Q1 2024 EnLink Midstream LLC Earnings Call
Operator: Greetings and welcome to the EnLink Midstream Q1 2024 earnings call and webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Brungardt, Senior Director of Investors. Please proceed with your question. Thank you, Brian. You may begin.
Greetings and welcome to the Enlink Midstream Q1, 'twenty 'twenty four earnings call and webcast.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad as.
As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host surprise from Garth senior director of investors.
Speaker Change: Please proceed with your question.
Surprise: Thank you Brian you may begin.
Brian Joseph Brungardt: Thank you and good morning everyone. Welcome to EnLink's first quarter of 2024 earnings call. Participating on the call today are Jesse Arenivas, Chief Executive Officer; Dilanka Seimon, Executive Vice President and Chief Commercial Officer; and Ben Lamb, Executive Vice President and Chief Financial Officer. Walter Pinto, Executive Vice President and Chief Operating Officer, is also in the room to answer any questions during the Q&A session.
Surprise: Thank you Hey, good morning, everyone welcome to Enlink <unk> first quarter of 2024 earnings call participating on the call today are Jeff <unk>, Chief Executive Officer, the locker, Simon Executive Vice President and Chief Commercial Officer, and Ben Lamb, Executive Vice President and Chief Financial Officer Wal.
Speaker Change: Pinto Executive Vice President and Chief operating Officer is also in the room to answer any questions during the Q&A session.
Speaker Change: We issued our earnings release and presentation. After the markets closed yesterday and those materials are on our website.
Speaker Change: Today's call will also be made available on our website at investors <unk> com.
Brian Joseph Brungardt: We issued our earnings release and presentation after the markets closed yesterday, and those materials are on our website. A replay of today's call will also be made available on our website at investors.enlink.com. Today's discussion will include forward-looking statements, including expectations and predictions within the meaning of the federal securities laws. Such forward-looking statements speak only as of the date of this call, and we undertake no obligation to update or revise them. Actual results may differ materially from our projections, and a discussion of factors that could cause actual events to differ can be found in our press release, presentation, and SEC files.
Speaker Change: Today's discussion will include forward looking statements, including expectations and predictions within the meaning of the federal securities laws for forward looking statements speak only as of the date of this call and we undertake no obligation to update or revise actual results may differ materially from our projections and a discussion of factors that could cause actual events to differ can be found in our press release.
Speaker Change: Orientation and SEC filings.
Brian Joseph Brungardt: This call also includes discussions pertaining to certain non-GAAP financial measures. Definitions of these measures, as well as reconciliation of comparable GAAP measures, are available in our press release and the appendix of our presentation. We encourage you to review the cautionary statements and other disclosures made in our press release and our SEC filings, including those under the heading Risk Factor. We'll start today's call with a set of brief prepared remarks by Jesse, Dilanka, and Ben, and then leave the remainder of the call open for questions and answers. With that said, I would now like to turn the call over to Jesse Arenivas. Thanks, Brian.
Speaker Change: This call also includes discussions pertaining to certain non-GAAP financial measures definitions of these measures as well as reconciliation to comparable GAAP measures are available in our press release and the appendix of our presentation and we encourage you to review the cautionary statements and other disclosures made in our press release, and our SEC filings, including those under the heading risk factors.
Speaker Change: We will start today's call with a set of brief prepared remarks by Jessie The Walker and then and then leave the remainder of the call open for questions and answers.
Speaker Change: With that I would now like to turn the call over to Jeffrey <unk>.
Jesse Arenivas: Thanks, Brian, and good morning, everyone. Thank you for joining us today to discuss our first quarter 2024 results. While our operations were not immune to the impact of winter weather during the quarter, our results showcase the resiliency of our business. We continue to be encouraged with the longer-term prospects for EnLink, given our diverse systems and incremental demand potential for natural gas to help power our nation's growing industrial and power needs, including the developing industries around data centers and artificial intelligence.
Jeffrey: Thanks, Brian and good morning, everyone. Thank you for joining us today to discuss our first quarter 2024 results.
Jeffrey: While our operations were not immune to the impact of the winter weather during the quarter our results showcase the resiliency of our business.
Jeffrey: We continue to be encouraged with the longer term setup for enlink, given our diverse system and incremental demand potential for natural gas to help power, our nation's growing industrial and power needs, including the developing industries around data centers and artificial intelligence.
Jesse Arenivas: For the quarter, we generated $338 million of adjusted EBITDA driven by the strength of our Louisiana system and offset by temporary volume impacts from the winter weather impacts of our GNP system. These results were in line with our expectations and drove solid free cash flow after distributions of approximately $74 million.
Jeffrey: For the quarter, we generated $338 million of adjusted EBITDA, driven by the strength of our Louisiana system and offset by temporary volume impacts from the winter weather impacts of our G&P systems.
Jeffrey: These results were in line with our expectations and drove solid free cash flow after distributions of approximately $74 million.
Jesse Arenivas: Consistent with our approach to return capital to investors, we repurchased approximately $50 million of units outstanding, taking our total buyback execution to nearly 10% of the units outstanding over a little more than two years, all while continuing to invest and grow our business. Last quarter, we discussed our commitment to provide safe, reliable, and cost-efficient CO2 transportation solutions linking emitters with sequestration providers. Despite recent progress on the regulatory front, and while we continue to develop our CO2 transportation expertise by operating both new build and converted CO2 pipelines, the CCS industry as a whole has been slower to develop than we initially anticipated.
Jeffrey: Consistent with our approach to return capital to investors, we repurchased approximately $50 million of units outstanding taken our total buyback execution to nearly 10% of the units outstanding over a little more than two years, all while continuing to invest and grow our business.
Jeffrey: Last quarter, we discussed our commitment to provide safe reliable and cost efficient C. O two transportation solutions linking the letters with sequestration providers.
Jeffrey: <unk> recent progress and are on a regulatory front.
Jeffrey: While we continue to develop our C O T transportation expertise by operating both Newbuild and converted C O two pipelines.
Jeffrey: Ccs industry as a whole has been slower to develop than we initially anticipated. However.
Jesse Arenivas: However, we are continuing our discussions regarding CCS opportunities with ExxonMobil as well as other parties and look forward to providing an update when we reach definitive terms. Overall, we continue to see positive momentum for our business.
Jeffrey: However, we are continuing our discussions regarding ccs opportunities exxonmobil as well as other parties and look forward to providing an update when we reached definitive terms.
Jeffrey: Overall, we continue to see positive momentum for our business we.
Jesse Arenivas: We have spoken at length in prior quarters about the next wave of LNG demand coming in earnest in 2025 and how that is reshaping the landscape and driving our three phases of growth in Louisiana. Dilanka will provide more color around our Louisiana natural gas strategy, but I'm impressed with the quick execution. We are seeing customers respond to the shifting market dynamics as they look to secure the natural gas critical to their operations. To that extent, we've executed our first project to help resupply the eastern part of Louisiana through a capital-efficient, quick-to-market, de-bottlenecking project that is fully subscribed by high-quality customers.
Jeffrey: We have spoken at length in prior quarters about the next wave of LNG demand coming starting in earnest in 2025.
Jeffrey: And how that is reshaping the landscape in driving our three phases of growth and Louisiana.
Jeffrey: The lockup will provide more color around our Louisiana natural gas strategy and I'm impressed with the quick execution, we are seeing customers respond to the shifting market dynamics as they look to secure the natural gas is critical to their operations.
Jeffrey: That extent, we've executed on our first project to help resupply the eastern part of Louisiana through a capital efficient quick to market Debottlenecking project that is fully subscribed by high quality customers.
Jesse Arenivas: Beyond just Louisiana, though, the need for natural gas to help power our modern society is becoming more apparent as industries look to secure reliable and affordable energy. Like you, we have been amazed at the rapid emergence of data center demand for power, particularly driven by the AI revolution. This is occurring across the country, even right here in North Texas.
Jeffrey: Beyond just Louisiana, though the need for natural gas to help power our modern society becomes more apparent as industries look to secure reliable and affordable energy.
Jeffrey: Like you we have been amazed at the rapid emergence of the data center demand for power, particularly driven by the AI Revolution.
Jeffrey: This is occurring across the country, even right here in North Texas.
Jesse Arenivas: We understand and can appreciate that these are early days, and that consultants, policymakers, utilities, and the investment community are still trying to get their collective arms around the ultimate impact of this growth and demand. But the initial forecasts are staggering. While data center electricity consumption was approximately 2.5% of the U.S. total in 2022, there are forecasts for this demand to triple or more by 2030. To help put that in perspective, according to the Boston Consulting Group, this growth in consumption is the equivalent of adding 40 million homes. What is key for our industry is that these AI data centers are not only veracious users of energy, but they run 24-7 and do not turn on at all.
Jeffrey: We understand and can appreciate that these are early days and that consultants policymakers utilities and the investment community are still trying to get their collective arms around the ultimate impact of this growth in demand.
Jeffrey: But the initial forecast are staggering.
Jeffrey: While data center electricity consumption was approximately two 5% of the.
Jeffrey: As told in 2022 their forecast for this demand a triple or more by 2030.
Jeffrey: The help to help put that in perspective, according to the Boston consulting group this growth in consumption.
Jeffrey: It would be equivalent to adding 40 million homes.
Jeffrey: What is key for our industry is that these AI data centers are not only voracious.
Jeffrey: Users of energy, but they run 24, seven that do not turn on at all.
Jesse Arenivas: Renewables will surely play a key part, but because of this dynamic, we expect natural gas to be a large contributor to meet the increased baseload demand for power generation. We consider this to be a potential incremental growth driver creating a rising tide that will lift all boats in the natural gas industry and one that is likely to drive rapid and exciting change for our business. Wells Fargo analysts predict that additional natural gas demand could be 7 BCF or more by 2030, assuming that natural gas accounts for 40% of the fuel mix.
Jeffrey: Renewables will surely play a key part that because of this dynamic we expect natural gas to be a large contributor to meet the increased baseload demand for power generation.
Jeffrey: We consider this to be a potential incremental growth driver, creating a rising tide that will lift all boats in the natural gas industry.
Jeffrey: And one that is likely to drive rapid and exciting change for our business Wells Fargo analysts predict forecast the additional natural gas demand could be seven bcf to more or more by 2030, assuming that natural gas accounts for 40% of the fuel mix.
Jesse Arenivas: To wrap up my comments, EnLink is executing today to meet customer needs and is excited about the growing need for natural gas to provide reliable and affordable energy to power our modern society. And with that, I'll turn it over to Dilanka to provide an update on our commercial opportunity.
Jeffrey: To wrap up my comments Enlink is executing today to meet customer needs and excited about the growing need for natural gas can provide reliable and affordable energy to power our modern society.
Jeffrey: And with that I'll turn it over to lock in to provide an update on our commercial opportunities.
Dilanka Seimon: Thanks, Jesse, and good morning, everyone. Last quarter, we discussed the shifting Louisiana gas supply and demand market and how we are focused on creating shareholder value. Today, I would like to provide a quick update. As I mentioned during the last call, we are approaching the Louisiana gas opportunity in three phases. In our first phase, we are realizing the full value of our existing assets through renewing capacity at higher rates.
Lock: Thanks, Jessie and good morning, everyone.
Lock: Last quarter, we discussed the shifting Louisiana gas supply and demand market and how we are focused on creating shareholder value.
Lock: Today, I would like to provide a quick update.
Lock: As I mentioned during the last call we are approaching the Louisiana gas opportunity in three phases.
Lock: On our first phase of opportunities, which is realizing the full value of our existing assets through renewing capacity at higher rates.
Dilanka Seimon: Our commercial team has worked with our customers, and we have successfully renewed the vast majority of the contracts up for renewal in 2024. This Green New World represents an incremental annual margin opportunity, which is included in our 2024 financial guidance. The second phase of opportunities is leveraging our assets to drive attractive, quick-to-market projects. Last night, we announced the first execution of such a project. Through some additional compression, we are increasing gas supply to the Mississippi River Corridor by approximately 210 million cubic feet per day. The project is expected to cost approximately $70 million with an in-service date in the fourth quarter of 2025. This debacle-necking project results in a mid-single-digit EBITDA investment multiplier.
Lock: Most of the team has worked with our customers and we have successfully renewed the vast majority of the contracts up for renewal in 2024.
Lock: This renewal represents an incremental annual margin opportunity, which is included in our 2024 financial guidance.
Lock: The second phase of opportunities is leveraging our assets to drive attractive quick to market projects.
Lock: Last night, we announced the first execution of such a project.
Lock: To some additional compression we are increasing gas supply to the Mississippi River corridor by approximately 210 million cubic feet per day.
Lock: The project is expected to cost approximately $70 million with an in service date in the fourth quarter of 2025.
Lock: This debottlenecking projects results in a mid single digit EBITDA investment multiple.
Lock: Pleased to have fully contracted the capacity with a diverse mix of highly creditworthy customers.
Benjamin D. Lamb: We are pleased to have fully contracted the capacity with a diverse mix of highly creditworthy customers. The third phase of opportunities is to add new projects to increase supply to our gas pipelines to meet the increasing demand in the Mississippi River Corridor markets and to expand our gas storage position. In this regard, we are in the process of marketing our expansion of the Jefferson Island Storage Hub and are very pleased with the response from our existing and new customers.
Lock: The third phase of opportunities is to add new projects to increase supply to our gas pipelines to meet the increasing demand in the Mississippi River corridor markets and to expand our gas storage position.
Lock: In this regard we are in the process of marketing or expansion of Jefferson Islands storage hub and are very pleased with the response from our existing and new customers.
Benjamin D. Lamb: We are excited about this longer-term opportunity as we can nearly double our working gas storage capacity through brownfield expansion. With that, I'll turn it over to Ben to provide an overview of our operations and our financial results.
Lock: We are excited about this longer term opportunity as weak and nearly double our working gas storage capacity through brownfield expansions.
Lock: With that I'll turn it over to Ben to provide an overview of our operations and our financial results. Thanks to Walker and good morning, everyone.
Benjamin D. Lamb: Thanks, Dilanka, and good morning, everyone. Let's start with Permian, where segment profit for the first quarter of 2024 came in at $89 million. Segment profit in the quarter included approximately $9.3 million of gross operating expenses tied to plant relocation and $2.4 million of unrealized derivative loss. Excluding plant relocation OPEX and unrealized derivative activity, segment profit in the first quarter of 2024 decreased 10% sequentially but grew 12% from the prior year quarter. In addition to plant reload costs impacting operating expenses, the first quarter results included a one-time utility true-up expense increasing Permian OPEX by approximately $5 million.
Benjamin D. Lamb: Let's start with the Permian for segment profit for the first quarter of 2024 came in at $89 million.
Benjamin D. Lamb: Segment profit in the quarter included approximately $9 $3 million of gross operating expenses tied to plant relocations.
Benjamin D. Lamb: And $2 $4 million of unrealized derivative losses.
Benjamin D. Lamb: Excluding plant relocation opex and unrealized derivative activity segment profit in the first quarter of 2024 decreased 10% sequentially, but grew 12% from the prior year quarter.
Benjamin D. Lamb: In addition to plant reload costs impacting operating expenses. The first quarter results included a one time utility true up expense, increasing Permian opex by approximately $5 million.
Benjamin D. Lamb: Our diverse mix of producers remained active during the quarter, however, results were impacted by the winter weather and producer timing. Average natural gas gathering volumes were approximately 2% lower sequentially, but were 13% higher than the prior year. The Tiger II facility is in the process of coming online and will enable the next phase of Permian growth.
Benjamin D. Lamb: Our diverse mix of producers remained active during the quarter. However results were impacted by the winter weather and producer timing.
Benjamin D. Lamb: Average natural gas gathering volumes were approximately 2% lower sequentially that were 13% higher than the prior year quarter. The tiger two facilities in the process of coming online and will enable the next phase of Permian growth.
Benjamin D. Lamb: Turning now to Louisiana, we experienced another quarter of solid performance in the gas segment, benefiting from price volatility, along with strong results in the NGL segment driven by normal seasonal effects. Segment profit for the first quarter of 2024 came in at $110.4 million, including $19.5 million of unrealized derivative losses, excluding the impact of unrealized derivative activity. Segment profit in the first quarter of 2024 grew approximately 26% sequentially and grew approximately 23% compared to the prior year.
Benjamin D. Lamb: Turning now to Louisiana, we experienced another quarter of solid performance in the gas segment benefiting from price volatility.
Benjamin D. Lamb: Along with strong results in the NGL segment, driven by normal seasonal effects.
Benjamin D. Lamb: Segment profit for the first quarter of 2024 came in at $110 $4 million, including $19 $5 million of unrealized derivative losses.
Benjamin D. Lamb: Excluding the impact of unrealized derivative activity segment profit in the first quarter of 2024 grew approximately 26% sequentially and grew approximately 23% compared to the prior year quarter.
Benjamin D. Lamb: Moving up to Oklahoma, we delivered segment profit of $85.7 million for the first quarter of 2024, including $4.1 million of unrealized derivative loss. Excluding the impact of unrealized derivative activity, segment profit in the first quarter of 2024 decreased 19% sequentially and decreased approximately 7% from the prior year quarter, driven by lower volumes and the one-time contract reset that we discussed in last quarter's call. During the first quarter, we saw operators remain active with rigs on our acreage.
Benjamin D. Lamb: Moving on to Oklahoma, We delivered segment profit of $85 $7 million for the first quarter of 2024, including $4 $1 million of unrealized derivative losses.
Benjamin D. Lamb: Excluding the impact of unrealized derivative activity segment profit in the first quarter of 2024 decreased 19% sequentially and decreased approximately 7% from the prior year quarter, driven by lower volumes and the onetime contract reset that we discussed in last quarter's call.
Benjamin D. Lamb: During the first quarter, we saw operators remain active with rigs on our acreage. However, average natural gas gathering volumes were 7% lower sequentially and 3% lower compared with the prior year quarter. As a result of the winter weather and a few cases of price related shut ins.
Benjamin D. Lamb: However, average natural gas gathering volumes were 7% lower sequentially and 3% lower compared to the prior year quarter as a result of winter weather and a few cases of price-related shedding. Wrapping up with North Texas, segment profit for the quarter was $59.8 million, including $0.1 million of unrealized derivative loss. Excluding unrealized derivative activity, segment profit in the first quarter of 2024 decreased 12% sequentially and decreased 18% from the prior year quarter, driven by lower volumes and the one-time contract receivs. Natural gas gathering volumes were 6% lower sequentially and 10% lower compared to the prior year.
Benjamin D. Lamb: Wrapping up with North, Texas segment profit for the quarter was $59 8 million, including <unk> 1 million of unrealized derivative losses.
Benjamin D. Lamb: Excluding unrealized derivative activity segment profit in the first quarter of 2024 decreased 12% sequentially and decreased 18% from the prior year quarter, driven by lower volumes and the onetime contract reset.
Benjamin D. Lamb: Natural gas gathering volumes were 6% lower sequentially and 10% lower compared to the prior year.
Benjamin D. Lamb: Like Oklahoma, volumes were impacted by winter weather and a small number of price-related shutouts. These solid results reflect the benefits of our diverse assets. Winter weather was a modest headwind for our GNP businesses, while our Louisiana gas segment benefited from the short-term volatility. In total, our segments drove another robust quarter with $338 million in adjusted EBITDA. We are tracking toward the midpoint of our adjusted EBITDA guidance of $1.31 billion to $1.41 billion for full year 2024.
Benjamin D. Lamb: Like Oklahoma volumes were impacted by winter weather and a small number of price related shut ins.
Benjamin D. Lamb: These solid results reflect the benefits of our diverse asset next winter.
Benjamin D. Lamb: Winter weather was a modest headwind for our G&P businesses, while our Louisiana gas segment benefited from the short term volatility.
Benjamin D. Lamb: In total our segments drove another robust quarter with $338 million and adjusted EBITDA.
Benjamin D. Lamb: We are tracking towards the midpoint of our adjusted EBITDA guidance of $1 31 billion to $1 $41 billion for full year 2024.
Benjamin D. Lamb: While we don't give quarterly guidance, let me remind you that our Louisiana NGL segment experiences some seasonality, with the second and third quarters being seasonally weaker. Capital expenditures, plant relocation expenses, Net-to-EnLink, and investment contributions were $111 million in the first quarter of 2024. Pre-cash flow after distributions for the first quarter came in at approximately $74 million.
Benjamin D. Lamb: While we don't give quarterly guidance, let me remind you that our Louisiana NGL segment experienced some seasonality with the second and third quarters being seasonally weaker.
Benjamin D. Lamb: Capital expenditures plant relocation expenses net to Enlink and investment contributions were $111 million in the first quarter of 2020 for free cash flow after distributions for the first quarter came in at approximately $74 million.
Benjamin D. Lamb: On the balance sheet side, we continue to be in a very strong position with a leverage ratio of 3.3 times at the end of the first quarter, and we retain ample liquidity. During the quarter, S&P recognized our strong credit profile and upgraded us to BBB-minus, moving us into investment grade following the prior upgrade from FIT. Consistent with our capital allocation plan, we maintained the common unit distribution of 13.25 cents per unit in the first quarter, which represents a 6% increase over the first quarter of 2023.
Benjamin D. Lamb: On the balance sheet side, we continue to be in a very strong position with a leverage ratio of three three times at the end of the first quarter can we retain ample liquidity.
Benjamin D. Lamb: During the quarter S&P recognized our strong credit profile and upgraded us to triple B minus moving us into investment grade following the prior upgrade from Fitch.
Benjamin D. Lamb: Consistent with our capital allocation plan, we maintained to the common unit distribution of <unk> 13, and a quarter cents per unit in the first quarter, which represents a 6% increase over the first quarter of 2023. Additionally.
Benjamin D. Lamb: Additionally, we remain active with our common unit repurchase program, with approximately $50 million spent in the first quarter. This puts us on pace to complete our $200 million unit repurchase program for 2024. Since the end of 2021, we've now repurchased approximately 46 million common units, or nearly 10% of units outstanding.
Benjamin D. Lamb: Additionally, we remain active with our common unit repurchase program with approximately $50 million spent in the first quarter.
Benjamin D. Lamb: This puts us on pace to complete our $200 million unit repurchase program for 2024.
Benjamin D. Lamb: Since the end of 2021, we've now repurchased approximately 46 million common units or nearly 10% of units outstanding.
Jesse Arenivas: In summary, the EnLink team delivered solid results in the first quarter of 2024, and we expect the momentum to continue for the rest of the year. With that, I'll turn it back over to Jesse. Thank you, Ben. The EnLink team delivered another quarter with solid execution in the first quarter of 2024 that showcased the resiliency of our diverse assets. We're excited for the future and remain committed to meeting the needs of our customers in 2024 and beyond. With that, you may now open the call to questions. Thank you. We will now be conducting a question and answer session.
Benjamin D. Lamb: In summary, the Enlink team delivered solid results in the first quarter of 2024, and we expect the momentum to continue for the rest of the year with that I'll turn it back over to Jesse.
Jesse: Thank you Ben the Enlink team delivered another quarter with solid execution.
Jesse: In the first quarter of 2024 that showcase the resiliency of our diverse assets. We're excited for the future and remain committed to meeting the needs of our customers in 2024 and beyond.
Speaker Change: With that he may now open the call for questions.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Spiro Dounis with Citi. Please proceed with your question.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue you.
Speaker Change: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you.
Speaker Change: First question comes from the line of Spiro <unk> with Citi. Please proceed with your question.
Spiro Michael Dounis: Thanks, operator. Good morning, guys.
Spiro: Thanks, operator, good morning, guys.
Spiro Michael Dounis: First question on carbon capture: if we could, I was hoping for a little more detail on the status of Pecan Island specifically. As you all noted last call, it sounded like all the parties were incentivized to really come to a resolution quickly, just given some of the capture obligations coming in 2025. So I'm just sort of curious, should we read anything into the lack of an update here? And are you in a better position now than you were a few months ago?
Spiro: First question on carbon capture if we could I was hoping for a little more detail on the status of Pecan Island, specifically as you all noted last call it sounded like all the parties where.
Spiro: Incentivize really come to a resolution quickly just given some of the cash obligations coming in 2025. So one just sort of curious if you could read anything is there anything on the lack of the update here in our unit better position now than where you were a few months ago, maybe narrow the bands on any potential outcomes.
Jesse Arenivas: Hi Spiro, it's Jesse.
Spiro: Hi, Spiro, it's Jesse thanks, Thanks for the question.
Spiro: Yes, I think last quarter, we talked about the pause and Pecan Island.
Jesse: The broader opportunity to address additional or alternatives to go on island project.
Jesse Arenivas: Thanks. Thanks for the question. Yeah, I think last quarter we talked about the PAWS and Pecan Island and the broader opportunity to address, you know, additional or alternatives to the Pecan Island project. Those discussions continue. We don't have an update today, but we have made a lot of progress on defining the scope of additional projects. However, remember, this is a new industry, and it's been more challenging to find a mutually beneficial transportation option.
Jesse: Those can those discussions continue we don't have an update today.
Jesse: But we have made a lot of progress on.
Jesse: Defining the scope of additional projects. However, remember this is a new industry and it's been more challenging.
Jesse: To find a mutually beneficial transportation option.
Jesse Arenivas: We're still working on that, and we'll have an update as soon as we have one for. As I noted earlier, this has taken longer for the industry as a whole, it's taken longer than we had predicted, but remember, we have to proceed at the pace of the emitters and sequesters until they define the definitive agreements. Then, you know, our role can't be consummated. So, at the same time, you know, we're gaining experience in the CCS space.
Jesse: We're still working that and we will have an update as soon as we have one for you.
Jesse: As I noted earlier this has taken longer for the industry as a whole has taken longer than we had predicted.
Jesse: Remember we have to proceed at the pace of the emitters and sequesters.
Jesse: Until that Ivy Hill, they define the definitive agreements that are.
Jesse: Our role.
Jesse: It can't be consummated.
Jesse: So at the same time.
Jesse: We're gaining experience in the Ccs space. Our Bridgeport facility is now operating given us valuable profitable has experienced both transport and Sidoti capturing newbuild.
Jesse Arenivas: Our Bridgeport facility is now operating and giving us valuable practical experience, both transporting CO2, capturing, you know, new build and repurposing pipe. So, we think this is key. You know, we've said we are very well positioned along the Supreme River Corridor with pipe in the ground, decades-long experience with regulators, and customers, and so we believe we have not lost conviction at all. We think CCS will play a major role in decarbonizing the industrial sector. We think we're very well positioned to take advantage of that. The timing hasn't been as planned, but longer term, we believe we will win.
Jesse: And Repurposing of pipe. So we think this is key.
Jesse: We've said, we are very well positioned along the river corridor with pipe in the ground decades long experience with regulators.
Jesse: Customers and so we believe we have not lost conviction at all we think Ccs will play a major role and Decarbonize in the industrial sector. We think we're very well positioned to take advantage of that and ultimately timing hasnt been as planned but longer term, we believe we will win.
Spiro Michael Dounis: Got it, thanks. Thanks for that, Jesse.
Jesse: Got it thanks for that just the second one maybe for you Ben just just thinking about some of the items that impacted the first quarter and how to think about moving forward into <unk>. You mentioned some shut ins in Oklahoma curious if you see a bigger impact there as we head into <unk>, if you're thinking of do well connections are enough to offset some of that and then in the Permian and obviously you mention.
Benjamin D. Lamb: The second one, maybe for you, Ben, just thinking about some of the things that impacted the first quarter and how to think about moving forward with 2Q. You mentioned some shut-ins in Oklahoma. I'm curious if we see a bigger impact there as we head into 2Q, if you think maybe well connections are enough to offset some of that. And then in the Permian, obviously, you mentioned weather impact early in the quarter. Just maybe give us a sense of how you exited 1Q and what that looks like for 2Q.
Benjamin D. Lamb: Weather impacts early in the quarter, just maybe give us a sense of how you exited <unk> and what that looks like for <unk>.
Benjamin D. Lamb: Yeah, Spiro, starting in Oklahoma, I think most of the shut-in activity is either in the rearview mirror or will be here very shortly. It was very isolated, but between a little bit of that and the winter weather, volumes were a bit soft for OneCube. We actually have a pretty robust schedule of WellConnects for Oklahoma in the coming days here, so we feel good about Oklahoma for the rest of the year. In terms of the Permian, but for the winter weather, volume would have been about flat in 1Q versus 4Q.
Benjamin D. Lamb: Yes Spiro star.
Benjamin D. Lamb: <unk> in Oklahoma.
Benjamin D. Lamb: Think most of the shut in activity is either in the rearview mirror or will be here.
Jesse: Shortly it was it was very isolated between a little bit of that in the winter weather volumes were a bit soft for <unk>.
Spiro: Actually have a pretty robust schedule of well connects for Oklahoma in the coming in the coming days year. So we feel good about Oklahoma for the rest of the year.
Spiro: In terms of the Permian.
Spiro: But for the winter weather.
Spiro: Volume would have been about flat in <unk> versus <unk>.
Spiro Michael Dounis: And that's not surprising when you think about the way we've talked about the growth in the basin this year. After we had this furious pace of growth in the Midland Basin last year, this year the Midland Basin is flatter, and the growth is in the Delaware. Delaware has been full for us. In fact, we've been offloading some volumes, waiting on the plant to come online. The good news is the plant is coming online literally as we speak, and that's what will enable that next leg of Permian growth. Got it. I'll leave it there.
Spiro: That's not surprising when you think about the way we've talked about the growth in the basin. This year. After we had this furious pace of growth in the Midland Basin last year. This year Midland is flatter and the growth is in the Delaware.
Spiro: Delaware has been full for us in fact, we have been offloading some volumes waiting on the plant to come online. Good news as the plant is coming online literally as we speak.
Spiro: That's what will enable that next leg of Permian growth.
Operator: Got it. I'll leave it there. Thank you, gentlemen.
Speaker Change: Got it I'll leave it there thank you gentlemen.
Speaker Change: Thanks.
Speaker Change: Thank you.
Praneeth Satish: Our next question comes from the line of Praneeth Satish with Wells Fargo. Please proceed with your question.
Praneeth Satish: Our next question comes from the line of parties Satis with Wells Fargo. Please proceed with your question.
Praneeth Satish: Hi, guys good morning I.
Satis: Unless I missed it can you can you give us an update for where you see capex trending in in 'twenty four 'twenty five in light of the Henry hub to River project did anything change there as it relates to Capex guidance, and then I think you've got $50 million, if I remember correctly for the Exxon for kind of a placeholder for Exxon Ccs.
Satis: Projects in the budget this year.
Satis: Could that be reduced given some of the.
Praneeth Satish: Delays that you mentioned.
Praneeth Satish: Hi guys, good morning.
Speaker Change: Hey, good morning <unk>.
Praneeth Satish: Big picture Capex.
Praneeth Satish: The midpoint of the 2024 guidance is $4 65, and that has not changed with the Henry hub to River project, we reserved some dollars in the capital budget for these phase two Louisiana gas expansions.
Praneeth Satish: There is no addition for this year.
Speaker Change: Too early of course to talk about 2025, Capex, but I would just say that sitting here today. We don't have any reason to believe it is materially different than the run rate we've been on in 2004 and even back in 2023.
Speaker Change: On the Ccs side Youre right we did.
Praneeth Satish: Did allow for $50 million of Ccs spending.
Praneeth Satish: In arriving at our <unk> guidance for 2024.
Praneeth Satish: And you're also right that as the year goes on.
Praneeth Satish: Things have been slower to develop than we would've hoped it becomes less likely that we spend all $50 million of that we don't have an update for you today.
Praneeth Satish: But potentially could result in an increase in 2024 Bcf a day.
Speaker Change: Got it thanks.
Speaker Change: And then I guess as I look at your phase one of your Louisiana growth strategy, I think youre getting a $20 million uplift this year.
Speaker Change: Much of your remaining Louisiana transport contract portfolio is still under legacy rates, where you could kind of reprice it to current market rates.
Speaker Change: And I guess do you think you could see another $20 million bump in 2025.
Benjamin D. Lamb: Good morning, Praneeth. Big picture CapEx, the midpoint of the 2024 guidance is 465, and that has not changed with the Henry Hubb to River project. We reserved some dollars in the capital budget for these phase 2 Louisiana gas expansions, so there's no addition for this year.
Benjamin D. Lamb: I guess, unless I missed it, can you give us an update on where you see CapEx trending in 2024 and 2025 in light of the Henry Hub to River project? Did anything change there as it relates to CapEx guidance? And then I think you've got $50 million, if I remember correctly, as kind of a placeholder for Exxon CCS projects in the budget this year. Could that be reduced given some of the delays that you mentioned?
Speaker Change: Hi, good.
Benjamin D. Lamb: Too early, of course, to talk about 2025 CapEx, but I would just say that sitting here today, we don't have any reason to believe that it's materially different from the run rate we've been on in 2024 and even back in 2023. On the CCS side, you're right; we did allow for $50 million of CCS spending in arriving at our SCFAD guidance for 2024. And you're also right that as the year goes on and things have been slower to develop than we would have hoped, it becomes less likely that we spend all $50 million of that. We don't have an update for you today, but it potentially could result in an increase in FCFA debt in 2024.
Speaker Change: Good morning are indeed, very happy with the re contracting we've been doing no.
Speaker Change: Louisiana gas system speaks.
Speaker Change: Really relative to the value of assets.
Speaker Change: As you indicated correctly most of the re contracting rates are already baked into the budget. We don't see a similar uplift in 'twenty five we add this point substantially re contracted for the rest of 'twenty pointed out working on renewables of 25.
Speaker Change: It might be a marginal uplift, but majority comes in.
Speaker Change: That was baked in this year.
Speaker Change: Got it thank you guys.
Speaker Change: Thank you.
Speaker Change: And our next question comes from the line of Naomi <unk> with UBS. Please proceed with your question.
Dilanka Seimon: Thanks. And then, I guess as I look at your, you know, phase one of your Louisiana growth strategy, I think you're getting a $20 million uplift this year. How much of your remaining Louisiana transport contract portfolio is still under legacy rates where you could kind of reprice it to current market rates? And I guess, do you think you could see another, you know, $20 million bump in 2025? Hi, it's Dilanka here. Good morning, Wendy.
Naomi: Hi, Good morning, Thank you for taking my question maybe.
Naomi: Maybe as a follow up on all your question as we look ahead. It seems like on link has some good mineral with expectations, particularly around the Delaware.
Dilanka Seimon: Hi, it's Dilanka here. Good morning.
Naomi: Can you give us an update on potential need for adding processing capacity beyond the tiger plant location.
Naomi: Yes.
Speaker Change: Yes of course, you've been focused on getting Tiger two.
Naomi: In service to enable that next leg of growth.
Naomi: As far as looking beyond that the good news is we've now three times successfully relocated and.
Naomi: An existing processing plant to the Permian.
Naomi: And so that gives us the luxury of being able to time the decision to add capacity closer to the need.
Naomi: So we will be watching carefully as the year develops and as our producers share their plans with us when the right time to add that in his capacity as we don't think Thats a decision we have to make today because with the benefit of a portfolio of assets eligible for relocation, we can bide, our time a bit and learn more from our producers to get the timing just right.
Naomi: Yeah.
Dilanka Seimon: We're indeed very happy with the recontracting we've been doing. Now, the Louisiana gas system speaks really well to the value of our assets. As you indicated correctly, most of the recontracting rates were already baked into the 24 budget. We don't see a similar uplift in 25. We are at this point substantially recontracted for the rest of 24, and we are working on renewables of 25. There might be a marginal uplift, but the majority comes in the number that was baked in this year.
Naomi: Thanks for the condo, maybe to switch to capital allocation, given and thanks, Hi, FTF curious on the thought process around balancing the value proposition between buybacks.
Operator: Our next question comes from the line of Naomi Mosferati with UBS. Please proceed with your question.
Speaker Change: Our deleveraging.
Speaker Change: Yes.
Speaker Change: <unk> remained focused on returning capital to the common unit holder as we said in the prepared remarks over the past few years now we've eliminated about 10% of the shares outstanding through the share repurchase program and we will continue to execute the $200 million common unit repurchase program that the board authorized for this year.
Speaker Change: On the balance sheet side, we're in very good shape, having just gotten the upgrade to triple B minus from from S&P and we are at or slightly below in fact, our leverage target. So we're largely going to remain focused on on the common unitholder.
Speaker Change: Thanks for the color have a great rest of your day.
Speaker Change: Yes.
Naomi Mosferati: Hi, good morning. Thank you for taking my question. Maybe as a follow-up to an earlier question, as we look ahead, it seems like EnLink has some good permanent growth expectations, particularly around Delaware. Can you give us an update on the potential need for adding processing capacity beyond the Tiger 2 plant relocation?
Speaker Change: Thank you. Our next question comes from the line of Jeremy Tonet with JP Morgan. Please proceed with your question.
Benjamin D. Lamb: Yeah, of course, we've been focused on getting Tiger 2 in service to enable the next leg of growth. As far as looking beyond that, the good news is we've now successfully relocated an existing processing plant to the Fermion. And so that gives us the luxury of being able to time the decision to add capacity closer to the need. So we'll be watching carefully as the year develops and as our producers share their plans with us when the right time to add that next capacity comes.
Benjamin D. Lamb: We don't think that's a decision we have to make today because, with the benefit of a portfolio of assets eligible for relocation, we can bide our time a bit and learn more from our producers to get the timing just right.
Naomi Mosferati: Great. Thanks for the color.
Benjamin D. Lamb: Maybe to switch to capital allocation, given EnLink's high FCF yield, curious about the thought process around balancing the value proposition between buybacks or
Benjamin D. Lamb: Yeah, we remain focused on returning capital to the common unit holder. As we said in the prepared remarks, over the past few years, we've eliminated about 10% of the shares outstanding through the share repurchase program, and we'll continue to execute the $200 million common unit repurchase program that the board authorized for this year. On the balance sheet side, we're in very good shape, having just gotten the upgrade to triple B minus from S&P, and we are at or slightly below, in fact, our leverage target. So we're largely going to remain focused on the common unit holders.
Jeremy Bryan Tonet: Hi, good morning.
Speaker Change: Alright.
Naomi Mosferati: Thanks for the call. Have a great rest of your day.
Jeremy Bryan Tonet: Just wanted to touch base on the Louisiana side, a little bit more as far as the.
Jeremy Bryan Tonet: The fees is that the projects and just wanted to get a oh.
Jeremy Bryan Tonet: Update a better feel for I guess, what the scope of the potential opportunities in the timeframe that these.
Jeremy Bryan Tonet: These spaces could come to fruition.
Operator: Thank you. Our next question comes from the line of Jeremy Tonet with JP Morgan. Please proceed with your question.
Speaker Change: Good morning.
Speaker Change: <unk>.
Speaker Change: The Henry do River project is indeed, Great example of quick to execute good return on capital project that needs immediate cost are in demand.
Speaker Change: Leveraging our assets in the ground. So just a bit color on the project. This one at the progression in all of our 26 inch connecting the Henry hub to the river cardio market to increase throughput by about 210 million cubic feet per day.
Jeremy Bryan Tonet: Just wanted to touch base on the Louisiana side a little bit more, as far as the phases of the projects are concerned, and just wanted to get an update, a better feel for, I guess, what the scope of the potential opportunities is in the time frame that these phases could come to fruition.
Dilanka Seimon: Good morning, Dilanka here again. The Henry2River project is indeed a great example of a quick-to-execute, good-return-on-capital project that meets the immediate cost of demand by leveraging our assets in the ground. So just a bit of color on the project; this one has compression along our 26-inch pipeline, connecting the Henry hub to the river corridor market to increase throughput by about 210 million cubic feet per day. The best thing is that we are fully contracted for this project with a diverse set of creditworthy customers.
Speaker Change: Best thing is that we are fully contracted for this project.
Speaker Change: Tableau set of credit worthy customers.
Speaker Change: So that project is.
Speaker Change: Well underway and on execution.
Dilanka Seimon: So that project is well underway and on execution. I'll also add that we executed a similar project like this last year by adding compression to increase deliveries to the Venture Global Capital Pass project, again, by about 200 million cubic feet per day. And the good news today is that there is more demand for this, and we are working on even other opportunities to bring additional supply to our systems through better interconnectivity, new build pipe, and natural gas storage expansions, etc.
Speaker Change: So at that.
Speaker Change: We executed a similar project like this last year by adding compression to increase deliveries to.
Speaker Change: The venture Global Calcasieu pass project again by about 200 million cubic feet per day.
Speaker Change: And.
Speaker Change: The good news today that there is more demand for this and we are working on even other opportunities to bring in.
Speaker Change: Additional supply to our systems through better connectivity, new unified natural gas storage expansions et cetera. So the funnel of opportunities is quite encouraging or beyond these debottlenecking type projects.
Dilanka Seimon: So the funnel of opportunities is quite encouraging. Beyond these debottoning type projects that I just mentioned, the storage expansion, the new build pipes, etc., we will take a little bit longer, but the team is very focused on bringing these projects to market because, clearly, there is a market demand for them.
Speaker Change: Just mentioned the storage expansion, the <unk> et cetera.
Speaker Change: Take a little bit longer.
Speaker Change: The teams are very focused on bringing these projects to market because clearly there's a market demand for it.
Speaker Change: Okay.
Dilanka Seimon: Got it. So do I take that kind of like, no, we shouldn't really expect any incremental announcements in the near term about what kind of things are accomplished in the near term for the Louisiana strategy, or just trying to get a time frame of when these items could come together as you outline?
Speaker Change: Got it so do I take that kind of like.
Speaker Change: No we shouldn't really expect any incremental announcements in the near term kind of things.
Speaker Change: Things are accomplished in the near term for the Louisiana strategy or just trying to get timeframe of when these items could come together as you outlined.
Jesse Arenivas: Sure. I think in the near term, you can potentially expect something on the storage side. We've talked about the 9-BCF storage expansion we are working on. We've completed the engineering studies, and we are busyily marketing that expansion. So, in the next couple of quarters, you can potentially expect us to FID our storage expansion as well.
Speaker Change: Sure I think in the near term.
Speaker Change: Potentially can expect something on the storage side, we've talked about.
Speaker Change: Nine Bcf.
Speaker Change: Storage expansion, we're working on we've completed the engineering studies and we are busily marketing.
Speaker Change: The.
Speaker Change: Expansion. So in the next couple of quarters, you can potentially expect us to.
Speaker Change: Our storage expansion as well.
Jeremy Bryan Tonet: And Jeremy, this is Jesse. Let me just add, you know, kind of on a macro level, you know, we've said before, the optionality of our Louisiana assets is envy, you know, we operate two of the four market systems, there's redundancy, so there's a lot of these low, a lot of low-hanging fruit that we continue to, uh..., try to meet customer demand. So I think, you know, it just proves that owning this diverse set of assets continues to provide future opportunities for our business.
Speaker Change: And Jeremy This is Jesse let me just add kind of on the macro.
Speaker Change: We've said before you know the Optionality of our Louisiana assets as MBS.
Jesse: We operate two of the four market systems. There is redundancies. So theres a lot of these low a lot of low hanging fruit that we continue to.
Jesse: Try to.
Speaker Change: Didn't meet the customer demand so I think it is.
Jeremy Bryan Tonet: This proves that our own in this diverse set of assets continued to provide future opportunity for our business.
Benjamin D. Lamb: Got it. Thank you for that. And then just quickly want to go to the Oklahoma and North Texas segments. And just wondering, given the current strip, and given your producer customer conversations, how do you feel about executing against segment guidance at the
Jeremy: Got it. Thank you for that and then just quickly wanted to go to the Oklahoma and North Texas segments, and just wondering given the current strip and given your producer customer conversations how do you feel about executing against that segment guidance at this point.
Jeremy Bryan Tonet: We feel good about the segment guidance at this point. Clearly, there was a headwind from the weather and a little bit of that shut-in activity in the first quarter, but like I say, I think most of that is in the rearview mirror or will be here shortly, and I think things look bright, particularly in Oklahoma, as we get closer to the end of the year, as the target for 2025 gets closer and becomes closer to realization.
Speaker Change: We feel good about the segment guidance at this point clearly there was a headwind from the weather and a little bit of that shut in activity.
Benjamin D. Lamb: Got it. Thank you for that. I'll leave it there.
Speaker Change: In the first quarter, but like I say I think.
Benjamin D. Lamb: Most of that is in the rearview mirror or will be here shortly.
Speaker Change: I think things look right, particularly in Oklahoma as we get closer to the end of the year as the strip for 2025 gets closer.
Benjamin D. Lamb: Becomes.
Speaker Change: Closer to.
Benjamin D. Lamb: Realizations.
Speaker Change: Got it thank you for that I'll leave it there.
Benjamin D. Lamb: Thanks.
Operator: Thank you. Our next question comes from the line of Elvira Scotio with RBC Capital Markets. Please proceed with your question.
Benjamin D. Lamb: Thank you. Our next question comes from the line of Elvira Scotto.
Elvira Scotio: With RBC capital markets. Please proceed with your question.
Elvira Scotio: Hey, good morning, everyone. I guess just one question for me. Any impact that you guys see from kind of where the waha prices are the negative waha prices? I know you have some takeaway capacity, I believe in Whistler, so it really impacts when Matterhorn comes on. I think you get some capacity, but just any color there would be helpful. Yeah, hi.
Elvira Scotio: Hello, Good morning, everyone I guess, just one question from.
Elvira Scotto: For me.
Speaker Change: I'll now unpack the key guys see from kind.
Elvira Scotio: Oh boy, the Wahhab price profile for negative wellhead prices I know you have some takeaway capacity I believe on Whistler. So.
Elvira Scotio: Really impact when Matterhorn.
Elvira Scotto: Hassan I think you've got some capacity, but just any color there would be helpful.
Benjamin D. Lamb: We really haven't seen much impact from the challenges at WAHA for the gas that we market. We've already hedged WAHA basis gas last year at prices significantly better than, you know, of course, what you see on the screen today. So it's not a direct price risk to us. And in terms of producer behavior, obviously, it's an oil-directed basin. Nobody's shutting down over negative WAHA prices. But also, given who our customers are, they do a good job of planning their transportation needs.
Speaker Change: Yes, hi.
Benjamin D. Lamb: We really haven't seen much impact from the challenges at Bahar for the gas that we market.
Benjamin D. Lamb: <unk> already hedged wahhab basis.
Benjamin D. Lamb: Last year at prices significantly better than.
Benjamin D. Lamb: Of course, what you see on the screen today, so it's not a direct price risk to us.
Operator: And in terms of producer behavior, obviously, it's an oil directed basins nobody's shutting in over negative wahhab prices, but also just given who our customers are they do a good job of planning their transportation needs and so everyone has has egress out of the base and we're really not seeing much of an impact from what's going on in La right now we are.
Benjamin D. Lamb: And so everyone has egress out of the basin. We're really not seeing much of an impact from what's going on at WAHA right now. We are excited, though, to bring Matterhorn on in the second half because, clearly, the market is demonstrating that there's a need for that capacity.
Benjamin D. Lamb: We're excited though.
Benjamin D. Lamb: To bring matterhorn on in the second half because clearly the market is demonstrating that there is a need for that capacity.
Elvira Scotio: Great, thank you very much.
Speaker Change: Thank you very much.
Elvira Scotio: Yeah.
Operator: Thank you. Our next question comes from the line of Wade Suki with Capital One. Please proceed with your question.
Wheat Suki: Thank you. Our next question comes from the line of wheat Suki with capital. One. Please proceed with your question.
Wade Suki: Good morning, everyone. Thank you for taking my question. Just wondering if you might be able to comment on what you're seeing in the M&A market and maybe maybe contrast how those sort of inorganic opportunities might rank compared to organic, if you don't mind.
Wade Suki: Good morning, everyone. Thanks for taking my question.
Wade Suki: Just wondering if you might be able to comment on what you're seeing in the M&A market and maybe maybe contrast, how those sort of inorganic opportunities might rank compared to organic if you don't mind.
Benjamin D. Lamb: You know, there's, uh... Quite a few assets in private hands that need to find permanent homes. And I do think that seller expectations have somewhat moderated over the last couple of years. But we're going to remain very disciplined in doing anything in the M&A market to make sure that it does exactly what you're talking about, that it competes favorably with the other uses of capital that we have, including all the things that Dilanka has talked about in Louisiana. So while we're always in the flow of those discussions, you're going to see us remain very disciplined.
Wade Suki: Yes.
Speaker Change: There is.
Benjamin D. Lamb: Sure.
Benjamin D. Lamb: Quite a few assets in private hands that need to find permanent homes.
Benjamin D. Lamb: And I do think that.
Benjamin D. Lamb: Seller expectations.
Benjamin D. Lamb: Had somewhat.
Benjamin D. Lamb: Moderator.
Benjamin D. Lamb: Over the last couple of years.
Benjamin D. Lamb: But we're going to remain very disciplined.
Benjamin D. Lamb: And doing anything in the M&A market to make sure that it does exactly what you're talking about but it competes favorably with the other uses of capital that we have including all of the things that <unk> talked about in Louisiana. So while we're always in the flow of those discussions youre going to see us remain very disciplined.
Dilanka Seimon: Got it. Thank you. And just thinking about commercial activity in Louisiana, could you maybe contrast sort of what you're seeing today in terms of pipeline prospects versus, you know, what you might have been saying six months ago, a year ago?
Speaker Change: Got it thank you and just thinking about kind of commercial activity in Louisiana.
Dilanka Seimon: Could you maybe contrast sort of what youre seeing today in terms of pipeline prospects versus.
Dilanka Seimon: You might've been six months ago, a year ago.
Dilanka Seimon: I'll take that one. I think we are seeing the demand driver continue. A lot of the industrial facilities in that region are facing the dynamic of the LNG hole of gas, particularly as the Bench Global Plaquemines facility comes online. So I would say that...
Speaker Change: Well I'll take that one.
Dilanka Seimon: Yes.
Speaker Change: I think we are.
Speaker Change: Being the demand driver to continue a lot of the industrial facilities in that region are facing the dynamic of the LNG full of gas, particularly as a bench local documents facility comes online.
Speaker Change: So I would say that the difference is that people are seeing that demand materialize a lot of people, who kind of tangentially knew this was going to happen, but it's becoming more real as you've seen in the re contracting of all capacity.
Dilanka Seimon: The difference is that people are seeing the demand materialize. A lot of people kind of tangentially knew this was going to happen, but it's becoming more real, as you've seen in the recontracting of our capacity and the ability for us to bring, relatively quickly, these projects to market. And as I mentioned earlier, we have several other projects that we are pursuing, and that, together..., with the participants in that area, kind of coming to terms with the changing dynamic there, I think will go really well for future projects for us.
Wade Suki: Fantastic. Thanks.
Wade Suki: Capacity and the ability for us to bring relatively quickly these projects to market and as I mentioned earlier, we have several other projects that we're pursuing and that together with.
Wade Suki: The participants in that area kind of coming to terms with the changing dynamic that I think bodes really well for future projects for us.
Wade Suki: One more, if I may squeeze it in here, kind of dovetailing off that last bit. More of a macro question. Are you all seeing any signs of a softening or slowdown among your industrial customers? To the extent you can speak to it, no.
Wade Suki: Okay.
Speaker Change: One more if I may squeeze it in here kind.
Wade Suki: Kind of Dovetailing off that last a bit more of a macro question you all seeing any signs of a softening or a slowdown among your industrial customers to the extent you can speak to it.
Dilanka Seimon: No, we are not seeing that. In fact, there are some expansions being announced, particularly on the ammonia side, with all the incentives that are at play currently. The blue ammonia sector is kind of really taking off. Recall that one of these ammonia plants, the world-class train, which is about 1.3 million 30,000 MMBG of gas per day per train.
Wade Suki: No we are not seeing that in fact, there are some expansions being announced particularly on the <unk>.
Dilanka Seimon: Millenia side with all the incentives that are at play currently the blue ammonia sector is kind of really taking off.
Dilanka Seimon: Recall that one of these ammonia plant is kind of the world class.
Dilanka Seimon: Rain, which is about one 3 million tons of ammonia is about a 110 to 100.
Dilanka Seimon: 1000, <unk> of gas per day per train.
Dilanka Seimon: So many are being discussed around the river corridor, around our assets. So that's creating incremental demand, in addition to the kind of robust demand that already exists in that area. One thing I'll add is the storage component with natural gas, price, volatility, together with the demand from the LNG plants that are coming along to meet their operational flexibility. You really need storage, gas storage, to balance that out. The increasing power demand is another reason for that to grow. So I think, again, Jefferson Island Storage, Sorrento Storage, and Napoleonville Storage are very crucially located to absorb that market demand as well. Fantastic. Thank you so much for taking the time to answer my question.
Dilanka Seimon: Many are being discussed around the river cargo around our assets.
Dilanka Seimon: That's creating incremental demand.
Dilanka Seimon: In addition, due to the kind of the robust demand that already exist in that area.
Dilanka Seimon: One thing on that is the storage component with natural gas price volatility together with the the demand from the LNG plants that are coming along to meet their operational flexibility.
Dilanka Seimon: Really need storage gas storage to balance that out.
Dilanka Seimon: The increasing power demand is another reason for that to grow. So I think again, just knowledge CRA job Sorrento storage Napoleon storage.
Dilanka Seimon: Crucially located.
Dilanka Seimon: To absorb that market demand as well. So we are very excited about.
Dilanka Seimon: That opportunity in storage in addition to the transport.
Dilanka Seimon: Fantastic. Thank you so much for taking my questions.
Speaker Change: Thank you.
Operator: Our next question comes from the line of Harry Mathier with Barclays. Please proceed with your question.
Dilanka Seimon: Our next question comes from the line of Harry Mateer with Barclays. Please proceed with your question.
Harry Mathier: Hey, good morning. I have a follow-up on the balance sheet, and I, you know, acknowledge you're a bit below your leverage target, but now you do have IG ratings at two of the three agencies. Does that change anything for you in terms of ways you could optimize the balance sheet, whether that's, you know, different tranches of debt, coupons, or tenor? And, related, when you look at the preferreds, does the shifting narrative recently about the trajectory of rates this year cause you to maybe reconsider paying those down further or maybe replacing them with senior debt since you do have some balance sheet capacity? Thanks.
Harry Mathier: Hey, good morning.
Harry Mathier: I have a follow up on the balance sheet, not acknowledging or a bit below your leverage target but.
Harry Mathier: Now you do have Iga ratings to the three agencies does that change anything for you in terms of ways you could optimize the balance sheet, whether that's you know.
Harry Mathier: Different tranches of debt coupons or tenor and I guess related when you look at the preferreds just.
Harry Mathier: Shifting narrative.
Harry Mathier: Recently about the trajectory of rates. This year cause you to maybe reconsider paying those down further or maybe replacing with senior debt. Since you do have some balance sheet capacity.
Benjamin D. Lamb: Hey, Harry, it's Ben. Lots of impact there. I mean, I think the good news on most of the debt structure is that it was put in place at a time when base rates were significantly lower than they are today. And so, while the upgrade to investment grade is recent. We already had a very low-cost debt structure in place, and so I don't think that there are that many opportunities to optimize within the existing debt structure.
Speaker Change: Hey, heres been.
Benjamin D. Lamb: Lots of unpack there I mean I think the.
Benjamin D. Lamb: The good news on most of the debt structure.
Benjamin D. Lamb: Is that it was put in place at a time when.
Benjamin D. Lamb: Base rates were significantly lower than they are today and so while the upgrade to investment grade is recent.
Benjamin D. Lamb: We already had a very low cost debt structure in place and so I don't think that there are that many opportunities to optimize within the existing debt structure now on the preferred side.
Benjamin D. Lamb: Now, on the preferred side, In general, we still think that it's better value to focus our excess free cash flow on returning capital to the common unit holder, but we have opportunistically reduced the preferred particularly when we can get them below par, which frankly, lately, hasn't been very easy to do. Don't be surprised to continue to see us do a little bit of that opportunistically, but we don't have anything, no current plans to do anything bigger on the preferreds, including by using, as you say, the little bit of leverage capacity that we have, because having just gotten the upgrade from BBB minus, we want to be clear, we're committed to retaining that BBB minus rating, and I think that... Increasing leverage to do that, to deal with the preferreds would, at this point, maybe not be in keeping with that goal.
Harry Mathier: Got it. Very clear. Thank you.
Benjamin D. Lamb: In general, we still think that it's better value.
Harry Mathier: <unk>, our excess free cash flow.
Harry Mathier: On returning capital to the common unitholder, but we have opportunistically reduced the preferreds.
Harry Mathier: Particularly when we can get them.
Harry Mathier: Below par, which frankly lightly hasnt hasnt been very easy to do don't be surprised to continue to see us do a little bit of that opportunistically, but we don't have anything.
Harry Mathier: No current plans to do anything bigger.
Harry Mathier: Preferreds.
Harry Mathier: <unk> by using the <unk> as you say it a little bit of leverage capacity that we have because.
Harry Mathier: Having just gotten the upgrade from triple B minus we want to be clear we're committed to.
Harry Mathier: Retaining that triple B minus rating.
Harry Mathier: I think that.
Harry Mathier: Increasing leverage to do that to deal with the preferreds with at this point with maybe not be in keeping with that goal.
Harry Mathier: Got it very clear thank you.
Jesse Arenivas: Thank you. There are no further questions at this time. I'd like to pass the floor back over to Jesse for closing comments.
Harry Mathier: Thank you there are no further questions at this time I'd like to pass the floor back over to Jesse for closing comments.
Operator: Thank you, Alicia, for facilitating our call this morning and thank everyone for being on the call. As always, we appreciate your continued interest and investment in EnLink. We look forward to updating you with our second quarter results in August. In the meantime, we wish you well and have a great day. This concludes today's webinar. Thank you.
Jesse Arenivas: Thank you Alicia for facilitating our call. This morning, and thank everyone for being on the call as always we appreciate your continued interest and investment in Enlink.
Operator: We look forward to updating with our second quarter results in August and.
Operator: In the meantime, we wish you well and have a great day.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time.
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