Q1 2024 Kinder Morgan Inc Earnings Call
Operator: Welcome to the quarterly earnings conference call. At this time, all participants are in a listen-only mode. During the Q&A session, if you'd like to ask a question, you may press star 1 on your phone. Today's call is being recorded. If you have any objections, please disconnect at this time. I'll now turn the call over to Richard Kinder, Executive Chairman of Kinder Morgan. Thank you. You may begin.
Welcome to the quarterly earnings conference call at this time, all participants are in a listen only mode. During the Q&A session. If you'd like to ask a question press star one on your phone today's call is being recorded if you have any objections. Please disconnect. At this time I will now turn the call over to rich Kinder executive Chairman of Kinder Morgan. Thank you you may begin thank you Ted as always.
Richard D. Kinder: Before we begin I'd like to remind you that Cam is earnings release today and this call include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and of course, the Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures before making any.
Richard D. Kinder: Today and this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and, of course, the Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosure on forward-looking statements and the use of non-GAAP financial measures set forth at the end of our earnings release, as well as to review our latest filings with the SEC for important material assumptions, expectations, and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements.
Richard D. Kinder: Investment decisions, we strongly encourage you to read our full disclosure on forward looking statements and use of non-GAAP financial measures set forth at the end of our earnings release as well as review our latest filings with the SEC for important material assumptions expectations and risk factors that may cause actual results to differ.
Richard D. Kinder: Materially from those anticipated and described in such forward looking statements before turning the call over to Kevin and the team who will report a good quarter came up let me comment on another broader issue in past quarters Ive talked a lot about the demand for natural gas, resulting from this country's LNG export facilities.
Richard D. Kinder: Before turning the call over to Kim and the team who have reported a good quarter at KMI, let me comment on another broader issue. In previous quarters, I've talked a lot about the demand for natural gas resulting from this country's LNG export facilities. Today, I want to speak briefly about what I and others in the industry now see as another source of increased demand for our commodity, the tremendous expected growth in the need for electric power.
Richard D. Kinder: Today, I want to speak briefly about what I and others in the industry now see as another source of increased demand for our commodity the tremendous expected growth and the need for electric power. This.
Richard D. Kinder: This growth is being driven by a number of factors, most prominently by the increasing demand for new and expanding data centers, especially those required to support AI. One recent survey showed a projected increase in electric demand to power data centers of 13 to 15 percent compounded annually through 2030. Put another way, data centers used about 2.5 percent of U.S. electricity in 2022 and are projected to use about 20 percent by 2030.
Richard D. Kinder: This growth is being driven by a number of factors most prominently by the increasing demand of new and expanding data centers, especially those required to support AI. One recent survey showed a projected increase in electric demand to power data centers of 13% to 15%.
Richard D. Kinder: Compounded annually through 2030 put another way data centers used about 2.5% of U S. Electricity in 2022 and are projected to use about 20% by 2038.
Richard D. Kinder: AI demand alone is projected to be about 15% of demand in 2030. If just 40% of that AI demand is served by natural gas, that would result in incremental demand of 7 to 10 BCF a day. Utilities throughout America are sounding the alarm. For example, one Southeast utility announced its expectation that its winter demand would increase by 37% by 2031.
Richard D. Kinder: AI demand alone is projected at about 15% of demand in 2030, if just 40% of that AI demand is served by natural gas that would result in incremental demand of seven to 10 Bcf a day.
Richard D. Kinder: Utilities throughout America, our salary alarm, one south east utility analysis expectation that it's winter demand would increase by 37% by 2031 P. J M. It or it could actually which operates the wholesale power market across part of the Midwest and the northeast has doubled its 15 year annually.
Richard D. Kinder: PJM Interconnection, which operates the wholesale power market across part of the Midwest and the Northeast, has doubled its 15-year annual forecast for demand growth and estimates that demand in the region by 2029 will increase by about 10 gigawatts. Now, to put that in perspective, 10 gigawatts is about twice the power demand of New York City on a typical day. The overriding question is how to handle this increased demand. To answer that question, it's important to understand the nature of the increased demand. It's become increasingly obvious that reliability and affordability are the key factors.
Richard D. Kinder: <unk> forecast for demand growth and estimates that demand in the region by 2029 will increase by about 10 Gigawatts now to put that in perspective 10, Gigawatts is about twice the power demand of New York City on a typical day.
Richard D. Kinder: The overriding question is how to handle this increased demand.
Richard D. Kinder: The answer to that question, it's important to understand the nature of the increased demand it's become increasingly obvious that reliability and affordability are the key factors the power needed for AI and the massive data centers being built today and planning for the near future require affordable.
Richard D. Kinder: The power needed for AI and the massive data centers being built today and planned for the near future require affordable electricity that is available without interruption, 24 hours a day, 365 days a year. This type of need demonstrates that the emphasis on renewables as the only source of power is fatally flawed in terms of meeting the real demands of the market. This is not a knock on renewable energy.
Richard D. Kinder: Electricity that is available without interruption 24 hours a day 365 days a year. This type of need demonstrates that the emphasis on renewables as the only source of power is fatally flawed in terms of meeting the real demands of the market.
Richard D. Kinder: This is not a knock on renewables, we all know they will play a significant role in the future of electric generation, but it's a reminder, all of us at natural gas and nuclear still have an extremely important role to play in order to provide the uninterrupted power that AI and the data centers, we will need the primary.
Richard D. Kinder: We all know they will play a significant role in the future of electric generation. But it's a reminder to all of us that natural gas and nuclear still have an extremely important role to play in order to provide the uninterrupted power that AI and data centers will need. The primary user of these data centers is big tech, and I believe they're beginning to recognize the role that natural gas and nuclear energy must play.
Richard D. Kinder: Use of these data centers is big Tech and I believe they are beginning to recognize the role that natural gas and nuclear must play they like the rest of us realized that the wind doesn't blow all the time the Sun doesn't shine all the time that the use of batteries to overcome the shortfall is not practically are economically feasible.
Richard D. Kinder: They, like the rest of us, realize that the wind doesn't blow all the time, the sun doesn't shine all the time, that the use of batteries to overcome the shortfall is not practically or economically feasible, and, finally, that, unfortunately, adding significant amounts of new nuclear power to the mix is not going to happen in the foreseeable future. In addition to all these factors, the market is now understanding that building transmission lines to connect distant renewables to the grid typically takes years to complete, and that's a time frame inconsistent with the need to place these data centers into service as quickly as possible.
Richard D. Kinder: Finally that unfortunately, adding significant amounts of new nuclear power to the mix is not going to happen in the foreseeable future.
Richard D. Kinder: Addition to all of these factors the market is now understanding that building transmission lines to connect district renewables to the grid typically takes years to complete and Thats, a time frame and consistent with the need to place. These data centers and to service as quickly as possible. All of this means that natural gas must play.
Richard D. Kinder: All this means that natural gas must play an important role in power generation for years to come. I think acceptance of this hypothesis will become even clearer as power demand increases over the coming months and years, and it will be one more significant driver of growth in the demand for natural gas that will benefit all of us in the midstream sector. And with that, I'll turn it over to Kim.
Richard D. Kinder: An important role in power generation for years to come I think acceptance of this hypothesis will become even clearer as power demand increases over the coming months and years and it will be one more significant driver of growth in the demand for natural gas that will benefit all of us in the midstream sector and with that I'll turn it over.
Kimberly Allen Dang: Okay, thank you. I'm going to make a few general points, and then I'll turn it over to Tom and David to give you all the details. We had a great quarter. Adjusted EPS increased by 13%. EBITDA was up 7%, and that was driven by strong performance in natural gas and our refined products businesses. You know, this type of growth is tremendous for a stable fee-based set of midstream assets as large as ours. The balance sheet remains strong. We ended the quarter at 4.1 times debt to EBITDA.
Speaker Change: Okay. Okay. Thanks.
Speaker Change: I'm going to make a few overall points and then I'll turn it over to Tom and David can give you all the details.
Speaker Change: We had a great quarter adjusted EPS increased by 13% EBIT guide was up 7%.
Speaker Change: And that was driven by strong performance and natural gas and our refined products businesses.
Speaker Change: This type of graph is tremendous for our stable fee based set of midstream assets as large as ours.
Speaker Change: Balance sheet remains strong we ended the quarter at four one times debt to EBITDA and we continue to return significant value to shareholders today, Our board approved an increase in the dividend of <unk> <unk> per share.
Kimberly Allen Dang: And we continue to return significant value to shareholders. Today, our board approved an increase in the dividend of 2 cents per share. This is the seventh year in a row that we've increased the dividend. Our financial outlook of 14% growth and adjusted EPS for the year, as well as the other budget guidance we provided in January, is unchanged. We've seen much lower gas prices than we anticipated this year, but the long-term fundamentals in natural gas remain very strong.
Speaker Change: Year in a row that we've increased the dividend.
Our financial outlook of 14% growth in adjusted EPS for the year as well as the other budget guidance. We provided in January is unchanged.
Speaker Change: We've seen much lower gas prices than we anticipated this year, but the longer term fundamentals of natural gas remained very strong gas demand is expected to grow significantly between now and 2030 with a more than doubling of LNG exports as well as a 50% increase in exports to Mexico.
Kimberly Allen Dang: Gas demand is expected to grow significantly between now and 2030, with a more than doubling of LNG exports, as well as a 50% increase in exports to Mexico. And that doesn't include the anticipated substantial increase in gas demand from power associated with AI and data centers that Rich just mentioned. You know, estimates we've seen range anywhere from 3 BCF to over 10 BCF, and we've seen some estimates as high as 16 BCF.
Speaker Change: And that doesn't include the anticipated substantial increase in gas demand from power associated with AI and data center that rich just mentioned Alaska months, we've seen range anywhere from three Bcf to over 10 Bcf and we've seen some estimates as high as 16 Bcf.
Kimberly Allen Dang: With respect to the LNG pause, we do not think it impacts our planned projects or the growth in the LNG market between now and 2030, although it could impact the mix of projects. We think the LNG pause is an unwise decision and bad policy.
Speaker Change: With respect to the LNG pause, we did not think it impacts our planned projects or the growth in the LNG market between now and 'twenty 30, although it could impact the mix of projects, but we think that is in and what we think the LNG pauses and unwise decision and bad policy.
Kimberly Allen Dang: Our petroleum products business continues to produce very stable cash flows. Volumes are steady, and much of the business has tariff or contract escalators. It will produce nice cash flow for years to come. It's also a capital efficient business and has some nice growth opportunities around the edges in product blending, renewable diesel, and other sustainable fuels. Our backlog of projects increased by about $300 million during the quarter due to new natural gas projects added.
Speaker Change: Our petroleum products business continues to produce very stable cash flow.
Speaker Change: Volumes are steady and much of the business has tariff for contract escalators. It will produce nice cash flow for years to come it's all fairly capital efficient business and have some nice growth opportunities around the edges and product blending renewable diesel and other sustainable fuels.
Our backlog of projects increased by about $300 million during the quarter due to new natural gas projects added to backlog in the mall.
Kimberly Allen Dang: The multiple on the backlog remains less than five times, and I also think that we've got significant opportunity to add to the backlog within the next year. In our ETB business, we secured pore space in the Houston Ship Channel for CO2 sequestration, with capacity to store more than 300 million tons. Significant distance between the emitting source and the sequestration site often challenges CCS economics, and we've secured a very strategically located site.
Speaker Change: The multiple on the backlog remains less than five times and I also think that we've got significant opportunity to add to the backlog within the next year.
Speaker Change: And our ATV business, we secured pore space in the Houston ship channel for Seo to sequestration with capacity to store more than 300 million times.
Speaker Change: Significant discount between the emitting source and the sequestration site often challenges CCF economics.
Speaker Change: And we've secured a very strategically located site. So we had a nice quarter in terms of growth. We continue to expect nice growth for the year. We've got a sound balance sheet, we returned significant value to our shareholders and we have nice opportunities to invest in the longer term with that I will.
Kimberly Allen Dang: So we had a nice quarter in terms of growth. We continue to expect nice growth for the year. We've got a sound balance sheet. We've returned significant value to our shareholders, and we have nice opportunities to invest in the longer term. With that, I'll turn it over to Tom to give you details on the business performance for the quarter.
Speaker Change: Ill turn it over to Tom to give you details on the business performance for the quarter.
Thomas A. Martin: Thanks, Kim. Starting with the natural gas business unit, transport volumes increased by 2% for the quarter versus the first quarter of 2023, driven primarily by increased flows eastbound on Iraq's interstate pipelines into the mid-continent region. The Permian Highway Expansion Project being placed into service, an increase in flows into our LNG customers in Texas, partially offset by decreased volumes delivered to local distribution companies on the East Coast as we had a warmer winter this quarter compared to the first quarter of 2023.
Tom: Thanks Kim.
Tom: Starting with our natural gas business unit transport volumes increased by 2% for the quarter versus the first quarter of 2023, driven primarily by increased flows eastbound on our Rockies Interstate pipelines into the mid continent region.
Tom: Permian Highway expansion project being placed into service.
Tom: Increased flows into our to our LNG customers in Texas.
Tom: The offset by decreased volumes delivered to local distribution companies on the east coast as we had a warmer winter this quarter compared to the first quarter of 2023.
Thomas A. Martin: Our natural gas gathering volumes were up 17% for the quarter compared to the first quarter of 2023, driven by the Haynesville and Edelford volumes, which were up 35% and 12%, respectively. Given the low price environment, we are now expecting gathering volumes to average 5% below our 2024 plan but still 7% over 2023, adjusting for asset sales in both cases, which delayed about 10% of our 2024 budgeted GNP CapEx spend. Until supply growth returns, and we view this slight pullback in gathering volumes as temporary, given higher production volumes will be necessary to meet the demand growth from LNG expected in early 2025.
Tom: Our natural gas gathering volumes were up 17% for the quarter compared to the first quarter of 2023, driven by the Haynesville and Eagle Ford volumes, which were up 35% and 12% respectively.
Given the low price environment, we are now expecting gathering volumes to average 5% below our 2024 plan, but still 7% over 2023 adjusting for asset sales in both cases.
Tom: With delayed about 10% of our 2024 budgeted GNP capex.
Tom: Until supply growth growth returns and we view this slight pullback in gathering volumes as temporary given higher production volumes will be necessary to meet the demand growth from LNG expected in early 2025.
Thomas A. Martin: A quick update on our newly acquired South Texas Midstream assets and our Texas Intrastate market. The integration of the assets and personnel is going well. We are progressing some of the upside opportunities that we assumed in the acquisition sooner than expected. We feel very good about the long-term earnings expectation and valuation multiple for the acquisition. Our experience in other acquisitions has been that we tend to achieve more value over time than we originally expected from acquiring assets that are highly integrated with our existing network. We are already seeing evidence of that with these assets.
Tom: A quick update on our newly acquired South, Texas Midstream assets, and our Texas intrastate market.
Tom: The integration of the assets and personnel is going well, we're progressing some of the upside opportunities that we assumed in the acquisition sooner than expected.
Tom: We feel very good about the long term earnings expectation and valuation multiple for the acquisition.
Tom: Our experience in other acquisitions has been that we tend to achieve more value over time than we originally expected from acquiring assets that are highly integrated with our existing network. We are already seeing evidence of that with these assets.
Thomas A. Martin: In our products pipeline segment, we find product and crude and condensate volumes were down 1% for the quarter versus 2023. Gasoline volumes were down 3%, partially offset by an increase in diesel and jet fuel, 2% and 1% increases, respectively. RD volumes flowing through our assets in California continue to grow. We average 37,000 barrels a day for the quarter, and we're exploring opportunities to expand our RD capabilities in the Pacific Northwest. In our terminal segment, our liquids lease capacity remains high at 95 and 94 percent.
And our products pipelines segment refined products and crude and condensate volumes were down 1% for the quarter versus 2023.
Gasoline volumes were down 3%, partially offset by an increase in diesel and jet fuel, 2% and 1% increases respectively.
Tom: Are the volumes flowing through our assets in California continued to grow we averaged 37000 barrels a day for the quarter and we're exploring opportunities to expand our R&D capabilities in the Pacific Northwest.
Tom: Our terminal segment.
Tom: Sure.
Tom: Our liquids lease capacity remains high at 95 or 94%.
Thomas A. Martin: Utilization at our key hubs at the Houston Ship Channel and New York Harbor remains very strong, primarily due to favorable blend margins. Our GenZak tankers are 100% leased through 2024 and 92% leased through 2025, assuming likely options of exercise. The CO2 business segment experienced 4% lower oil production volumes, 9% higher NGL volumes, and 7% lower CO2 volumes in the quarter versus the first quarter of 2023. With that, I'll turn it over to David Michels. Okay, thank you, Tom.
Tom: Elevation at our key hubs of the Houston ship Channel and the New York Harbor remained very strong primarily due to favorable blend margins.
Tom: Our Jones Act tankers are 100% leased through 2024, and 92% leased through 2025, assuming likely options are exercised.
Tom: The <unk> business segment experienced 4% lower oil production volumes.
Tom: 9% higher NGL volumes, and 7% lower cotwo volumes in the quarter versus the first quarter of 2023.
David Patrick Michels: With that I'll turn it over to David Michael's Okay. Thank you Tom.
David Patrick Michels: So for the first quarter of 2024, we're declaring a dividend of 28.75 cents per share, which is $1.15 per share annualized, up 2% from 2023. For the quarter, we generated revenues of $3.85 billion, which was down $38 million from Q1 of 2023. Our cost of sales was down $108 million.
David Patrick Michels: For the first quarter of 2024, we're declaring a dividend of $28 75 per share, which is $1 15 per share annualized up 2% from 2023.
David Patrick Michels: For the quarter, we generated revenues of $3 $85 billion, which was down $38 million from Q1 of 2023, our cost of sales was down $108 million. So our gov. Our gross margin increased 3%, which explains most of the 2% growth in our operating income.
David Patrick Michels: So our gross margin increased 3%, which explains most of the 2% growth in our operating income. Equity from earnings, excuse me, earnings from equity investments, was up $78 million, but $65 million of that was due to a non-cash impairment we took in the first quarter of last year. We saw year-over-year growth from our natural gas products and terminal businesses. The main drivers of that growth came from project contributions, growth project contributions placed in service across each of those business units, as well as from additional contributions from our acquired South Texas midstream assets.
David Patrick Michels: Equity from earnings excuse me earnings from equity investments is up $78 million at $65 million of that was due to a noncash impairment. We took in the first quarter of last year.
David Patrick Michels: We saw year over year growth from our natural gas products and terminals businesses. The main drivers of that growth.
David Patrick Michels: Came from project contributions growth project contributions placed in service.
David Patrick Michels: Across each of those business units as well as.
David Patrick Michels: Additional contributions from our acquired South, Texas Midstream assets.
David Patrick Michels: We also had higher margins on our natural gas storage assets and higher volumes on our natural gas gathering system. However, interest expense was up due to a higher short-term debt balance due in part to the South Texas acquisitions.
David Patrick Michels: We also had higher margins on our natural gas storage assets and higher volumes on our natural gas gathering systems.
Interest expense was up due to the higher short term debt balance due in part to the South Texas acquisition.
David Patrick Michels: And we generated net income attributable to KMI of $746 million and EPS of $0.33, both up 10% from Q1 of last year. On an adjusted net income basis, which excludes certain items, we generated $758 million, up 12% from Q1 of last year. And we generated adjusted EPS of $0.34, up 13% from last year. So, nice growth, as Kim mentioned.
David Patrick Michels: We generated net income attributable to <unk> of $746 million and EPS of <unk> 33.
David Patrick Michels: Both up 10% from Q1 of last year on an adjusted net income basis, which excludes certain items, we generated $758 million up 12% from Q1 of last year and we generated adjusted EPS of <unk> 34 up 13% from last year, So nice growth as Kim mentioned.
David Patrick Michels: Our average share count reduced by 27 million shares, or 1%, due to our share repurchase efforts. And our DCF per share was $0.64, up 5% from last year. Our first quarter DCF was impacted by higher cash taxes and sustaining CapEx, but that is due to the timing of our cash tax payments and maintenance projects. We expect cash taxes to be favorable for the full year, and sustaining capital to be in line with our budget for the full year.
Our average share count reduced by 27 million shares or 1% due to our share our share repurchase efforts.
David Patrick Michels: And our DCF per share was <unk> 64 up 5% from last year.
David Patrick Michels: Our first quarter DCF was impacted by higher cash taxes, and sustaining capex, but that is due to timing of our cash tax payments and maintenance projects, we expect cash taxes to be favorable for the full year and sustaining capital to be in line with our budget for the full year.
David Patrick Michels: On our balance sheet, we ended the first quarter with $31.9 billion of net debt, which increased to $94 million from the beginning of the year. And here is a high-level reconciliation of that increase. We generated $1.189 billion of cash flow from operations, and we paid $630 million in dividends. And we spent about $620 million in total capital, including growth, sustaining, and contributions to our joint venture. Finally, as you can see in our press release, we are adjusting our long-term leverage target from around 4.5 times to a range of 3.5 to 4.5 times.
David Patrick Michels: On our balance sheet, we ended the first quarter with $31 9 billion of net debt, which increased $94 million from the beginning of the year.
David Patrick Michels: And here is the highest high level reconciliation of that increase we generated $1. One 9 billion of cash flow from operations, we paid $630 million in dividends.
We spent about $620 million.
David Patrick Michels: Total capital, including growth sustaining and contributions to our joint ventures.
David Patrick Michels: Finally, as you can see in our press release, we are adjusting our long term leverage target from around four five times to a range of three five to four five times.
David Patrick Michels: We've been operating near the midpoint of that range for several years, and we believe this range is the appropriate long-term guidance for a company like ours that has significant scale and a high-quality business mix that produces stable cash flows backed by multi-year contracts. And now, with that, back to Kim.
David Patrick Michels: We've been operating near the midpoint of that range for several years and we believe this range is the appropriate long term guidance for a company like ours that has significant scale and a high quality business mix, which produces stable cash flows backed by multi year contracts.
Speaker Change: And now with that take care.
Kimberly Allen Dang: Okay, Ted, if you would open it up for Q&A, and we'll take the first question.
Paul: Thanks, Paul.
Speaker Change: If you would open it up for Q&A and we will take the first question.
Operator: Yes, the phone lines are now open for questions. If you would like to ask a question over the phone, please press star 1 and record your name. To withdraw your question, press star 2. The first question is from John Mackay with Goldman Sachs. Your line is open. Hey, good afternoon, everyone.
Speaker Change: Yes. The lines are now open for questions. If you would like to ask a question over the phone. Please press star one and record your name to withdraw your question Press Star two.
Speaker Change: First question is from John Mackay with Goldman Sachs. Your line is open.
Hey, good afternoon, everyone. Thank you for the time.
John Ross Mackay: Maybe it will start on the leverage target I know, it's been a focus for a while would love just to hear a little bit more on the decision process to bring it down and then if.
John Ross Mackay: Hey, good afternoon, everyone. Thank you for your time.
John Ross Mackay: Maybe we'll start on the leverage target because I know it's been a focus for a while. We'd love just to hear a little bit more on the decision process to bring it down. And then, you know, if we're looking forward relative to how you guys have been operating over the last few years, what are the kind of practical outputs you could say or decisions you'll make internally with this new target? Thanks.
John Ross Mackay: We're looking forward relative to how you guys have been operating last few years.
What are the kind of practical outputs.
John Ross Mackay: You could say our decisions you'll make internally with this new target.
John Ross Mackay: Sure.
John Ross Mackay: So.
John Ross Mackay: We started assessing this win or.
John Ross Mackay: Our actual operating leverage started gravitating further away from the target leverage of four five times. The budget for 2024 has had three nine times. So that's when we started assessing at the timing of the change doesn't really have any there's no magic to why we are changing it now except for that that slight difference in <unk>.
David Patrick Michels: We started assessing this when our actual operating leverage started gravitating further away from the target leverage of four and a half times. The budget for 2024 has us at 3.9 times, so that's when we started assessing it. The timing of the change doesn't really have any magic to it, except for that slight difference in gravitating away from the four and a half. The practical implications of this change are that we're not changing the way that we operate our company.
John Ross Mackay: Gravitating away from the four five.
John Ross Mackay: The practical implications of this change are really we're not changing the way that we operate our company. We've always kind of had the leverage target of four and a half but viewed.
John Ross Mackay: Having some cushion below that four five is valuable we think that this three five to four and a half is.
John Ross Mackay: More reflective of where we've been operating and how we'll continue to operate the company going forward.
Speaker Change: Well I would just reiterate what David said is bringing our policy and.
David Patrick Michels: We've always kind of had a leverage target of four and a half, but we viewed having some cushion below that four and a half as valuable. We think that this three and a half to four and a half is more reflective of where we've been operating and how we'll continue to operate the company going forward.
Speaker Change: In line with delay that we run the business.
Speaker Change: So there is no change.
Speaker Change: Our overall capital allocation philosophy.
Speaker Change: All right appreciate that and maybe shifting gears, obviously started on the big demand ramp we're hoping to see on the power Gen side talked through the you guys talked to the macro really well maybe what I wanted to ask on is just tying that to the micro side. You know if we're looking at Kinder over the next couple of years, where do you see that.
David Patrick Michels: So I would just reiterate what David said, you know, it's just bringing our policy, you know, in line with the way that we run the business. And so, you know, there is no change to our overall capital allocation philosophy.
Kimberly Allen Dang: All right, appreciate that. And maybe, shifting gears, you obviously started on the big demand ramp we're hoping to see on the power generation side, talked through the macro really well. Maybe what I wanted to ask is just tying that to the micro side, you know, if we're looking at Kinder over the next couple of years, where do you see the biggest opportunities for you guys specifically?
Speaker Change: Opportunities for you guys specifically.
Speaker Change: Well I think it's pretty early and all of that and so I think rich laid out really well sort of what we expect to happen in that market, but if you look right now I think we saw a roughly 20%.
Speaker Change: The power market in the U S.
Speaker Change: So I think we would and thats of the overall power market depth.
Kimberly Allen Dang: Well, I think it's pretty early in all of this, and so I think, you know, Rich laid out really well sort of what we expect to happen in that market, but you know, if you look right now, I think we serve roughly 20% of the power market in the U.S., and so I think we would, and that's the overall power market, this will have, you know, this will primarily be focused on gas because of what I think nuclear energy just, you know, will take too long to develop, given when we expect this demand to happen.
Speaker Change: Therefore.
Speaker Change: This will primarily be focused we think on gas.
Because of what rich said with respect to you know you need consistent power.
Speaker Change: Or it could have some renewable aspect with gas backup I think nuclear just will take a while.
Speaker Change: Take too long to develop give them, we expect us this demand to happen. So we moved 40% of the gas in the U S and so we would expect to realize.
Speaker Change: <unk> portion.
Speaker Change: Of this opportunity but.
Putting an exact number on that right now is very difficult because we still don't even know exactly how much that the demand is going to be as you can see from the range numbers that we discussed here earlier.
Kimberly Allen Dang: So, you know, we move 40% of the gas in the U.S., and so we would expect to realize, you know, a significant portion of this opportunity, but, you know, putting an exact number on that right now is very difficult because, you know, we still don't even know exactly how much the demand's going to be, as you can see from the range of numbers that we discussed here earlier. VICE CHAIRMAN FISC If you just look at overall demand, we've been talking about for months and years calibrating the demand for LNG export and how much that adds.
Speaker Change: Just look at overall demand we've been talking about for <unk>.
Speaker Change: A months or years.
Speaker Change: Calibrating the demand for LNG export and how.
Speaker Change: How much that adds this as another leg to the stool really and whether it's five Bcf a day or 10 Bcf a day, we don't know.
Speaker Change: But it's clearly going to be another leg to the stool in terms of natural gas demand and I think it will tend to be located near reliable electric generation because.
Kimberly Allen Dang: This is another leg to the stool, really, and whether it's 5 bcf a day or 10 bcf a day, we don't know, but it's clearly going to be another leg to the stool in terms of natural gas demand, and I think it will tend to be located near reliable electric generation, because if you're Microsoft.
Speaker Change: If you or Microsoft or Google you want that power as close to Europe facility as possible.
Speaker Change: Yes, I guess one other additional point there just if you look at the scale of our network across the country.
Speaker Change: Natural gas I think that gives us.
Speaker Change: <unk> opportunity to serve this market wherever it develops and I think our reach is unparalleled in the sector.
Kimberly Allen Dang: Yeah, I guess one other additional point there: just if you look at the scale of our network across the country, for natural gas, I think that gives us a great opportunity to serve this market wherever it develops. And I think our reach is unparalleled in the sector.
Speaker Change: Alright, I appreciate all that thank you very much.
Speaker Change: Next question in the queue is from Michael Blum with Wells Fargo. Your line is open.
Michael Jacob Blum: Thanks, Good afternoon everybody.
Michael Jacob Blum: I wanted to ask about.
Michael Jacob Blum: The Permian and West Texas.
John Ross Mackay: All right. I appreciate all that. Thank you very much.
Obviously, while how prices have been negative and I'm wondering if you can just remind us.
Michael Jacob Blum: The next question in the queue is from Michael Blum with Wells Fargo. Your line is open.
Michael Jacob Blum: Thanks. Good afternoon, everybody.
Michael Jacob Blum: There is a benefit there to use any negative impacts.
Michael Jacob Blum: I wanted to ask about the Permian, West Texas. Obviously, WAHA prices have been negative of late, and I'm wondering if you can just remind us if there's a benefit there to you. Is there any negative impact? Just overall, how those low WAHA prices are impacting you.
Michael Jacob Blum: Overall, how those in a little while prices are impacting you.
Speaker Change: Okay stable, yes, so just firstly first.
Speaker Change: The price the price macro here at this point in time when micro.
Speaker Change: Purely a result of that this warm winter that we had I wouldn't normally be it this way im not trying to predict pricing that being said on the intrastate markets. We do share in some of that upside with some of our proprietary storage that we hold.
Unknown Executive: Okay, stable.
Unknown Executive: Yeah, so just first, you know, the price macro here at this point in time, or micro, is purely a result of that warm winter that we had. It wouldn't normally be this way. I'm not trying to predict prices. That being said, you know, on the intrastate markets, we do share in some of that upside with some of our proprietary storage that we hold. And so that's where we see some of the benefit.
And so that's where we see some of the benefit.
It's obviously.
Speaker Change: Longer term, we've been saying this for some time.
Speaker Change: We see a need for another pipe.
Speaker Change: Inhibiting the Bud while I'm talking to you we don't have anything to announce today, but we continue to try and work.
Speaker Change: Im trying to commercialize and other pipe still having discussions with customers along those fronts, but nothing to report this morning.
Unknown Executive: You know, it's obviously, you know, longer term, you know, we've been saying this for some time, there's, you know, we see a need for another pipe, and I'll just nip it in the bud. While I'm talking to you, we don't have anything to announce today, but we continue to try and work on trying to commercialize another pipe, still having discussions with customers along those lines, but we have nothing to report this morning or this afternoon. Oh my!
Speaker Change: Afternoon.
We've got a little bit of capacity on <unk>, we have hedged a lot of that part of this year, but theres a little bit open.
Speaker Change: But as you go out in time more of that capacity is up and so we participate I'd say around the margin.
When those spreads blowout.
So that delivers a little bit of benefit to our shareholders.
Unknown Executive: We've got a little bit of capacity on PHP and GCX. We've hedged a lot of that for this year, but there's a little bit open. But as you go out in time, you know, more of that capacity is open. So we participate, I'd say, around the margin when those spreads blow out. So that, you know, delivers a little bit of benefit to our shareholders.
Speaker Change: Great and then maybe if I can just push on that so you said youre still working on a project and nothing to announce.
Speaker Change: Is that more likely to be something like Permian pass or do you think something more like Cts extension could happen or both.
Speaker Change: We continue to try commercialize those.
Unknown Executive: Great. And then, you know, maybe I can just push on that. So you said you're still working on a project, but I have nothing to announce.
Speaker Change: As I said the last time highly competitive.
Speaker Change: We think theres a need it's just it's a matter of making sure we have the contract to support the investment.
Speaker Change: Great. Thank you.
Unknown Executive: Is that more likely to be something like Permian Pass? Or do you think something more like TCS expansion could happen, or both? Well, look, we're, you know, we continue to try commercial.
And the next question the queue is from Jeremy Tonet with Jpmorgan. Your line is open.
Jeremy Bryan Tonet: Hi, good afternoon.
Jeremy Bryan Tonet: Hello, Jeremy.
Jeremy Bryan Tonet: Just wanted to come back to the gathering volumes as you laid out it seems to come in a bit below budget and I was wondering if you could dive in a little bit more by basin.
Unknown Executive: Well, look, we're, you know, we continue to try and commercialize both. As I said the last time, highly competitive. We think there's a need; it's just a matter of making sure we have the contracts to support the investors.
Jeremy Bryan Tonet: Where you see those volumes coming in softer than budget.
Jeremy Bryan Tonet: And the next question in the queue is from Jeremy Tonet of J.P. Morgan. Your line is open.
Jeremy Bryan Tonet: From a budget perspective, yes, it's.
Jeremy Bryan Tonet: It's slightly below budget.
Jeremy Bryan Tonet: I just want to come back to the gathering volumes you laid out. It seems to be coming in a bit below budget there. I was wondering if you could dive in a little bit more by basin where you see those volumes coming in softer than budget.
Eagle Ford.
Jeremy Bryan Tonet: <unk>.
The Bakken.
Jeremy Bryan Tonet: Well and even a little bit on the Haynesville.
Jeremy Bryan Tonet: Overall, but.
Still good growth year over year.
Jeremy Bryan Tonet: And like I said earlier I think this is.
Jeremy Bryan Tonet: A temporary.
Jeremy Bryan Tonet: Blip development.
Unknown Executive: From a budget perspective, yeah, it's slightly below budget in the Eagleford and the Bakken. Those are, and even a little bit in the Haynesville overall, but still good growth, you know, year over year.
Jeremy Bryan Tonet: Development of production because as demand picks up next year, we'll certainly going to need all of these volumes on more.
Jeremy Bryan Tonet: To meet to meet that demand.
Speaker Change: Got it that's helpful. There and I was just curious I guess from a higher level thought process. We have seen some large cap peers out there look to kind of separate the business along commodity lines, such as natural gas versus crude oil and just wondering how kinder thinks about the business today being the natural gas pipes versus the terms.
Unknown Executive: And, like I said earlier, I think this is a temporary blip in the development of production because as demand picks up next year, we're certainly going to need all these volumes and more to meet that demand.
Unknown Executive: Got it, that's helpful there. And I was just curious, I guess, from a higher level thought process, we've seen some large cap peers out there look to kind of separate the business along commodity lines, such as natural gas versus crude oil. And just wondering how Kinder thinks about the business today, be it the natural gas pipes versus the terminals versus the CO2, if you still see the same synergies of having it all under the same roof, or what you think about that in the current environment. Sure.
Speaker Change: That's versus the C. O. Two if you still see the same synergies of having it all under the same roof for how you think about that in the current environment.
Speaker Change: Sure I mean, all of the businesses that we own and operate.
Speaker Change: We we like we think they provide stable cash flow and good opportunities.
Speaker Change: I think that it really we could simplify it a little bit for you I mean, if you put products and terminals together since they're both primarily.
Unknown Executive: Sure. I mean, all the businesses that we own and operate, we like them; we think they provide stable cash flow and good opportunities. You know, I think that we could simplify it a little bit for you. I mean, if you put products and terminals together, since they're both primarily refined products, you know, we would have essentially three different commodity lines. We'd have natural gas, we'd have petroleum products, and we'd have CO2.
Speaker Change: <unk> products.
Speaker Change: <unk> essentially three different commodity lines, we'd have natural gas, we would have petroleum products and we'd have to see how the two I think on Seo to that oil production is going to be needed for a long time, there's going to be incremental opportunities for cotwo flooding in the Permian.
Speaker Change: As you know as you get through all of the primary production.
Speaker Change: And I think that business gives us the expertise that we need to exploit the Ccs desktops and so the reservoir engineers that we used in that business help us as we go out and talk to customers and talk to them about Sequestrating R gap and being able to keep it in certain reservoirs and so.
Unknown Executive: I think CO2, you know, that oil production is going to be needed for a long time. There's going to be incremental opportunities for CO2 flooding in the Permian as, you know, as you get through all the primary production. And I think, you know, that business gives us the expertise that we need to exploit the CCS system. And so, you know, the reservoir engineers that we use in that business help us as we go out and talk to customers and talk to them about sequestering their gas and being able to keep it in certain reservoirs.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: The businesses, we own and operate we think are similar.
Speaker Change: And that they are stable fee based assets that are core to the energy infrastructure.
Speaker Change: And and we will continue to operate them asset you know.
Speaker Change: <unk> coming in and offering to buy them at a great price in which case, we are a highly economic and we would.
Unknown Executive: And so, you know, the businesses we own and operate are similar in that they're stable, fee-based assets that are core to the energy infrastructure. And we will continue to operate them, absent, you know, somebody coming in and offering to buy them at a great price, in which case we are highly economical, and we would entertain that. But I think, absent getting a wonderful price for our shareholders, we are happy with the businesses that we own.
Speaker Change: We would entertain that but I think.
Speaker Change: Absent getting a a wonderful price for our shareholders. We are happy with the businesses that we own.
Speaker Change: Got it understood. Thank you.
Speaker Change: Yes.
Speaker Change: Next question is from Neal Dingmann with <unk> Securities. Your line is open.
Speaker Change: Okay.
Neal David Dingmann: Hey, Neal.
Speaker Change: I guess no Neil.
Speaker Change: Neil if you there please check your mute button.
Neal David Dingmann: Sorry about that good afternoon.
Neal David Dingmann: My question is on shareholder return given the new plan for I guess not modified plan I'd say for the leverage well that change anything with his thoughts towards dividends and buybacks on a go forward.
Unknown Executive: Got it. Understandable. Thank you. The next question is from Neal.
Neal David Dingmann: The next question is from Neal Dingmann with Truist Securities. Your line is open.
Speaker Change: No it does.
Let me say this again so that it is.
Neal David Dingmann: Hey Neal! I guess not Neal. Neal, if you're there, please check your mute button.
Speaker Change: It is clear to everybody.
Speaker Change: This change is just bringing our policy in line with the way that we have operated over the last couple of years. There is no zero change in our capital allocation philosophy.
Neal David Dingmann: Sorry about that. Good afternoon, Kim. My question is on shareholder return given the new plan for, I guess not a modified plan, I'd say for the leverage. Will that change anything with his thoughts toward dividends and buybacks when I go forward?
Speaker Change: Very clear and then just a quick follow up.
[laughter] I got that one.
Kimberly Allen Dang: No, it has, and let me say this again so that it is clear to everybody, you know; this change is just bringing our policy in line with the way that we have operated.
Speaker Change: Yes midstream assets I'm, just wondering is that kind of going as you had thought maybe just talking about integration and potential even maybe more upside than expected. It seems like it's going quite well.
Kimberly Allen Dang: Very clear. And then just a quick follow-up on the USPF. I think I got that one.
Unknown Executive: Yeah, so yeah, I mean, early days, obviously, but yes, we are seeing some of the commercial and development opportunities that we were contemplating when we made the acquisition come together sooner than we were originally expecting. Some of those were even out several years from now. I think, you know, we may see something even sooner than that this year or next year on some of those opportunities. But yes, on the other side, we are seeing slightly lower volumes this year to start with, again, given the lower price environment. But overall, you know, we feel we're going to be on our acquisition model for 2024.
Texas: Texas, Yes, so yes, I mean early days obviously.
Texas: But yes, we are seeing some of the commercial and development opportunities that we were contemplating.
Made the acquisition, we are seeing those opportunities come together sooner than we originally expecting some of those were out even several years from now.
Texas: We may see something even sooner than that this year or next year on some of those opportunities but.
Texas: But yes the on the other side, we are seeing slightly lower volumes this year to start with.
Texas: Again, given the lower price environment, but overall, we feel we're going to be on our acquisition model for 2024.
Neal David Dingmann: Thank you for the details.
Speaker Change: And thank you for the detail.
Keith T. Stanley: The next question is from Keith Stanley with Wolf Research. Your line is open.
Speaker Change: And the next question is from Keith Stanley with Wolfe Research. Your line is open.
Keith T. Stanley: Hi, good afternoon. Just one question on the backlog. So you increased it by 300 million. I think I think you said you brought on some gas projects, just I'm not sure if other projects came into service, and maybe it's even more than 300 million. Just more color on what projects you added. Was there anything notable about that? And then follow up can
Keith T. Stanley: Hi, Good afternoon, just one question on the backlog. So you increased to 300 million I think I think you said you brought on added some gas projects just I'm not sure. If other projects came into service and maybe it's even more than $300 million just give more color on what projects you added was there anything.
Speaker Change: Well on that.
Speaker Change: And follow up Ken just said.
Unknown Executive: We added, Keith, about $400 million, and we put $100 million of projects in service to get to the $300 million net addition. And on the projects that we added and gas, you know, we added one interstate project on TGP. We added an intrastate lateral project on the Texas intrastate. And we added a pipeline egress project in Altamont, which is on the gathering and processing side.
Ken: We added Keith about $400 million, and we put 100 million of projects and service to get to the 300 million net additions.
Ken: And on the projects that we added and gas.
Ken: We added one enter say.
Ken: Project on T. G. P. We added on Amtrust day lateral project on the Texas Intrastate and we added a.
Ken: Hey.
Ken: Pipeline Egress project and all come off which is on the gathering and processing side.
Keith T. Stanley: Got it. That was all for me. Thank you.
Ken: Okay.
Speaker Change: Got it that was all for me. Thank you.
Theresa Chen: And the next question in the queue is from Theresa Chen with Barclays. Your line is open.
Speaker Change: And the next question on the Hughes from Theresa Chen with Barclays. Your line is open.
Theresa Chen: Good afternoon. Thank you for taking my questions. I'd like to touch on the theme of increased demand for power related to AI and data centers. I was just curious if you had any early discussions with customers as far as the steps it would take to commercialize these activities, these potential projects on your system, and what that could look like.
Theresa Chen: Good afternoon. Thank you for taking my questions and I'd like to touch on the theme of increased demand for our power related to AI and data centers. Just curious have you had any early discussions with customers and as far as the <unk>.
Theresa Chen: Perhaps it would take some nausea lives these activities and indeed, a potential projects on your system and what that could look like.
Theresa Chen: Yes. So this is Steve I'll, just I'll give you a micro example of something we're working on in the southeast.
Unknown Executive: This is Siegel. I'll give you a micro example of something we're working on in the southeast. We've got a data center looking to connect to our system. You know, as Rich alluded to, reliability is very important. Not only are they looking for reliable power supply, but the power provider itself is looking for incremental capacity. And on top of that, the data center is looking for incremental storage to backstop the intermittency of their backup power generator to the effect that it's not available.
Steve: We've got.
Steve: Data center looking to connect to our system as rich alluded to reliability is very important.
Steve: Not only are they are looking for reliable power supply.
Steve: How're provider itself is looking for incremental capacity and.
Steve: And on top of that the datacenter is looking for incremental storage to backstop.
Steve: The intermittency of their backup power generator to the effect that it's not available. So that's an example of something we're looking at in terms of the broader broader themes.
Unknown Executive: So that's an example of something we're looking at in terms of the broader themes. I think they're looking for access to reliable power. They're looking for access to, you know, obviously large populations and land. And then water is important for cooling purposes. So those are kind of some of the themes in our discussions. But specifically, that's a good example of something we're working on in the southeast.
Steve: I think they are looking for access to reliable power.
Steve: They are looking for access to.
Steve: Obviously large populations in land and then water is important for cooling purposes. So those are kind of some of the themes in our discussions.
Specifically, that's a good example of something where we're going on in the southeast.
Steve: Yeah.
Steve: Thank you CFO and Ken Coeur earlier comment about significant opportunities to add it to the backlog within the next year or so is that referring to.
Kimberly Allen Dang: Thank you, Sifu. And Kim, in your earlier comment about significant opportunities to add to the backlog within the next year or so, is that referring to, you know, an egress solution out of the Permian? Is there more to that comment? If you could help us unpack that, that'd be great. Sure, so I think it just...
Steve: And egress solution out of the Permian is there more to that comment you could help us unpack that would be great.
Ken Coeur: Sure. So I think it just.
Kimberly Allen Dang: Sure. So, I think it just refers to a broad set of opportunities that we're looking at. And so, you know, on the supply side, there could be things around Haynesville, which we talked about already on this call, coming out of the Permian. So, it is, you know, supplying to the southeast, it's LNG on the demand side, it's industrial growth on the demand side, it's LNG potentially on the West Coast, it's, you know, market power growth out in the West. It's power growth in Mexico on the West Coast.
Speaker Change: It refers to a broad set of opportunities that we're looking at and so.
Speaker Change: That is on the supply side, there could be things around Haynesville, we talked about already on this call.
Speaker Change: Coming out of the Permian.
Speaker Change: There is opportunities coming out of the Eagle Ford is all these basins are gonna have to ramp up just to get to the 20 Bcf of growth that we've been talking about before you add on top of that.
What are the data center and AI demand growth numbers that we talked about so.
Speaker Change: It is supply into the southeast its LNG on the demand side, it's the industrial growth on the demand side. It is LNG and potentially on the west coast.
Kimberly Allen Dang: You know, we won't get all the things that we're looking at. But, you know, I think that, once you start looking at larger opportunity sets, you know, over time, we're going to add those to the backlog. And so, I think some of these opportunities are going to come to fruition within the next year. And that's really what's behind my comment.
Speaker Change: Market power growth out on in the West.
Yes.
Speaker Change: Power growth in Mexico on.
Speaker Change: On the wealth cost so I mean, there's a whole bunch of.
Speaker Change: Fundamental factors that are driving now and I think what we're seeing is that the opportunity set has grown.
Speaker Change: And so you know.
Speaker Change: But we are to the point of commercialization of the opportunities that we won't get all of the things that we're looking at but you know.
Speaker Change: I think that once you start looking at larger opportunities that over time, we're going to add those to the backlog and so I think some of these opportunities are going to come to fruition within the next year and that's really what's behind my comment.
Dan Lungo: And the next question is from Dan Lungo with Bank of America. Your line is open.
Dan Lungo: Hi guys, thanks for taking my question. I just want to turn back to the library story real quick.
Thank you.
Speaker Change: And the next question is from Dan <unk> with Bank of America. Your line is open.
Dan: Hey, guys. Thanks for taking my question I, just wanted to turn back to the leverage target.
Dan Lungo: I know nothing's changed with capital allocation priorities, but I was just wondering if you could comment on what type of factors would drive it to the higher end of the range and the lower end of the range outside of, obviously, the right acquisition?
Dan: Any change in capital allocation priorities.
Dan: I was just wondering if you can comment what type of factors would drive it to the higher end of the range and the lower end of the range outside of obviously the right acquisition.
Unknown Executive: Yeah, so I mean, here's what I'd say is, you know, if we see an acquisition, or there's, you know, some huge expansion opportunity, that could result in leverage going up for a period of time. But if there are periods of time when there's less opportunity, you know, obviously, we produce tremendous amounts of cash flow. And then, you know, you could create capacity on the balance sheet for a period of time until more opportunities come along. And so that's why the range, it gives us the flexibility to move up and down inside that range, depending on what the environment looks like. Thanks, very clear. And then
Speaker Change: Yeah, So I mean, here's what I'd say is.
Speaker Change: If we see an acquisition or there is continued expansion opportunity that could result in leverage going up for a period of time. If there are periods of time when there is less opportunity. Obviously, we produced tremendous amounts of cash flow and then you could create capacity on the balance sheet.
Speaker Change: For a period of time until more opportunity came along and so that's why the range.
Speaker Change: Gives us the flexibility to move up and down inside that range, depending on what the environment looks like.
Thanks, very clear and then.
Unknown Executive: Thanks, very clear. And then does this change anything in regards to how the rating agencies view you? Obviously, you've been operating like this for a while, so I don't think it will. But any comments on what the agencies have said to you guys? We don't want to speak for the agencies, but...
Speaker Change: Does this change anything in regards to how the rating agencies view view you obviously, you've been operating like this for a while so I don't think it well, but just any comments around what city agencies have said to you guys.
Speaker Change: Don't want to speak for the agencies, but.
Unknown Executive: 4.5, being our previous target, was viewed somewhat by the agencies and certainly by some of our fixed income investors as where we would like to operate with our leverage over a longer period of time. So get up to that four and a half times.
Speaker Change: I do think it matters that.
Speaker Change: Four and a half being our previous target was viewed somewhat somewhat by the agencies and certainly by some of our fixed income investors as.
Speaker Change: Where we would like to operate with our leverage over the longer period of time to get up to that four five times in reality of the way. We operated was we operated with some cushion below that.
Unknown Executive: In reality, the way we operated was we operated with some cushion below that. So we think that this leverage target is more in line with the way we've been operating, which is what we've told everyone for a long time. But I think by making this change, it will have some impact on the way that the grading agencies view our financial policy as well as our fixed income investors.
Speaker Change: So we think that this leverage target is more in line with the way we've been operating.
Speaker Change: Which is what we've told everyone for a long time.
But I think by making this change I think it will have some impact on the way that the rating agencies view, our financial policy as well as our fixed income investors.
Speaker Change: Thanks really clear.
Speaker Change: Yes.
Operator: And I'm showing no further phone questions at this time.
Speaker Change: And I'm showing no further phone questions at this time.
Unknown Executive: Okay, well, thank you all very much. Have a good evening. This concludes today's call. Thank you for your participation. You may disconnect at this time.
Speaker Change: Okay, well. Thank you all very much have a good evening.
Speaker Change: This concludes today's call. Thank you for your participation you may disconnect at this time.
Yeah.
Speaker Change: Hello.
Yes.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Sure.