
Speaker Change: Our next question comes from Spiro <unk> with Citi. Please go ahead.
Spiro Michael Dounis: Thanks, Operator. Good morning, team.
Spiro: Thanks, operator, good morning team want to go back to the synergies quickly if we could share it sounds like some of your comments there you are.
Spiro Michael Dounis: I wanted to go back to Synergies quickly, if we could. Sheridan, it sounds like in some of your comments there that you're saying you're sort of finding even more as time goes by. And I was wondering if we could tie that back to your prior targets. You know, at one point, you talked about $400 million in synergies with upside of $800 million. I think a lot of that was sort of probability-weighted, so I'm curious. Are you sort of getting closer to that 800 million number? If you could maybe just provide some examples of where you've been most surprised?
Spiro: And you're sort of finding even more as time goes by and I was wondering if we could tie that back to your prior targets you know at one point, you talked about $400 million of synergies.
Spiro: With upside to $800 million I think a lot of that was sort of probability weighted so I'm curious.
Spiro: Are you sort of getting closer to that 800 million number if you could maybe just provide some examples of where you've been most surprised.
Sheridan C. Swords: Yeah, Spiro, we are getting more confident and moving up the ladder as we see more opportunities come out there. And we're kind of seeing it all across. We're seeing it in how we optimize our storage, we're seeing it how we are combining the two assets to make logistic savings better, we're seeing it as we tie the systems together, how we can demand pull in jails and refine products, so we're seeing it across all aspects of our business that we've talked about.
Spiro: Yeah.
Spiro: We are getting more confident in moving up the ladder as we see more and more opportunities to come out there and we're kind of seen it all across.
Spiro: Parts of our business, we're seeing it from you as how we optimize our storage we see N at how we how we are combining the two assets to make logistics savings better we're seeing it.
Spiro: As we tie the systems together, how weekend demand pull Ngls and number five blocks. So we're seeing it across all aspects of our business that we've talked about.
Spiro: Okay.
unknown: Great, that's a helpful color. Oh, sorry.
Spiro: Great.
Speaker Change: That's helpful color.
Speaker Change: Alright.
Kevin L. Burdick: Now, Spiro, this is Kevin. The other thing I'd just add is, you know, we pull in all these opportunities that Sheridan talked about, not only there but also on the GNA side, from a cost-reduction standpoint. We pull all that in, we prioritize them, we understand what the value is, the timing,
Speaker Change: Spiro This is Kevin the other thing I'd just add in there is we pull in all these opportunities that Sharon Sheridan talked about not only there but also on the we continue to identify opportunities on the G&A side as well from a cost reduction standpoint, when we pull all of that and we prioritize them.
Speaker Change: Understand what the value is the timing.
Kevin L. Burdick: Any cost and then we get people assigned to them and I think it's that transparency and accountability internally that help us get the confidence of that.
unknown: Transparency and accountability help us get the confidence of what we're looking at, and those numbers continue to improve. Spiro, this is Spiro, it's the comment of you get what you measure, and we are measuring our center.
Speaker Change: What we're looking at and those numbers continue to improve.
unknown: Got it. Got it.
Speaker Change: Spiro. This is the only thing that is.
Kevin L. Burdick: It's the comment of you get what you measure and we are measuring our synergies.
Kevin L. Burdick: Yes.
Spiro Michael Dounis: Helpful. Second question, maybe just turn it to CapEx. Maybe for you, Walt, some of your peers have started to provide this sort of normalized CapEx figure that allows them to keep growing with the basin. I guess I'm just curious, maybe how we should think about that for ONEOK.
Speaker Change: Got it got it helpful.
Speaker Change: Just second question, maybe just turning to Capex, maybe for you Walt.
Spiro: Some of your peers have started to provide that sort of normalized capex figure that allows them to keep growing with the basin I guess I'm, just curious and maybe how we should think about that for one oak, especially as we head into 2025 in the first quarter, you've got three major projects coming online it would seem like that capex load can be coming down. So just curious how you guys think about what normal look.
Walter S. Hulse: Especially as we head into 2025 in the first quarter, you've got three major projects coming online. It would seem like that CapEx load is going to be coming down. So I'm just curious how you guys think about what normal looks like on the CapEx side.
Spiro: Like on the Capex side.
Walter S. Hulse: Well, Spiro, I'm not going to go down the 2025 guidance route yet, but I think it's fair to say you've identified correctly that we've got three, you know, decent-sized projects that will all roll off early in 2025. So as we look at CapEx going forward, we have much more manageable, lower capital, very high return opportunities that are presenting themselves. So I think it's fair to say that we would see that trend down. And if you were to look longer term for a, you know, kind of sustainable CapEx level, it probably would be lower than where we are for 2025.
Speaker Change: Well I'm not going to go down the 2025 guidance.
Speaker Change: Route yet but.
Speaker Change: I think it's fair to say you've identified correctly that we've got three.
Speaker Change: Decent sized projects that will all roll off early in 2025.
Speaker Change: So as we look at Capex going forward, we have much more manageable lower capital very high return opportunities that are presenting themselves. So I think it's fair to say that we would see that.
Speaker Change: And if you were to look longer term for a new kind of sustainable capex level.
Speaker Change: It probably is lower than where we are for 2024.
Spiro Michael Dounis: Great. I'll leave it there for today. Thank you, gentlemen.
Speaker Change: Great I'll leave it there for today, Thank you gentlemen.
Speaker Change: Okay.
Tristan James Richardson: Our next question comes from Tristan Richardson with Scotiabank. Please go ahead. Hey, good morning, guys.
Speaker Change: Our next question comes from Tristan Richardson with Scotia Bank. Please go ahead.
Tristan James Richardson: Hey, good morning guys. Maybe just a minor one on the guidance increase. Should we think of the small saddle horn acquisition as part of that increase in expectations for the year? And if so, maybe some proportion of the guidance increase could we attribute to the acquisition?
Tristan James Richardson: Hey, good morning, guys, maybe just a minor one on the guidance increase should we think of the the.
Tristan James Richardson: Saddle Horn.
Tristan James Richardson: Acquisition is part of that increase in expectations for the year.
Tristan James Richardson: If so maybe kind of what proportion of the guidance increase could be could we attribute to the acquisition.
Sheridan C. Swords: Yeah, we did put a little bit of the Saddlehorn increase into our guidance, that was part of it, but it's a small portion. You could see we probably increased, and that we'll get from Saddlehorn by about a third.
Speaker Change: Yes, we did put a little bit of the saddle horn increase due to our into our guidance that was part of it but it's a small portion you could see we probably increased and that we'll get from saddle horn by about a third.
unknown: I appreciate it. We've known that was coming for a little bit of time. So it's not like that. That was the primary driver of the expansion, and it's really seeing strength across our entire business. And, of course, a little more saddle horn doesn't hurt.
Speaker Change: I appreciate it.
Tristan James Richardson: We've known that was coming through a little bit of time. So it's not like that that was the primary driver.
Tristan James Richardson: Uh huh.
Tristan James Richardson: The expansion, it's across it's really seeing strength across our entire business and.
Tristan James Richardson: Of course, a little more subtle earned doesn't hurt.
unknown: helpful context, well appreciated and maybe just more of a housekeeping one. How should we think about, for example, the corporate cost allocation? You guys noted, you know, a $33 million change in refined products and crude. Should we think of all of that as attributable to moving the corporate costs around, or maybe there is a way to think about for the full year 24, maybe what percent of total corporate costs get allocated to the segment just as we think about refined products and crude modeling?
Speaker Change: Helpful context, I appreciate it and then maybe just more of a housekeeping one.
Tristan James Richardson: How should we think about maybe the corporate cost allocation.
Tristan James Richardson: You guys noted.
Tristan James Richardson: $33 million change with within refined products crude should we think of all of that is attributable to.
Tristan James Richardson: Moving the corporate costs around or maybe is there a way to think about for the full year 'twenty for maybe what percent of total.
Tristan James Richardson: Cost get allocated to the segment just as we as we think about refined products and crude modeling.
unknown: Well, I would look over a couple of quarters to get a trend there as we do that. This is the first quarter that we allocated corporate costs to that, so surely we took a look at it, but there could be some other corporate costs in the first quarter that might skew that a little bit. So I would look over the next couple of quarters to get a trend, but it will proportionally carry its fair share, kind of based on EBITDA contributions.
unknown: Yeah, I would look over a couple of quarters to get to see a trend there as we as we do that.
Tristan James Richardson: This is the first quarter that we allocated corporate costs.
Tristan James Richardson: To that.
Tristan James Richardson: Surely we took a look at it but there could be some other corporate costs in the first quarter that that might skew a little bit. So I would look over the next couple of quarters to get a trend, but it'll proportionately carry its fair share kind of based on EBITDA contribution.
unknown: Thank you very much.
Speaker Change: That's helpful. I appreciate it guys. Thank you very much.
Michael Jacob Blum: Our next question comes from Michael Blum with Wells Fargo. Please go ahead.
Tristan James Richardson: Our next question comes from Michael Blum with Wells Fargo. Please go ahead.
Michael Jacob Blum: Thank you good morning, everyone I wanted to go back to the.
Michael Jacob Blum: AI data center discussion a little bit.
Andrew Ziola: When you look at your gas pipeline network, how much room is there to expand capacity compression versus having to actually build.
Michael Jacob Blum: New pipe and then.
Michael Jacob Blum: If you were to increase gas pipeline capacity to serve higher power, though growth are there any upstream benefits that you'd also see.
Michael Jacob Blum: Thank you. Good morning, everyone.
Tristan James Richardson: Good morning, Michael This is Chuck.
Michael Jacob Blum: As far as.
Charles M. Kelley: Capacity adds that we could look at it along our footprint.
Michael Jacob Blum: I wanted to go back to the AI data center discussion a little bit. When you look at your gas pipeline network, how much room is there to expand capacity via compression versus having to actually build a new pipe? And then if you were to increase gas pipeline capacity to serve higher power load growth, are there any upstream benefits that you'd also get?
Charles M. Kelley: As Pierce mentioned a couple of times here today, we are in conversations with.
Charles M. Kelley: Existing customers on these on our pipes connected a little more than I think the numbers 40 gas fired.
Charles M. Kelley: Good morning, Michael. This is Chuck.
Charles M. Kelley: As far as... Capacity ads that we could look at along our footprint. As Pierce mentioned a couple times here today, we are in conversations with existing customers on our pipes, you know, connected to a little more than 40 gas-fired generation facilities today. We're working with about 15 potential projects on our systems today. Not all of those will come to fruition, but the conversations are ongoing, and of the 15, we're seeing probably three or four of those folks saying the demand is derived from the data center.
Chuck: Generation facilities today were working it was about 15 potential projects on our systems today, not all of those will come to fruition, but the conversations are ongoing and of the 15 were seeing probably three or four of those folks saying the demand is derived from the data centers. So we are looking at several projects.
Charles M. Kelley: So we are looking at several projects that would add looping as well as some compression, depending where we are on which of our systems, whether it's the interstates up in the upper Midwest, in Oklahoma, not necessarily looping, but rather some compression projects. So it's kind of an all of the above capacity addition. And I don't recall the second part of your question.
Charles M. Kelley: That would add would be looping as well as some compression depending where we are which are our systems, whether its the interstates and the upper Midwest in Oklahoma, not necessarily looping, but rather some compression projects. So it's kind of an all of the above.
Charles M. Kelley: Our capacity additions.
Charles M. Kelley: And I don't recall the second part of your question.
Charles M. Kelley: The second part was about any upstream benefits.
Charles M. Kelley: Second part was about any upstream benefits.
Charles M. Kelley: Upstream. So, Michael, what I would say there is this is going to be a little bit of a longer answer here, but you came at it from the question of what is the capacity of an existing line if you put more demand on it, and what does that look like? I'll just paint a scenario, which doesn't take anything from my comments that we're far along in this, but if you were to put a data center in North Dakota, it's a cold weather area, it's very advantageous for data centers, and you connected it, say, to the tailgate of one of the plants.
Charles M. Kelley: Extreme so.
Charles M. Kelley: Michael what I would say there is.
Charles M. Kelley: It's going to be a.
Charles M. Kelley: Little bit of a longer answer here, but.
Charles M. Kelley: You came at it from the question of what's the capacity of an existing line and you put more demand on it and what does that look like.
Charles M. Kelley: Just paint a scenario, which don't take anything from my comments that we're far along in this but if you were just put a data center in North Dakota.
Charles M. Kelley: It's a cold weather area.
Charles M. Kelley: Advantageous for data centers, and you connected I'd say to the tailgate.
Charles M. Kelley: One of the plants.
Charles M. Kelley: Unknown Attendee, Selman Akyol, Elvira Scotto, Theresa Chen, Indraneel Mitra, Zackery Everen, for, you know, natural gas electric power generation. So that's just one example of the way I could see that it's kind of a long way of answering your question, but that would be a benefit to the gathering and processing business.
Charles M. Kelley: And then you're taking low 24 hours, a day and Thats loaded it frees up on transportation of gas that goes elsewhere out of that basin. We do have space to do that but thats, one way to kind of tamper down maybe.
Charles M. Kelley: Our future expansion.
Charles M. Kelley: The North Dakota area, one on the transmission lines, whether or not that <unk>, whether or not that would be northern border or are you actually some other generating facility.
Charles M. Kelley: For natural gas electric power generation. So that's just one example of that.
Charles M. Kelley: I can see that it's kind of a long way of answering your question, but that what I would see a benefit to the gathering and processing business.
Charles M. Kelley: Okay, perfect. Thank you. And then I just want to go back on Saddlehorn for a second.
Speaker Change: Okay perfect. Thank you and then just wanted to go back on saddle Horn for a second I realize it's a small acquisition in the Grand scheme of things, but I Wonder if you just talk in terms of strategic rationale for that asset to why you want to own more of it and just also from a capital allocation perspective, why that makes sense.
Charles M. Kelley: Yeah.
Michael Jacob Blum: I realize it's a small acquisition in the grand scheme of things, but I wonder if you could just talk in terms of the strategic rationale for that asset and why you want to own more of it. And also, from a capital allocation perspective, why that may be Michael
Charles M. Kelley: Michael This is Sheridan I think the first thing on why we want to own. It we operate that pipeline, it's coming out of an area that we see growth in crude in fact, the last couple of months saddle Horn has been fully full.
Sheridan C. Swords: Michael, this is Sheridan. I think the first thing why we want to own it is because we operate that pipeline. It's coming out of an area that we see growth in crude. In fact, the last couple months, Saddlehorn has been fully allocated. And the third thing is that this was kind of instigated by planes that have a lot of connectivity up in the area, and they're seeing the benefit as well, which gives us more confidence that this is a good asset to own more of.
Sheridan: Fully allocated and the third is as this was kind of instigated by planes that has a lot of connectivity up in the area and they're seeing the benefit as well, which gives us more confidence that this is a good asset.
Sheridan: Laura.
Sheridan C. Swords: Okay.
Speaker Change: Thank you.
Theresa Chen: Our next question comes from Theresa Chen with Barclays. Please go ahead.
Sheridan C. Swords: Our next question comes from Theresa Chen with Barclays. Please go ahead.
Theresa Chen: Morning. In terms of the Synergy Outlook, just near term looking at the upcoming maintenance in Winked Webster, is there room from a crude oil marketing activity perspective across your assets for additional synergies to capture what would likely be a temporary and volatile by middling different rental backdrops and using the excess capacity you have on a bridge tax or maybe Longhorn to a small extent? I realize this does not neatly fit within your four categories of synergy buckets, but given that you are a significant market for commodities in general, could this be a source of additional upside?
Speaker Change: Good morning in terms of the synergy outlook, just near term looking at the upcoming maintenance and Wink to Webster is there a room from.
Theresa Chen: Crude oil marketing.
Theresa Chen: Any perspective across your assets offer additional centers.
Theresa Chen: Capture of will it likely be temporary in a volatile by Nicola and different parental backdrop and using the excess capacity you have on Bridgetex, we're making longhorn chest mall extent I realize that this does not neatly within your four categories at synergy buckets, but given that you are at significant market of commodities in general capacity sources.
Theresa Chen: Additional upside.
Sheridan C. Swords: Theresa, this is Sheridan. Yeah, we do see him.
Theresa Chen: Theresa This is Sheridan yeah, we do see them, we've always from the beginning saw opportunity in marketing crude oil to bring volume to our system.
Theresa Chen: Specifically right now as we think about what's going on in the next two months.
Sheridan C. Swords: We've always, from the beginning, seen opportunity and marketing crude oil to bring volume to our system, specifically right now, as we think about what's going on in the next two months. With the NEH to Midland differential kind of blowing out, we're naturally seeing more volume come to BridgeTex. That volume is up quite a bit. Part of the reason we're even more confident that it's going to continue and confident in increasing our guidance as we go forward, and with some of the maintenance that is coming up on certain pipelines, we haven't factored that in yet, but that makes us even more confident that we'll see some strong volumes of crew coming out of the Permian on our side. Marketing will add to that, but that'll probably be a little bit more long term as we get later on in the year.
Theresa Chen: With the NIH to Midland differential kind of blowing out worst naturally seeing more volume come to bridgetex that volume is up quite a bit and it's part of the reason, we're even more confident that's going to continue that confidence increasing R.
Theresa Chen: Our guidance as we go forward and with some of the maintenance that is coming up on certain pipelines, we haven't factored that in yet but that gets us even more confidence that we will see some strong volumes crude coming out of apartment on our system marketing will add to that but that will probably be a little bit more longer term as we get later on in the year.
Theresa Chen: Got it. And going back to the AI theme, and this has come up so much in recent weeks and months, but related to natural gas transmission and storage assets. And I'm just wondering if you have any early indications or thoughts on just quantitatively what this could mean as far as the size of the EPIDOT opportunity for ONEOK.
Sheridan C. Swords: Got it and going back to the AI.
Theresa Chen: And this has come up so much.
Theresa Chen: Weeks and months, but the latest natural gas transmission and storage asset I'm. Just wondering if you have any early indications our thoughts on just quantitatively what this could mean as far as the size of the EBITDA opportunity from <unk>.
Theresa Chen: Well.
unknown: You know, first of all, I think you got to look at the size that we currently are, you know, making 6.175 billion in EBITDA, and I think you got to look to see what kind of pace it's at. I think it's really just too early to tell.
Speaker Change: First of all I think you've got to look at the size that we currently are making.
Theresa Chen: 617 5 billion in EBITDA.
unknown: And I think you got it you got to look to see what kind of pace. It's at I think it's really just too early to tell.
Speaker Change: Thank you.
unknown: Our next question comes from Sunil Sibal with Seaport Global Securities. Please go ahead. Yeah, hi, good morning.
Theresa Chen: Our next question comes from Sunil Sibal.
Sunil K. Sibal: Seaport Global Securities. Please go ahead.
Sunil K. Sibal: Hi, good morning, everybody. So I just wanted to understand a little bit about the growth prospects, you know, when you think about beyond the projects which are kind of, you know, getting completed in the first half of 2025. So I was curious, you know, how would you define your growth opportunity beyond that in the four business buckets that you have? And then, on the same line, how have your hurdle rates changed, if any, in the current environment versus the environment we had a couple of years ago in terms of interest rates, etc.
Sunil K. Sibal: Yes, hi, good morning, everybody.
Sunil K. Sibal: So I just wanted to understand a little bit on the growth prospects you know when you think about it.
Sunil K. Sibal: Beyond the projects, which are kind of get completed in the first half of 'twenty five.
Sunil K. Sibal: I was curious to know how would you put your growth opportunity beyond that.
Sunil K. Sibal: And the poor business bucket that you have.
Sunil K. Sibal: And then on the same line.
Sunil K. Sibal: Do you have you have hardly.
Sunil K. Sibal: Changed if any.
Sheridan Swords: Current environment versus the environment, we had a couple of years back in terms of interest rates etcetera.
Sheridan C. Swords: This is Sheridan again. On growth projects, we are continuing to see, on the Synergy side, continuing to see low-capital, high-multiple type growth projects that we are baking in as we continue to go forward. They're coming all the time. We get more and more of them, but they're kind of factored into our overall capital plan already. We had capital in there that we believed would capture this, but we continue to get more excited about that growth that we see from growth projects as it relates to synergies and bringing them together.
Sunil K. Sibal: This is Sharon again on growth projects, we are continuing to on the synergy side continuing to see low.
Sheridan C. Swords: Capital High multiple type growth projects that we are baking in as we continue to go forward Theyre coming.
Sheridan C. Swords: All the time, we get more and more of them, but they they're kind of factored into our overall capital plan already we had capital in there that we would capture this but we continue to get get more excited about that growth that we see different growth projects as it relates to synergies and bringing bringing them together.
unknown: I think you were asking about interest rates. We aren't a company that relies heavily on short-term debt. All of our debt is turned out. We have cash called on the last three bonds that we've had mature, and we've said that we expect that it'll probably be the case later this year that we would go down that path. We were in and out of the CP market to cover month-to-month types of things, but our business is generating cash flow to be self-contained, and so we don't see any real impact from higher rates going forward.
Speaker Change: Okay. Thank you.
Sheridan C. Swords: As you were asking I think what you are asking about the interest rates.
unknown: Okay.
unknown: Okay.
unknown: Our.
unknown: A company that relies heavily on short term debt.
unknown: All of our debt is termed out.
unknown: We have cash called the last three bonds.
unknown: Mature.
unknown: We've said that we expect that that will probably be the case later this year that we would go down that path. So.
unknown: Occasionally we're in and out of the CP market to cover month to month.
unknown: Type of things, but a.
unknown: Our business is generating cash flow to the self contained and so we don't see any real impact from higher rates going forward.
Speaker Change: Okay understood.
Sunil K. Sibal: Okay, understood. And then one kind of operational one for me seems like in Permian, NGL volumes were, you know, a little bit weak sequentially. And I was curious if there was anything more to it than the weather issues there. And then in terms of the West Texas expansion, if you could update us on the contracting there.
unknown: And then.
unknown: When kind of all Krishna when for me it seems like in Permian Ngls.
Sunil K. Sibal: What.
Sunil K. Sibal: And a little bit sequentially.
Sunil K. Sibal: I was curious you know anything more to it than the bad debt.
Sunil K. Sibal: Issues, there and then in terms of the this pixel is expansion if you could update us on on the contracting there.
Sunil K. Sibal: <unk>.
Sunil K. Sibal: Yeah.
Sheridan C. Swords: Yeah, on the Permian, the kind of drop sequential in the Permian is really weather. We had the impact of weather out there. And one thing we noticed about the Permians, they're not used to weather, and anytime they get any kind of weather, it takes them a little bit more to get back up and going.
Sunil K. Sibal: Yes.
Sunil K. Sibal: The Permian kind of the drop sequential in the Permian does really well.
Sheridan C. Swords: Whether we had the impact of weather out there and one thing we noticed in the Permian, they're not used to it whether any time, they get any kind of whether it takes them a little bit more to get back up and going so we saw some body. So weather impact the first quarter was a big.
Sheridan C. Swords: So we saw somebody go out weather impact the first quarter was big. As we think about contracting going forward on our West Texas pipeline expansion, it is going as we had planned. We continue to contract more volume on that. We are right where we think we need to be as we continue to go forward. We are going to continue to leverage that into the future for more plant connections and to feed our transportation and fractionation business.
Sheridan C. Swords: The reason for the volume decrease as we think about contracting go on Florida on our West Texas pipeline expansion. It is going as we had planned we continue to contract more volume on that.
Sheridan C. Swords: We are right, where we think we need to be as we continue to go forward, we're going to continue to leverage that into the future for more.
Sheridan C. Swords: Client connection.
Sheridan C. Swords: Our transportation and fractionation business as we have said earlier, we already have contracted two plants that will be coming on this year. We have another one that's expanding and recently, we've actually signed up some more people as well to bring more volume onto this system. So like I said, we're very comfortable where we are with the contracting.
Sheridan C. Swords: As we have said earlier, we already have contracted two plants that will be coming on this year. We have another one that is expanding, and recently, we have actually signed up some more people as well to bring more volume to the system. Like I said, we are very comfortable where we are with the contracting on that system today, on that expansion. The expansion is on time and on budget, coming up in the first quarter of 2025.
Sheridan C. Swords: On that on that system today on that expansion and the expansion is is on is on time on budget.
Sheridan C. Swords: Coming up in the first quarter of 2025.
Speaker Change: Understood. Thank you.
Indraneel Mitra: Our next question comes from Neal Mitra with Bank of America. Please go ahead.
Sheridan C. Swords: Our next question comes from Neel Mitra with Bank of America. Please go ahead.
Indraneel Mitra: for taking my questions. I had a couple of questions on the guidance increase. So first, it seemed like the GMP rate was $1.21 in MCF, which was a little bit higher than the high end of the range of $1.15 to $1.20, which is the guidance. Is that something that we should roll forward, or is that something that happened with maybe MVCs in the first quarter? And then, second on that part, should we expect kind of a linear increase in volumes in the Bakken, or should we expect another weather downturn in 4Q in terms of your budgeting?
Indraneel Mitra: For taking my questions I had a couple of questions on the.
Indraneel Mitra: Our guidance increase so first it seemed like the GMP rate was $1 21, an mcf, which was a little bit higher than the high end of the range of $1 15 to $1 trillion, which is the guidance is that something that we should roll forward or is that something that occurred with maybe NBC is in the <unk>.
Indraneel Mitra: First quarter and then second on that part should we expect kind of a linear increase in volumes in the Bakken or.
Indraneel Mitra: Should we expect another weather downturn and working on in terms of your budgeting.
Sheridan C. Swords: Neil, this is Sheridan. The first thing on your increase in earnings, on the fee rate, a lot of that is driven by our inflationary escalators that are coming, and to a lesser extent, volume coming from certain customers that may have a different fee structure in there. And yes, we do think that will continue going forward, that fee rate. On the volume cadences coming out of the Bakken, it can be a little bit lumpy as we bring on compressor units and everything else. Sometimes we'll have some big volume coming in. We do always, [inaudible] Evenly across those scores, it usually concentrates in one quarter or the other.
Neil: Neil This shared the first thing on your on your increase on the earnings on the fee rate a lot of that is driven by our inflationary react escalators that are come in and to a lesser extent volume coming from certain customers that may have a different fee structure in there and yes, we do think that we'll continue.
Sheridan C. Swords: Going forward that fee rate.
Sheridan C. Swords: On the volume cadence is coming out of the Bakken it it can be a little bit lumpy as we bring on.
Sheridan C. Swords: Bruster units and everything else, we'll sometimes lost some <unk> volume coming in we do always.
Sheridan C. Swords: Budget for a winter weather in the first quarter and in the fourth quarter and the first quarter, but as you saw in 'twenty three the fourth quarter did not have any weather in it and all the weather showed up in the first quarter, so, but we spread it out over the two quarters and are budgeting standpoint, we know it does it all show up.
Sheridan C. Swords: Evenly across those quarters are usually concentrates in one quarter or the other.
unknown: And then, I wanted to clarify on the AI theme. I know this is still... in the very early innings.
Neil: Got it.
Sheridan C. Swords: And then I wanted to clarify on the AI theme I know this is Phil.
Pierce H. Norton: But Pierce, I wanted to follow back up on, you know, kind of the opportunity you see there in North Dakota with the favorable weather, temperatures, etc. Are you seeing opportunities from the wellhead to move lines to CCGTs or more so from CCGTs to data centers? And is this kind of geographically concentrated with your opportunities within your NGO footprint in the Bakken? Or are you seeing things outside of the Bakken and perhaps the Permian and MidCon as well? Well, first of all,
unknown: Very early innings, but curious I wanted to.
Pierce H. Norton: Paul a backup on kind of the opportunity you see there in North Dakota with the advantageous weather temperatures et cetera, or are you seeing opportunities from the wellhead could move lines too.
Pierce H. Norton: CCG teas or more so from CCG teams to data centers and is this kind of geographically concentrated with your opportunities.
Pierce H. Norton: Within your your NGL footprint in the Bakken or are you seeing things outside of the Bakken and perhaps.
Pierce H. Norton: The Permian and mid Con as well.
Pierce H. Norton: Well, first of all, you're not going to take it out of the wellhead because the GPMs, or the gallons per thousand of liquids that's associated with that gas, are just too high to tie it in back there. So you're going to need to get downstream of a plant. And I would also tell you that that's a theoretical scenario at this point, and that's something that we'll be exploring in the future with multiple different players.
Pierce H. Norton: Well first of all.
Pierce H. Norton: Youre not going to take it.
Pierce H. Norton: Out of the wellhead.
Pierce H. Norton: Because the.
Pierce H. Norton: The G P M or the gallons per thousand of luck.
Pierce H. Norton: With its associated with that gas is just too high.
Pierce H. Norton: To tie it in back there so you're going to get me to get downstream.
Pierce H. Norton: The plant.
Pierce H. Norton: And I would also tell you that.
Pierce H. Norton: That's a theoretical scenario at this point.
Pierce H. Norton: And that's something that we'll be exploring in the future with multiple different different players.
Pierce H. Norton: It could happen in any one of our basins. It's just that it's a little more advantageous where you can locate one of these things, where you get some really good kind of lower natural gas prices, and you've got a lot of natural gas supply, and the weather actually is colder. You have more kinds of heating degree days, so therefore it lessens the cooling load that you're needing on these AI facilities. So the thing I would probably say, again, about AI: more to come. We'll have more updates on these in the coming quarters, but again, don't think it's necessarily going to be material in the short term.
Pierce H. Norton: It could happen in any one of our basins.
Pierce H. Norton: Just that it's a little more advantageous where you can locate one of these things where you get some really good.
Pierce H. Norton: And a lower <unk>.
Pierce H. Norton: Natural gas prices.
Pierce H. Norton: And you got a lot of natural gas supply.
Pierce H. Norton: The weather actually is colder you have more kind of heating degree days. So therefore, it lessens the cooling load that you're meeting on these facilities.
Pierce H. Norton: So the thing I would probably say it again about a year more to come we.
Pierce H. Norton: We'll have more updates on these in the coming quarters.
Pierce H. Norton: But again don't think it's necessarily going to be material in the short term.
Speaker Change: Perfect. Thank you.
Keith T. Stanley: Our next question comes from Keith Stanley with Wolf Research. Please go ahead.
Pierce H. Norton: Our next question comes from Keith Stanley with Wolfe Research. Please go ahead.
Keith T. Stanley: Hi, good morning. First, just to follow up on Neil's question, but on the Rockies NGL bundled rate, that was up nicely to 30 cents in Q1. What drove that higher? And is that a good run rate for the balance of the year?
Keith T. Stanley: Hi, good morning.
Keith T. Stanley: First just a follow up to neil's question, but on the Rockies NGL bundled rate that was up nicely to 30 in Q1, what drove that higher and is that a good run rate for the balance of the year.
Keith T. Stanley: What drove that.
Sheridan C. Swords: Keith is a Sheridan. What drove that rate is less incentivized than the thing that came out. So that rate's gonna depend a lot on how much incentivized that thing is, because obviously, we're bringing that at a lower rate. But that 28 to 30 cents is going to be maybe even a little higher than that, depending if we get the volume to continue to ramp up and we have to manage. Elk Creek through backing out ethane for C3+. You could see it go a little bit higher there, but it's going to be in that range.
Keith T. Stanley: He just shared and what drove that Ray just less incentivized ethane that came out.
Sheridan C. Swords: So that that rate is going to depend a lot on how much incentivize that thing we come out because obviously, we bring it out at a lower rate.
Sheridan C. Swords: But that 28 to 30 cents is going to be maybe even a little higher than that depend if we if we get a <unk>.
Sheridan C. Swords: Volume continued to ramp up and we have to manage capacity on <unk> breakthrough backing out ethane foresee three plus you could see it go a little bit higher there, but it's going to be in that range.
unknown: Okay, great. Thank you.
Speaker Change: Okay, great. Thank you.
Speaker Change: Second question, just on going back to saddle horn, but.
Speaker Change: Are you optimistic that you could find other bolt on type opportunities like that over the course of the next year or was that more of a one off with with Western's process. I noticed you didn't list acquisitions as part of the capital allocation priorities in your remarks.
unknown: So.
Keith T. Stanley: The second question is just on going back to Saddlehorn, but are you optimistic that you could find other bolt-on type opportunities like that over the course of the next year? Or was that more of a one-off deal with Westerns? I noticed you didn't list acquisitions as part of the capital allocation priorities in your remarks.
Pierce: This is pierce.
Speaker Change: You know what I would tell you is we're always looking for opportunities to expand our footprint out there. That's one of the things that we look at.
Speaker Change: As far as M&A goes we continue to be focused and actually very pleased with the integration as it is it's related to Magellan.
Keith T. Stanley: So at this time, our that is our organization is primary focus is on the integration of what we just acquired last year.
Keith T. Stanley: I would say that future M&A will be the same as it always has been here at <unk>, we're going to be intentional and disciplined about what we look at it.
Speaker Change: Okay. Thank you.
Keith T. Stanley: Yeah.
Pierce H. Norton: So
Keith T. Stanley: Our next question comes from Neal Dingmann with tourists Securities. Please go ahead.
unknown: This is Pierce. You know, what I would tell you is we're always looking for opportunities to expand our footprint out there. That's one of the things that we look at. As far as, you know, M&A goes, we continue to be focused and actually very pleased with the integration as it relates to Magellan. You know, so at this time, our organization's primary focus is on the integration of what we just acquired last year. I'd say that future M&A will be the same as it always has been here at ONEOK. We're going to be intentional and dissimilar about what we look at.
Neal David Dingmann: Morning, all. Thanks for the time. My first question, just looking at your NGL raw, just the throughput on the raw volumes there, I'm just wondering, looks like the range is a little wide. I'm just wondering, could you discuss some drivers behind that, how this is shaping up sort of year to date so far?
Neal David Dingmann: Our next question comes from Neal Dingmann with Truist Securities. Please go ahead. All right, Morty, I'll take...
Speaker Change: Good morning, all thanks for the time My first question just looking at your NGL Ross just the throughput on the rail volumes. There I'm just wondering it looks like the range is a little wide I'm. Just wondering could you discuss the drivers behind that how this has shaped it up sort of year to date so far.
Neal David Dingmann: Yeah.
unknown: Neil, could you please repeat that question one more time?
Neal David Dingmann: Neil could you repeat that question one more time.
Neal David Dingmann: I'm looking specifically at slide 8 around NGL raw feed throughput volumes and just sort of looking on expectations behind 24 and you know it's not terribly wide, but just wondering what would cause that to trend towards the higher side and how that's looking sort of year to date.
Neal David Dingmann: Just just looking at the I'm looking specifically at slide eight around that at NGL raw feed throughput volumes.
Neal David Dingmann: And just sort of looking on expectations behind 24.
Neal David Dingmann: It's not terribly wide, but just wonder what would cause that to trend towards the higher side and how that's looking sort of year to date.
Sheridan C. Swords: On our raw feed NGO volumes, one of the big things on the raw feed NGO volumes that's going to make it go up is ethane recovery. And, you know, we've come out and said that we're going to have. Naturally, the Rockies are going to be in rejection, but we're going to have opportunities to incentivize that.
Neal David Dingmann: On our raw feed NGL volumes that one of the big things on the raw feed NGL volumes, that's going to make it go up is ethane recovery and we've come out and said that we're going to have.
Sheridan C. Swords: Naturally the Rockies is gonna be in rejection, but we're going to have opportunities to incentivize that.
Sheridan C. Swords: I also said we're going to manage our capacity in our pipeline as Elk Creeks until we get the expansion on. It's up more to the high end of its capacity. Then you have the mid-continent, where we have said that's going to be kind of in and out of ethane recovery, so is that more, we have the opportunity to, as prices spread statewide like they kind of are today, we'll see more ethane throughout the year come out, which will drive your, drive that up, your raw feed throughput up, and then out of the, Unknown Attendee, Selman Akyol, Elvira Scotto, Theresa Chen, Indraneel Mitra, Zackery Everen, Plenty full of rigs in the mid-continent drilling, in different areas, in some of the oil-rich areas, some very high GPM areas, that as we go through this year, we're cautiously optimistic that we're going to see really good growth there as well. So those are some of the areas we see could push it to the high end, but definitely ethane recoveries, the biggest swing here in 2020.
Sheridan C. Swords: I also said, we're going to manage our capacity and our pipeline is Elk Creek until we get the expansion on is up more to the high end of its capacity.
Sheridan C. Swords: Then you have the mid continent, where we have said that's going to be kind of in and out.
Sheridan C. Swords: Ethane recovery so is that more we have the opportunity to S.
Sheridan C. Swords: As prices spreads stay wide like they are today, we'll see more ethane throughout the year come out which will drive your drive that up your raw feed throughput up and then out of the Permian. We've always said that's going to be in full ethane recovery from here here on out. So the biggest one is gonna be ethane recovery, obviously, we are seeing.
Sheridan C. Swords: We've talked about volume in the Bakken that looks really really good we're also seeing.
Sheridan C. Swords: Plentiful of rigs in the mid continent drilling in different areas and some of the oil rich area. Some very high G. P. M areas that as we go through this year, where we're cautiously optimistic that we're going to see really good growth there as well. So those are those are some of the areas. We see could push it to the high end, but definitely ethane recoveries the biggest swing here in 'twenty going forward.
Neal David Dingmann: Very helpful. And then just a second question on looking at your natural gas pipeline earnings. I'm just wondering, part of the part I saw of the sequential increase was driven by that earnings was driven by the higher natural gas sales of volumes previously held in inventory. I'm just wondering, is that something you anticipate to continue to see potential upside from these incremental volumes in inventory? I mean, is there more to come? Or, you know, which we think about with other volumes around associated with it? Yeah, Neil, this is Chuck.
Speaker Change: Very helpful. And then just a second question on looking at your natural gas pipeline earnings I'm. Just wondering part of I saw the sequential increase was driven by that earnings was driven by the higher natural gas sales volumes previously held in inventory I'm. Just wondering is that something that you anticipate to continue to see potential upside.
Chuck: From these incremental volumes inventory I mean is there is that more to come or what should we think about with other volumes around associated around that.
Charles M. Kelley: Yeah, Neil, this is Chuck. You know, seasonality, obviously, the prices are higher in Q1. So when we set up for each calendar year, we look at our portfolio of equity gas and choose where we're going to, what months we're going to sell that, and try and optimize our value there. So that was part of our plan going into Q1. Obviously, you've seen gas prices fall here in Q2, so you have seasonality at work.
Neal David Dingmann: Yes, Neal this is Chuck.
Chuck: Seasonality, obviously the prices are higher in Q1, so when we set up for for each calendar year, we look at our portfolio of equity gas and choose where we're going.
Charles M. Kelley: What months, we're going to sell that and to try and optimize our value. There so that was.
Charles M. Kelley: Part of our plan going into Q1, obviously, you've seen gas prices fall here in Q2, So you got the seasonality at work.
Charles M. Kelley: You know, so we'll just be throughout the summer; we see electric generation pick up, and we'll see prices spike; we may sell into some of that. And then again, it'll be seasonal back to the winter months next year.
Charles M. Kelley: So it will just be throughout the summer as we see electric generation.
Charles M. Kelley: But we will see prices spike we may sell into some of that and then again it'll be a seasonal back to to the winter months next year.
Speaker Change: Helpful. Thank you all.
Charles M. Kelley: Yeah.
Craig Kenneth Shere: Our next question comes from Craig Shere with Troy Brothers. Please go ahead.
Charles M. Kelley: Our next question comes from Craig Shere with 20th Brothers. Please go ahead.
Craig Kenneth Shere: Good morning. Thanks for letting me in. Sheridan, back to that $0.28 to $0.30 Willis & NGL bundled rates question and this issue of incented ethane recovery, are you seeing the spread of ethane discounts required to incent recovery less than historical to the degree that we ramp up ethane, do you see that having, you know, relative to history, less of an impact?
Craig Kenneth Shere: Good morning, Thanks for fitting me in.
Craig Kenneth Shere: Sure then back to the 20% to 30 cent Williston NGL bundled rates question.
Craig Kenneth Shere: And this issue of incentive.
Craig Kenneth Shere: Ethane recovery or are you seeing the.
Craig Kenneth Shere: Spread of ethane discounts required to Incent recovery.
Craig Kenneth Shere: Less than historical to the degree that we ramp up ethane do you see that having.
Sheridan: Yeah relative to history less of an impact.
Sheridan C. Swords: Greg, what I'd say right now is that the incentivized ethane that we've done so far this year has been at or maybe a little bit above what we've done, what you'd say more as a run rate in the past. A lot depends on not just the price of ethane, but we have good demand for ethane on the Gulf Coast, but also what the price of natural gas is in the Balkans, and so you've got to look at the spread between those two, but so far, we have been very pleased with what we've been able to achieve with the incentivized effort.
Sheridan: Greg what I would say right now we are in the incentivize ethane that we've done so far this year it has been.
Sheridan C. Swords: At or maybe a little bit above what we've done what you would say more as a run rate in the past and a.
Sheridan C. Swords: A lot depends on.
Sheridan C. Swords: Not just the price of ethane, which.
Sheridan C. Swords: And we have good demand for ethane down the Gulf Coast, but also what the price of natural gas is in the in the Bakken and so you got to look at the spread between those two but.
Sheridan C. Swords: So far we have been very pleased with what we've been able to lock the ethane.
Sheridan C. Swords: Incentivised ethane in it.
unknown: Gotcha. Um, and just to finish off, do you see prospects for ethane being tailwinds year over year, even into 2025? And separately, around the Conway to Mont Belvieu basis spreads that that seems to have contracted in the last couple of quarters? Do you see that stuck in the doldrums for a while?
Sheridan C. Swords: Gotcha.
Speaker Change: And just to finish off.
unknown: Do you see prospects for ethane being tailwind.
unknown: Year over year, even into 'twenty.
unknown: 2025 and.
unknown: Separately around the Conway to Mont Belvieu basis spreads.
unknown: That seems to have contracted last couple of quarters do you see that.
unknown: Stuck in the doldrums for a while.
Sheridan C. Swords: One, I'll take the last one. On the Conway to Bellevue spread, that has actually, we have had opportunities. If you look at the average through the month, it may be off by a little bit, but in the interim month, we've had some opportunities to lock in some fairly good spreads. And our system is set up that we can lock in by component, Conway to Bellevue or Bellevue to Conway. We can lock both of those in as we go forward.
Speaker Change: Well I'll take the last one around the Conway to Belvieu spread that has actually we have had opportunities. If you look at the average through the month it may be in a little bit financial month, we've had some opportunities to lock in some fairly good spreads and our system was setup that we can lock in by component.
Sheridan C. Swords: Tom way to Belvieu or Belvieu to Conway, we can lock both of those in as we go forward we've.
unknown: We've been happy where the spreads have been at this time. Obviously, we'd always like them to be a little bit wider, but we've been able to take advantage of them. They're not going to get as wide as we saw a long time ago, where they were double-ditched. It's not going to get there because there's still plenty of capacity to move product between the two bases. But I think they're going to be at an acceptable range that we are going to be able to meet what our expectations are in our guidance or even exceed them.
Sheridan C. Swords: We've been happy where the spreads have been at this time, obviously, we would always like them to be a little bit wider but we've been able to take advantage of them, they're not going to get as wide as we saw in a long time ago, where they were double digits I'm not going to get there because there's still plenty of capacity to move product in between the two basins.
unknown: But I think theyre going to be at an acceptable range that we're going to be able to meet what our expectations are in our guidance or even exceed it.
unknown: And, I'm sorry, what did you say about your thoughts about FAA and then the next year? I think you should go on to the next one.
Speaker Change: And I'm sorry, what did you say about thoughts about ethane into next year.
unknown: I think if we go on to next year, what you're down is you... We'll continue to have the ability to recover more ethane as production continues to grow on all bases. You will; we're kind of waiting for the incremental.
unknown: Anthony as we go into next year, what Youre down as you were.
unknown: We're continuing to have the ability to recover more ethane as production continues to grow in all basins.
unknown: You will we're kind of waiting for the incremental.
Sheridan C. Swords: Ethane exports are coming online, but we'll see some coming on next year in 2025 and the year after that. And so what you come down to is how hard are the pet chems gone and what utilization rate the pet chems are running. And right now, with this wide crude to gas ratio that you're seeing on a global scale, that puts the United States ethane petrochemical ethane crackers at a huge disadvantage, and we're going to see them continue to try to run as hard as they can.
unknown: Ethane exports coming online that we'll see some coming on next year and 25 in the year after that and so once you come down to is how.
Sheridan C. Swords: How hard are the pet Chem has gone and what the utilization rate the pet chems or running and right now with this wide crude to gas ratio that youre seeing on a on a global scale that puts the United States ethane petrochemical ethane crackers that are huge just add huge advantage that we're going to see them continue to try.
Sheridan C. Swords: It run as hard as they can so I think we will see you will see the strength in that the pet chems will be running harder, but you will see a little bit more ethane coming out due to more production, we still as we get go into how we set up our system, we still see that the Bakken is going to be an area that we will be able to incentivize to aetna.
Sheridan C. Swords: So I think we will see, you'll see the strength in that the pet chems will be running harder, but you will see a little bit more ethane coming out due to more production. We still, as we get going with how we set up our system, we still see that the Bakken is going to be an area that we will be able to incentivize ethane out at a nice rate to be able to bring it into the stack, wherever that stack is. You know, even if we have more volume coming out of the mid-continent of the Permian, we still think we can get the Balkans in there at a nice rate.
Sheridan C. Swords: Now at it at a nice rate to be able to bring it into the stack wherever that stack.
Sheridan C. Swords: Even if we have more volume coming out of the mid continent. The Permian, we still think we can get Bakken in there at a nice rate.
Speaker Change: Thank you.
Andrew J. Ziola: This concludes our question and answer session. I would like to turn the conference back over to Andrew Ziola for any closing remarks.
Speaker Change: This concludes our question and answer session.
Andrew J. Ziola: I would like to turn the conference back over to Andrew <unk> for any closing remarks.
Andrew J. Ziola: All right, well, thank you, everyone. Our quiet period for the second quarter starts when we close our books in July and extends until we release earnings in early August.
Andrew J. Ziola: Alright, well. Thank you everyone. Our quiet period for the second quarter starts when we close our books in July and extends until we release earnings in early August we'll provide details for that conference call. At a later date. Thank you again and have a great day.
Operator: Thank you again, and have a great day!
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.