Q2 2024 Plains All American Pipeline LP Plains GP Holdings LP Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the 2024 Second Quarter Plains All American Pipeline Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Good day and thank you for standing by welcome to the 2024 second quarter Plains, All American pipeline earnings call.

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

Speaker Change: After the Speakers' presentation, there'll be a question and answer session.

To ask a question. During this session you will need to press star one on your telephone.

Speaker Change: And here the automated advertising your hand is race.

Operator: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I'd like to hand the conference over to your first speaker today, Blake Fernandez, VP of Investment Relations. Please go ahead.

Blake Fernandez: To withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would like to handle corporates over to your first speaker today Blake Fernandez VP of Investor Relations. Please go ahead.

Blake Fernandez: Thank you, Marvin. Good morning, and welcome to Plains All American's second quarter 2024 earnings call. Today's slide presentation is posted on the Investor Relations website under the news and events section at plains.gov, and an Audio Replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide 2. An overview of today's call is provided on slide three. A condensed consolidating balance sheet for BAGP and other reference materials are in the appendix. Today's call will be hosted by our Chairman and CEO, Willie Chak; Executive Vice President and CFO, Al Swanson; and other members of our management team. With that, I will now turn the call over to Willie.

Blake Fernandez: Thank you Marvin and good morning, and welcome to Plains, All American second quarter 2024 earnings call.

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

Blake Fernandez: Audio replay will also be available following today's call.

Speaker Change: Gordon disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide two.

Blake Fernandez: An overview of today's call is provided on slide three our condensed consolidated.

Blake Fernandez: Consolidating balance sheet for PAGP.

Blake Fernandez: And other reference materials are in the appendix.

Blake Fernandez: Today's call will be hosted by our chairman and CEO Willie Chiang.

Speaker Change: Decorative vice President and CFO Al Swanson, and other members of our management team.

Speaker Change: That I will now turn the call over to Willie.

Willie Chak: Thank you, Blake. Good morning, everyone, and thank you for joining us.

Willie: Thank you Blake and good morning, everyone and thank you for joining us.

Willie Chak: Today we reported second quarter adjusted EBITDA attributable to PAA of $674 million. This exceeded our expectations, and it highlights our focus on execution and the ability of our team and asset base to respond to the ever-changing market dynamics. As a result of our year-to-date performance, bolt-on M&A contributions, and momentum as we enter the second half of the year, we're raising the midpoint of our full year 2024 adjusted EBITDA guidance by $75 million to a new range of $2.725 to $2.775 billion.

Speaker Change: Today, we reported second quarter adjusted EBITDA attributable to PAA of 674 million this exceeded our expectation and it highlights our focus on execution and the ability of our team and asset base to respond to the ever changing market dynamics.

Speaker Change: As a result of our year to date performance bolt on M&A contributions and momentum as we enter the second half of the year, we're raising the midpoint of our full year 2024, adjusted EBITDA guidance by $75 million to a new range of $2 75.

Speaker Change: To two 775 billion our.

Willie Chak: Our 2024 production outlook remains unchanged at an increase of 200,000 to 300,000 barrels a day able to exit with the back half waiting. I would also note that while rigs are trending slightly below our initial expectations, efficiencies have largely offset the impact of a lower overall rig count. A high-level overview of our second quarter results and updated 2024 guidance is shown on slides 3 and 4. Consistent with our efficient growth strategy, Plains facilitated and acquired an additional 0.7% interest in the Wink-to-Webster Pipeline Company from Rattler Midstream for an aggregate cash consideration of approximately $20 million.

Speaker Change: Our 2024 production outlook remains unchanged at an increase of 200 to 300000 barrels a day exit to exit with a back half waiting.

Willie: I would also note that while rigs are trending slightly below our initial expectations efficiencies have largely offset the impact of a lower overall rig count.

Speaker Change: A high level overview of our second quarter results and updated 2024 guidance shown on slides three and slide four.

Willie: Consistent with our efficient growth strategy planes facilitated and acquired an additional.

Willie: 7% interest in the Wink to Webster pipeline company from Rattler midstream for an aggregate aggregate cash consideration of approximately $20 million and while this transaction is small it is a great example of how our numerous joint ventures partnerships and joint ownership agreements provide us with a robust opportunity set as far as potential.

Willie Chak: Now, while this transaction is small, it's a great example of how our numerous joint ventures, partnerships, and joint ownership agreements provide us with a robust opportunity set as far as potential bolt-on transactions. Slide five provides an overview of our bolt-on activity since the second half of 2022. During this time, we've completed eight bolt-on acquisitions for an aggregate investment of approximately $535 million net to Plains. These transactions all complement our existing asset base, include strong returns that meet our thresholds, create incremental efficient growth opportunities, and enhance our financial profile. With that, I'll turn the call over to Al. Thanks, Will.

Willie: Bolt on transactions Slide five provides an overview of our bolt on activity since the second half of 2022. During this time, we've completed eight bolt on acquisitions for an aggregate investment of approximately $535 million net to plains. These transactions all complement our existing asset base.

Willie: Include strong returns that meet our thresholds create incremental efficient growth opportunities.

Al Swanson: And enhance our financial profile with that I'll turn the call over to al.

Al Swanson: Thanks, Willie. We reported second quarter adjusted EBITDA net to PAA of $674 million. This reflects the benefit of higher tariff volumes and several market-based opportunities in our crude oil segment. The NGL segment experienced a favorable ISO to normal butane spread along with higher frac spreads on our unhedged C3 plus spec product sales.

Al Swanson: We reported second quarter, adjusted EBITDA net to PAA of $674 million.

Al Swanson: This reflects the benefit of higher tariff volumes in several market based opportunities in our crude oil segment.

Al Swanson: The NGL segment experienced favorable ISO to normal butane spreads along with higher frac spreads on our unhedged see three plus spec product sales.

Al Swanson: Across both of our crude oil and NGL segments, we benefited from lower than expected operating expenses. Some of this will reverse in the second half of the year, but we remain diligent in managing costs and running efficient operations. Slides 9 and 10 in today's appendix contain charts that provide details on our second quarter performance. A summary of our updated 2024 guidance is on slide 11. Shifting to capital allocation, as illustrated on slide 6, for 2024, we expect to generate approximately $1.55 billion of adjusted free cash flow, excluding changes in assets and liabilities and including $130 million of bolt-on acquisitions, with approximately $1.15 billion to be allocated to common and preferred distribution.

Willie: Cross both of our crude oil and NGL segments, we benefited from lower than expected operating expenses.

Willie: Some of this will reverse in the second half of the year, but we remain diligent in managing costs and running efficient operations slides nine and 10 in today's appendix contain walks that provide details on our second quarter performance. A summary of our updated 2024 guidance is on slide 11 shifting.

Al Swanson: Shifting to capital allocation is illustrated on slide six for 2024, we expect to generate approximately $155 billion of adjusted free cash flow.

Al Swanson: Excluding changes in assets and liabilities and including $130 million of bolt on acquisitions with approximately $1 $5 billion to be allocated to common and preferred distributions. We will also continue to self fund our capital program with $375 million of growth capital and 200.

Al Swanson: We will also continue to self-fund our capital program with $375 million of growth capital and $250 million of maintenance capital net to PAA. Finally, in June, we issued $650 million of senior unsecured notes due in 2034 at a rate of 5.7%. We will use the note, the proceeds, and cash to repay the $750 million note maturing in November. With that, I'll turn the call back to Willie.

Speaker Change: $50 million of maintenance capital net to PAA. Finally in June we issued $650 million of senior unsecured notes due in 2034 at a rate of five 7% when we use the note proceeds and cash to repay the $750 million note maturing in November with that I'll turn the call back to <unk>.

Al Swanson: Okay.

Willie Chak: Today's results reflect another quarter of strong execution, and we remain confident in our ability to continue delivering on our goals and initiatives. We're progressing our disciplined bolt-on strategy, and our efficiency efforts are resulting in cost containment throughout the company. Over the coming years, we expect a more durable and resilient cash flow profile, underpinned by contract extensions in the Permian long-haul business and a shift towards more stable fee-based cash flow in our NGL sector.

Speaker Change: Thanks Al today's results reflect another quarter of strong execution, and we remain confident in our ability to continue delivering on our goals and initiatives.

Speaker Change: We're progressing our disciplined bolt on strategy and our efficiency efforts are resulting in cost containment throughout the company.

Speaker Change: Over the coming years, we expect a more durable and resilient cash flow profile underpinned by contract extensions in the Permian long haul business and a shift towards more stable fee based.

Willie: Cash flow in our NGL segment.

Willie Chak: Plains remains well positioned as North American energy supply will continue to be critical to energy reliability, affordability, and security for the foreseeable future. Our strong operational and equity performance continues to reaffirm our strategy of capital discipline, generating meaningful free cash flow and increasing return of capital to our unit holders while maintaining financial flexibility. We appreciate your continued interest and support in Plains, and we look forward to providing further updates at our Earnings Conference in November. With that, I'll turn the call over to Blake, who will lead us into Q&A. Thank you, Willie.

Speaker Change: <unk> remains well positioned as north American energy supply will be continue to be critical to energy reliability affordability and security for the foreseeable future our strong operational and equity performance continues to reaffirm our strategy of capital discipline generating meaningful free cash flow and increasing return on capital to Europe.

Speaker Change: Unit holders, while maintaining financial flexibility.

Willie: We appreciate your continued interest and support in planes and we look forward to providing further updates on our earnings conference in November with that I'll turn the call over to Blake, who will lead us into Q&A. Thank you willing as we enter the Q&A session. Please limit yourself to one question and one follow up for those with additional questions. Please feel free to return to the queue. This.

Blake Fernandez: Thank you, Willie. As we enter the Q&A session, please limit yourself to one question and one follow-up. For those with additional questions, please feel free to return to the Q&A. This will allow us to address questions from as many participants as possible in our available time this morning. The IR team will also be available after the call to address any additional questions you may have. Marvin, please open the call for questions. Thank you.

Marvin: It will allow us to address questions from as many participants as possible in our available time. This morning. The IR team will also be available after the call to address any additional questions. You may have Marvin please open the call for questions.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question and a follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tristan Richardson of Scotiabank.

Marvin: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one plus one can wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question and a follow up please standby, while we compile the Q&A roster.

Willie: Our first question comes from the line of Tristan Richardson of Scotiabank. Your line is now open.

Tristan Richardson: Hey, good morning, guys. Good morning.

Tristan Richardson: Hey, good morning, guys. Good morning, maybe just a.

Tristan Richardson: Maybe just a question, Willie, on the crude segment, seeing the guide come up there. And you noted that you're seeing, your producer customers are seeing greater efficiencies. Curious if, I mean, is efficiencies better than expected kind of the key source of the change in the outlook for the cruise segment? And then, you know, I guess we've heard from producers this earnings season that these efficiency gains appear pretty sustainable as you look into 2025.

Tristan Richardson: Question really on the crude segment seeing the guidance come up there and you noted youre seeing.

Tristan Richardson: Your producer customers are seeing greater efficiencies curious if is that efficiencies better than expected kind of the key source of the change in the outlook for the crude segment and then I guess.

Speaker Change: We've heard from producers this earning season.

Speaker Change: These efficiency gains appear pretty sustainable as you look into 2025.

Tristan Richardson: You'd be kind of curious about the driver of the 2024 move, A, and then B, sort of how you see efficiency gains trending as you exit into and look to the beginning of 2025. Hey Tristan, this is Jeremy.

Speaker Change: Curious sort of.

Speaker Change: The driver of the 2024 move a and then b sort of how you see efficiency gains trending as you exit into and look to the beginning of 'twenty five.

Jeremy Goebel: Hey Tristan, this is Jeremy. The overall guidance change was part MGL and part crude. Within the crude segment, there are some opportunistic acquisitions in Canada and the U.S. As far as production growth is concerned, it's been in line with expectations, but the producer has been able to do less with more. We've maintained the 200,000 to 300,000 barrels of daily production growth guidance, a little bit of outperformance in the Midland, and a little underperformance in the Delaware, driven by infrastructure constraints and lower natural gas prices, but we see those deferrals of completions into the beginning of next year.

Willie: Hey, Chad this is Jeremy.

Chad: Overall guidance change was part NGL or crude within the crude segment. There are some opportunistic captures in Canada and the U S.

Speaker Change: As far as production growth has been in line with expectations, but the producers have been able to do less but more.

Willie: We're maintaining the 200 to 300000 barrels a day.

Speaker Change: <unk> growth guidance, a little bit of outperformance in the Midland a little underperformance of the Delaware driven by.

Willie: Infrastructure constraints and lower natural gas prices, but we see those deferrals and places us at the beginning of next year. So we think.

Jeremy Goebel: We think a healthier, efficient producer is good for our business long term, increasing recovery, lower cycle times, us chasing fewer connections, and more efficient capital on their side than ours, so I'd say it's directionally positive. It's not the sole source for the increase in guidance, but it's a positive trend for us.

Speaker Change: Our efficient producer is good for our business long term, increasing recovery lower cycle times us chasing less connections more efficient capital on their side and ours. So I'd say its directionally positive it's not the sole source for the increase in guidance, but it's a positive trend for us.

Jeremy Goebel: I appreciate it, Jeremy. And then maybe just the follow up on the NGL segment, you know, presumably as the business becomes more fee-based and mixed, you know, especially next year, curious how we should think about less variability in the NGL business longer term, and then maybe sort of at a high level, sort of where a base level of earnings for the NGL segment is once we have become more fee-based.

Willie: I appreciate it Jeremy and then maybe just the follow up on the NGL segment.

Jeremy: Presumably is.

Speaker Change: As the business becomes more fee based and mix, especially next year curious, how we should think about.

Speaker Change: Less variability in the NGL business longer term and then maybe sort of at a high level sort of where.

Speaker Change: Our base level of earnings for the NGL segment is once we once we have become more fee based.

Jeremy Goebel: This is Jeremy again. What I would say is we're not going to get forward guidance on the NGL segment, but we've entered into a 15-plus year contract that has replaced roughly a third of our frack spread exposure. We're investing $150 to $200 million to replace that business with gathering, fractionation, storage, and transportation. It's going to look just like an integrated NGL value chain, which we already have. This is bolting on and bolstering that piece, so we'll move from roughly 60-40 frack spread exposed to less than 50-50. I'd say, longer term, this is definitely a more predictable chain, but we do like the straddle business, and we'll continue to lean into that business as well.

Willie: Yes, Justin this is Jeff.

Jeremy: Jeremy again.

Speaker Change: I would say is we're not going to give forward guidance on the NGL segment, but.

Jeremy: Engineered into 15, plus year contracts, which is replaced roughly a third of our frac spread exposure.

Jeremy: We're investing $150 million to $200 million to replace that business with gathering fractionation storage transportation. So it's going to look just like an integrated NGL value chain, which we already have this is bolting on and bolstering that peso will move from roughly 60, 40, frac spread exposed to less than 50.

Jeremy: So I would say longer term this is definitely a more.

Jeremy: Predictable chain, but we do like the straddle business and we'll continue to lean into that business as well and Tristan. This is really just to reinforce that point also.

Willie Chak: And Tristan, this is Willie. Just to reinforce that point also, you know, historically, the market's been very seasonal. It will always be seasonal, but what you see us doing by going to more fee-based starts to flatten that saddle out a little bit. I think there will always be seasonal opportunities, but everything we're doing, as Jeremy pointed out, going to more fee-based, trying to flatten the saddle out, expanding our facilities over at Fort Saskatchewan, all play into that.

Tristan Richardson: Historically the market has been very seasonal it will always be seasonal, but what you see us doing by going into more fee based starts to flatten that settle out a little but I think there'll always be seasonal opportunities.

Jeremy: But everything we're doing as Jeremy pointed out going to more fee based.

Jeremy: To flatten the saddle out expanding our facilities over at Fort Saskatchewan, all play into that.

Willie Chak: I appreciate it. Thank you guys very much. Thanks Tristan. Thank you.

Jeremy: I appreciate it. Thank you guys very much thanks Tristan.

Operator: Thank you one moment for our next question. Our next question comes from the line of Michael Blum of Wells Fargo. Your line is now open.

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

Speaker Change: Our next question comes from the line of Michael Blum of Wells Fargo. Your line is now open.

Michael Blum: Thanks. Good morning, everyone. I want to ask you on your, I believe it was your last call, you said that you expected the cruise segment EBITDA in 2026 to be roughly flat at 24 EBITDA. Just wondering if that's still a good, a true statement, given the increase in 24 EBITDA.

Michael Blum: Thanks, Good morning, everyone.

Michael Blum: Wanted to ask on your <unk>.

Speaker Change: Last call you.

Speaker Change: <unk> said that you expect to be.

Speaker Change: Segment EBITDA in 2026 will be roughly flat with $2000 or EBITDA I'm, just wondering if thats still a good that's a true statement given the increase in.

Speaker Change: <unk> EBITDA guidance here.

Willie Chak: Yeah, Michael. This is Willie. I'll take that one.

Speaker Change: Yes, Michael this is Willie I'll take that one.

Willie Chiang: Our perspective hasn't changed.

Speaker Change: As you think about our performance this year versus 2026 same perspective.

Speaker Change: I just want to highlight last time on the call. The reason, we talked about that and gave not formal guidance, but a framework of kind of what we're thinking was to make sure people understood that with these renegotiations of contracts, we don't expect a cliff falling off in 'twenty six.

Willie Chak: Our perspective hasn't changed. So as you think about our performance this year versus 2026, the same perspective. I just want to highlight, last time on the call, the reason we talked about that and gave not formal guidance but a framework of kind of what we're thinking was to make sure people understood that with these renegotiations of contracts, we don't expect a cliff falling off in 2026. So the short answer, again, is no change to the perspective on the crude segment. We're always working on a lot of things there to try to bolster our crude business, and more guidance will come as we outline 25, 26, as far as formal guidance is concerned.

Willie Chiang: No short answer again is no change to the perspective on the crude segment, we're always working on a lot of things there to try to to.

Willie Chiang: To bolster our crude business and more guidance will come as we outlined 'twenty five 'twenty six as far as formal guidance coming out later.

Michael Blum: Okay, got it. Thanks for that. And then, just to continue the discussion on Permian production growth, just wanted to get your perspective, just how you see things playing out over the balance of this year and next, and do you think over the next, you know, few years, you could see a scenario where Permian crew takeaway could get tight again?

Speaker Change: Okay got it thanks for that and then.

Speaker Change: Continuing the discussion on Permian production growth.

Speaker Change: Wanted to get your perspective, just how you see things playing out over the balance of this year and next and do you think over the next.

Speaker Change: Few years.

Speaker Change: Could see a scenario, where Permian crude takeaway could get tight again thanks.

Jeremy Goebel: Michael, this is Jeremy. In the near term, like we said, there are some infrastructure constraints, mostly in New Mexico, that is, water, and gas. Lower gas prices just lend more completions in the Midland Basin. But we see that as pipelines come on, there was another one announced yesterday, but as we get fourth quarter relief, you're going to see the ability to add more production growth. So it'll be a little lumpy as we hit infrastructure constraints, but we see a directionally continuing increase of the 200,000 to 300,000 barrels a day a year that we've stayed with, and naturally the basin will get tighter. Four differentials don't reflect that for next year, but contracting discussions, as we've just had and others are having, reflect that the industry is looking to sell more away from Midland as time progresses.

Jeremy: Michael This is Jeremy.

Jeremy: The near term like we said there are some infrastructure constraints, mostly in new Mexico that being water gas and lower gas prices just lend more completions in the Midland.

Michael Blum: But we see that as pipeline.

Speaker Change: Pipeline is another one announced yesterday, but.

Speaker Change: As we get fourth quarter release, Youre going to see the ability to add more production growth. So it'll be a little lumpy as we head infrastructure constraints, but we see it directionally continuing increase in the 2% to 300000 barrels a day a year that we've.

Speaker Change: Stay with and that's really the base and we will get tighter.

Speaker Change: For differentials don't reflect that for next year, but contracting discussions or as we've just had and others are having reflect that the industry is looking to sell more away from Midland as time progresses. So I'd say, that's directionally positive for our business and everything's happening in line with the discussions we had with our shippers in the contract when we just completed.

Speaker Change: Thank you.

Speaker Change: Yes.

Operator: Thank you one moment for our next question. Our next question comes from the line of Jeremy Tonet of JPMorgan Securities. Your line is now open.

Speaker Change: Thank you next question.

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

Jeremy Tonet: Hi, good morning.

Jeremy Tonet: I just wanted to pick up, I guess, on the M&A opportunity set, more kind of little bolt-ons there. How much depth do you see to that opportunity set going forward here? Just trying to get a feeling for what you see there.

Jeremy: Hey, Jeremy.

Jeremy: Hey, just wanted to.

Jeremy: Pick up I guess on M&A opportunity set more and more kind of little bolt ons. There how much debt do you see to the opportunity set going forward here just trying to get a feeling for what you see there.

Willie Chak: Yeah, thanks for the question, Jeremy. We've, you know, you've heard us talk about efficient growth and bolt-ons and, quite frankly, it's been a niche for us, and the reason we showed the slide in the deck is to show just the number that we've done. And if you think about our asset base, where it sits, and the integrated nature of it, we're really, I think, uniquely positioned to be able to capture synergie

Speaker Change: Yes, thanks for the question Jeremy.

Speaker Change: You've heard us talk about efficient growth and bolt ons and quite frankly, it's been a niche for us and the reason we showed this slide in the deck is to show.

Jeremy Tonet: Just the number that we've done and if you think about our asset base, where it sits in the integrated nature of it we're really I think uniquely positioned to be able to capture synergies. So a lot of these bolt ons.

Willie Chak: So a lot of these bolt-ons, you know, they aren't processes that come out, but it's more in discussions with our partners to see how we get to win-win solutions, and we've demonstrated that we can do that, and these are bite-sized, but they certainly, when you add them up, make a meaningful difference, and the returns are great on them, and we think it's a great, great use of So we'll continue to try to advance and develop those. I think if you think about the environment and where capital is tight, different partners have different constraints and desires. It's kind of a target-rich environment to be able to have discussions like that.

Speaker Change: They arent processes that are.

Jeremy Tonet: Formally.

Jeremy Tonet: Come out, but its more in discussions with our partners to see how do we get to win win solutions and we've demonstrated that we can do that and these are bite sized but they certainly and when you add them up make a meaningful difference.

Speaker Change: And the returns are great on them and we think it's a great great use of our free cash flow.

Jeremy Tonet: So we will continue to.

Speaker Change: To try to advance and develop those I think if you think about the environment and where capital is tight differ.

Speaker Change: Different partners have different constraints and desires.

Speaker Change: It's kind of a target rich environment to be able to have discussions and the question is how many of them can you bring to fruition and we'll just continue to plug away on that and then maybe just to take it one step further if you were asking about broader M&A and opportunity sets.

Willie Chak: And the question is, how many of them can you bring to fruition? And we'll just continue to plug away at that. And then maybe just to take it one step further, if you were asking about broader M&A and opportunity sets, we've been pretty open on the views that we think there is going to be more consolidation across the industry, whether it be upstream, midstream, downstream, just because capital is more expensive and you start growing a little bit more through efficiencies and synergy.

Speaker Change: <unk> been pretty open on the views that we think there is going to be more consolidation across the industry, whether it be an upstream midstream downstream just because.

Speaker Change: Our capital is more expensive and you start growing a little bit more through efficiencies and synergies and.

Willie Chak: As we look at those, we're just going to stay very disciplined, and if it makes sense for the unit holders to consider something like that, we would certainly be open. But in the meantime, I think there's sufficient growth with bolt-ons. We have a deep, deep opportunity set there, and we'll see what we can bring across the line.

Speaker Change: As we look at those we're just going to stay very disciplined and if it makes sense to the unit holders to consider something like that we would certainly be open but in the meantime, I think the sufficient growth with bolt ons, we have a deep deep opportunity set there and we'll see what we can bring bring bring across the line.

Jeremy Tonet: Got it. That's very helpful there. And then maybe going a little bit further with Permian Egress supply and demand, just wondering if you could provide a bit more color on customer conversations at this point. Do they see tightening, and that kind of brings a different tone to the conversation, or just kind of wondering how you think that stands right now? I would say

Speaker Change: Got it that's very helpful. There and then just.

Speaker Change: Maybe go into a little bit further with Permian egress supply demand.

Speaker Change: Just wondering if you could provide a bit more color on customer conversations at this point do they.

Speaker Change: See tightening and that kind of brings a different tone to the conversation or just kind of wondering how you think that stands right now.

Jeremy Goebel: I would say that we've had constructive dialogue. Obviously, last quarter, we gave a significant update on our pipeline. Those are large shippers that have renegotiated with us, and we'll certainly see where there's available capacity. We're having a constructive dialogue. I don't want to speak to specific pipes or interests. There's a certain amount of exposure we want to retain because we see value and we need to clear the barrels our marketing facility buys. But with our third-party customers, we're having very constructive dialogue, but we're gonna be patient.

Speaker Change: I would say that.

Speaker Change: We've had constructive dialogue, obviously last quarter, we gave a significant update on our pipes. Those are large shippers that re contracted with us.

Speaker Change: And we're certainly see where there's available capacity, we're having constructive dialogue I don't want to speak to specific pipes or interest.

Speaker Change: There is a certain amount of exposure, we want to retain because we see value and we need to clear the barrels our marketing affiliate buys but with our third party customers were having very good.

Speaker Change: Constructive dialogue, but we're going to be patient.

Willie Chak: Jeremy, this is Willie. A couple of other things on that. You know, the last time we talked about the extension of our long-haul contracts, and I think this really, our strategy there is really playing into what we think is going to happen. You know, if you think about the last time the market was constrained, it was back in the 2014-15 range, 16, and then there was a lot of capacity built, and there was some, you know, markets were tight, spreads were wide, and we always expected at this point you would start tightening the spare capacity, and I think the strategy on the long-haul extensions to 28-29-30 fit well, as well as retaining some open space Got it, that's helpful. Thank you. Thank you.

Speaker Change: Jeremy This is Willie a couple of other things on that last time, we talked about the <unk>.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Manav Gupta of UBS. Your line is now open.

Jeremy Tonet: Tension of our long haul contracts.

Speaker Change: And I think Thats really our strategy. There is really playing into what we think is going to happen if you're thinking about the last time the market was constrained it was back in the $2014 15 range 16.

Speaker Change: And then there was a lot of capacity built and there were some markets where tight spreads were wide and we always expected at this point you would start tightening the spare capacity and I think the.

Speaker Change: The strategy on the long haul extensions to 29% to 28, 2930 fit well as well as retaining some open space on.

Speaker Change: The ability to capture margins between Midland and the Gulf Coast is a strategy that we've laid out and I think it will it will pan out pretty well.

Speaker Change: Got it that's helpful. Thank you thank.

Speaker Change: Thank you.

Speaker Change: Thank you Juan for next question.

Speaker Change: Our next question comes from the line of Manav Gupta of UBS. Your line is now open.

Manav Gupta: Congratulations, guys. I just wanted to focus a little bit on the lower operating expenses and lower costs. You did mention it was part of the plan.

Manav Gupta: Hey, Congrats guys I just wanted to focus a little bit on the lower operating expenses lower cost you did mention it was part of the beat.

Speaker Change: And to understand what part of it is sticky.

Speaker Change: What can actually gone and benefit you in the second half of 2024 without going into 'twenty five as it relates to even loading overall expenses in cost.

Chris Chandler: So trying to understand what part of it is sticky, what can actually go on and benefit you in the second half of 2024 and 2025 as it relates to, you know, lowering overall expenses and costs.

Speaker Change: Hey, good morning, Manav This is Chris Chandler.

Speaker Change: I will note that some.

Speaker Change: Some of the lower cost in the first half were our ability to successfully.

Speaker Change: First some spend into the second half so that won't necessarily be stick.

Speaker Change: Sticky, but we're of course always looking to optimize our operating cost.

Speaker Change: It.

Speaker Change: Certainly varies as volumes vary in utility prices very well.

Speaker Change: We will look to optimize that going forward, but some of that was first half second half deferrals.

Speaker Change: Okay, and any commentary on the possibility of redeeming the preferred like in the future that could lower your cost of capital.

Al Swanson: This is al.

Speaker Change: No change in our thinking at this time.

Speaker Change: But as we have articulated we do recognize that there may be a point in the future, where we will reconsider that so near term no medium to longer term.

Speaker Change: We will reevaluate that.

Speaker Change: Thank you.

Speaker Change: Thank you Juan for next question.

Speaker Change: Our next question comes from the line of Keith Stanley of Wolfe Research. Your line is now open.

Chris Chandler: Hey, good morning, MNAB. This is Chris Chandler.

Keith Stanley: Hi, Good morning, I think I clock here prepared remarks at six minutes, that's a new record for you guys. So congrats.

Speaker Change: Sure.

Speaker Change:

Speaker Change: Wanted to ask first on <unk>.

Speaker Change: Capital allocation.

Speaker Change: You, having another really good year above expectations in the past when that's happened I think you've been open about raising the distributions sooner or in larger size is that something that would be potentially on the table again or should we still assume 15 per unit Q4 is the target.

Al Swanson: I will note that some of the lower costs in the first half were our ability to successfully defer some spend into the second half, so that won't necessarily be sticky, but we're, of course, always looking to optimize our operating costs. It certainly varies as volumes vary and utility prices vary, and we'll look to optimize that going forward, but some of that was from the first half to the second half.

Speaker Change: Yes, Keith this is Walter thanks for the question.

Walter: I think we've been pretty steadfast in laying out our capital allocation strategies and to answer your question directly we've demonstrated and we will continue to.

Al Swanson: And any quick commentary on, you know, the possibility of redeeming the preferreds, like, in the future, that could lower your cost of capital?

Manav Gupta: This is Al. No change in our thinking at this time, but as we have articulated, we do recognize that there may be a point in the future where we'll reconsider that. So, near term now, medium to longer term, we will reevaluate. Thank you, guys.

Operator: Thank you one moment for the next question. Our next question comes from the line of Keith Stanley of Wolf Research. Your line is now open.

Speaker Change: To focus on returns of capital to our to our unit holders. If we are able to.

Keith Stanley: Hi, good morning. I think I clocked your prepared remarks at six minutes. That's a new record for you guys, so congrats on that. I wanted to ask first about capital allocation. You're having another really good year above expectations. In the past, when that happened, I think you've been open about raising the distribution sooner or in a larger size. Is that something that could potentially be on the table again, or should we still assume 15 cents per unit in Q4 as the target?

Speaker Change: Have sustainable EBITDA going forward.

Speaker Change: Absolutely, we'll consider that as we do our annual reviews on distribution.

Walter: We've done 220 <unk> increases.

Speaker Change: We've stated the 15th.

Speaker Change: And it's an annual increase that we look at early every year, but to answer your question again.

Speaker Change: Absolutely.

Speaker Change: Part of our part of our discussions we want to get back more cash to the unitholders if we can.

Speaker Change: Great. Thanks, Thanks for that.

Speaker Change: Just tying back to the Permian any early thoughts you would give on 2025 and the trajectory for volumes. There just given what youre seeing with efficiencies producer consolidation I think Jeremy alluded to relief when Matterhorn comes on just any thoughts just directionally for next year.

Keith Stanley: Great, thanks for that. Second, just tying back to the Permian, any early thoughts you would give on 2025 and the trajectory for volumes there, just given what you're seeing with efficiencies, producer consolidation, I think Jeremy alluded to relief when Matterhorn came on, just any thoughts just directionally for next year? You know, Keith, this is Willie again.

Willie Chak: Yeah, Keith, this is Willie. Thanks for the question. I think we've been pretty steadfast in laying out our capital allocation strategies. And to answer your question directly, we've demonstrated, and we will continue to focus on returns of capital to our unit holders. If we are able to have sustainable EBITDA going forward, we absolutely will consider that as we do our annual reviews on this. We've done 220-cent increases, we've stayed at the 15 cents, and it's an annual increase that we look at early every year, but to answer your question again, it's absolutely... As part of our discussions, we want to get back more cash to the unit holders.

Speaker Change: Keith This is Willie again, we're not we haven't given long term guidance, but I'll give you. Some general thoughts we play for the long term and our belief is that the Permian will be a key basin for the world.

Willie Chak: You know, Keith, this is Willie again. We haven't given you long-term guidance, but I'll give you some general thoughts. We've played for the long term, and our belief is that the Permian will be a key basin for the world. Our growth of 200 to 300, I think we've directionally said we expect that kind of to be closer to that than some of the incredible growth numbers that we've had in the past.

Speaker Change: Our growth of two to 300 I think directionally.

Speaker Change: Directionally said, we expect that kind of to be.

Speaker Change: More closer to that than some of the incredible growth numbers that we've had in the past there will be constraints there will be <unk>.

Willie Chak: There will be constraints, there will be lumpiness in the growth profile, but we are pretty bullish on the Permian and technology and some of the synergies that the E&P side has with the consolidations on being able to develop it more responsibly. So, or more efficiently, and more efficiently, not responsibly.

Speaker Change: <unk> in the growth profile, but we are pretty bullish on the Permian and technology and some of the.

Speaker Change: The synergies that the E&P upside is with the consolidations on being able to develop more responsibly so more efficiently.

Speaker Change: More efficiently not responsibly.

Speaker Change: Thank you.

Speaker Change: Thanks.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Spiro Dounis of Cities. Your line is now open.

Speaker Change: Thank you wound for next question.

Spiro <unk>: Our next question comes from the line of Spiro <unk> of Citi. Your line is now open.

Spiro Dounis: Thanks, Operator. Good morning, guys. I wanted to go back to Permian Egress just quickly. So, certainly respect that you can't say much for commercial reasons, but maybe if you could just give us a sense of maybe what's open to contract here and help us sensitize how to think about the impact. And as we think kind of out the 2026 plus, with more pipeline capacity coming, what is your appetite to have, you know, kind of a more than 10% contract book open at that point? Spiro, this is Jeremy.

Spiro <unk>: Thanks, operator, good morning, guys.

Spiro: Wanted to go back to Permian egress quicker.

Spiro: Quickly. So certainly respect that you can't say much for commercial reasons, but maybe if you could just give us a sense on maybe whats open to contract here.

Speaker Change: And help us sensitize kind of think about the impact.

Speaker Change: As we think kind of out to 2026 plus.

Speaker Change: More pipeline capacity coming what is your appetite to have kind of a more than 10% contract book open at that point.

Jeremy Goebel: Spiro, this is Jeremy. We haven't provided that and don't intend to, but I would say that there's a small amount on Cactus 1 and Cactus 2, and then Bateson has...

Jeremy Goebel: We haven't provided that and don't intend to, but I would say that there's a small amount on Cactus 1 and Cactus 2, and then...

Speaker Change: Sure. This is Jeremy if we havent provided that and don't intend to do but I would say that there is.

Speaker Change: Small amount on cactus one in cactus to in basin has.

Speaker Change: So Alex on contracted capacity Bridgetex does have some as well.

Speaker Change: 90% non operated interests that you might want to talk to one over there.

Speaker Change: Cactus wanted to are largely contracted.

Speaker Change: We've retained some space to sell our dock and then some other things that we do and then there's some space available to Cushing as well.

Spiro Dounis: Got it. Okay. Thanks, Jeremy. Second one, maybe just quickly on the volume guidance. Notice that the Permian intrabasin looks like it's stepped up a bit, but gathering has stepped down a bit.

Speaker Change: Got it okay. Thanks, Jeremy.

Speaker Change: Second one maybe just quickly on the volume guidance noticed that the Permian intra basin. It looks like that stepped up a bit of a gathering stepped down a bit and so sorry, if I missed it maybe you can just walk us through the dynamics there what's going on.

Spiro Dounis: And so sorry if I missed it. Maybe you just walk us through the document there of what's going on. Sure. This is Jeremy again.

Jeremy Goebel: Sure, this is Jeremy again. It's largely associated with transportation to Colorado City to hit other connecting carriers out of space. The pipelines toward Corpus are all full, so this is just getting additional barrels of production growth from the basin out to Colorado City and hitting either the Houston or mid-continent markets. And some of that's a reflection of TMX.

Jeremy Goebel: It's largely associated with transportation to Colorado City to reach other connecting carriers out of space, the Pipeline.

Speaker Change: Sure. This is Jeremy again.

Speaker Change: It's largely associated with the transportation to Colorado City, and other connecting carriers that space.

Speaker Change: The pipeline of towards Corpus or all the bulk of it is just getting additional barrels production growth from the basin out to Colorado City, and hitting the Houston or may kind of end markets and some of that to reflect in <unk>.

Spiro Dounis: You see, if the heavy barrels leave the mid-continent, there's some other barrels that have to take their place. So we've seen some impact on the basin and some on... Since Wing to West is extended into Beaumont, you're seeing more flows into Houston that can come across BridgeTech. So it's just as new pipeline dynamics add, as production goes, comes and finds new markets.

Speaker Change: If the heavy barrels late in the mid continent. There are some other barrels that have to take into place. So we have seen some impact on basin and so on.

Speaker Change: Since wink to Webster extended into Beaumont Youre seeing more flows into Houston that can cover bridgetex. So it's just as new pipeline dynamics added as production goes.

Speaker Change: And the new markets.

Operator: Got it. Helpful as always. Thanks, Dean.

Dave: Got it helpful as always thanks, Dave.

Neal Mitra: Thank you. One moment for our next question. Our next question comes from the line of Neal Mitra of Bank of America. Your line is now open.

Speaker Change: Thank you Bob for next questions.

Jeremy Goebel: Hi, thanks for taking my question. It looks like the 25 frack spread in Canada has, you know, peaked up to close to 70 cents a gallon. Have you started looking at hedging that out and adding more stability on top of your fixed fee contracts that you talked about last quarter? Hey Neal, this is Jeremy. We have a continuous program of looking at heading on the 4th.

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

Neel Mitra: Alright, Thanks for taking my question it looks like the 25.

Speaker Change: <unk> spread in Canada.

Neel Mitra: In 25 peaked up to close to 70 cents a gallon have you started looking at hedging that out and adding more stability on top of the year.

Speaker Change: The contracts that you talked about last quarter.

Jeremy Goebel: Hey Neal, this is Jeremy. We have a continuous program of looking at hedging on a forward basis and for the current year and for the prompt year. Absolutely, we're looking forward, and we try to have a rolling program. So we're not going to provide guidance at this point, but we see market signals, and we're opportunistic about trading around those positions and putting hedges on as well. So we continue to look at it. It's not something we're going to provide an update on now, but we absolutely pay attention to the forward price spread. It's steeply backwardated, and so opportunities are fewer and liquidity is lower on the forward basis, but it's definitely something we monitor and are active in.

Neel Mitra: Hey, Neil this is Jeremy we have a continuous program of looking at hedging on a forward basis.

Neil: Current year and crop year, absolutely, we're looking forward and we try to add a rolling program. So we're not going to provide guidance at this point, but we see market signals.

Neel Mitra: We're opportunistic around trading around those positions and putting hedges on as well. So we continue to look at it is that something where I provide an update now, but we absolutely pay attention to the forward frac spread it steeply backward dated.

Speaker Change: So the opportunities are fewer and liquidity fewer on the forward basis, but it's definitely something we monitor.

Jeremy Goebel: And, Neal, we typically give guidance closer to the beginning of the year, and as you probably know, the liquidity for the ability to hedge, as you move further out, it's more difficult. So more to come on that.

Dave: We're active in.

Dave: We typically give guidance closer to the beginning of the year.

Dave: And as you'll know as you probably know the liquidity for the ability to hedge it.

Dave: You move further out it's more difficult so more to come on that.

Neal Mitra: Okay, perfect. And then maybe we can go back to Jeremy on this. You know, we've talked about the Permian being back half-weighted with growth. Could you maybe talk about what you've seen in the second quarter with some of the negative Waha prices and some of the heavier gas-cut wells have been shut in, or we've seen delayed turn-in-line wells? And now that Matterhorn is delayed into early Q4, do you have any different expectations on if Q4 is heavier on growth versus Q3, or if your initial projections are unchanged? Sunil, I think we're still in the range.

Speaker Change: Okay, perfect and then.

Jeremy Tonet: Back to Jeremy.

Speaker Change: We've talked about the Permian being back half weighted with growth.

Speaker Change: Could you maybe talk about what you've seen in the second quarter with some of the negative raw pricing.

Jeremy Tonet: Some of the heavier gas cut well.

Jeremy Tonet: Have been shut in or we've seen delayed turn in line wells.

Speaker Change: And now that matter of Oregon delayed into.

Dave: Early Q4.

Dave: Have any different expectations on.

Dave: If Q4 is heavier on growth versus Q3 or.

Dave: If your initial projections are unchanged.

Jeremy Goebel: So Neal, I think we're still in the range of 200,000 to 300,000 barrels a day and can move within that range. But we have seen growth to date, so it's not like we didn't see anything. Q4 was very strong last year, which flattened out for a period, but we continue to see growth. Weather has not been as hot this year as it has been, so you've seen even growth during the summer where maybe you didn't see growth last year.

Dave: So Neil I think we're still in the range of 2% to 300000 barrels a day and move within that range, but we have seen growth to date. So it's not like we didn't see anything in Q4 was very strong last year was flatten out for a period, but we continue to see growth whether it has not been as hot this year than it had been so you've seen even growth during the summer where maybe you didn't.

Jeremy Goebel: Last year actually saw declines in this period of time, so directionally, it's been positive and consistent. Maybe it's delayed some completions in New Mexico and places that are more impacted, but that's really just a quarter, so that could be into the first quarter of next year. But Midland, like I said earlier, has outperformed. So I would say it is still in line with expectations, although the timing of some completions has moved.

Speaker Change: Last year last year actually saw declines in this time period of time, so directionally, it's been positive and consistent.

Dave: Maybe it's delayed completions in new Mexico, and places that are more impacted but thats really different quarter. So that could be end of the first quarter of next year, but Midland like I said earlier it outperformed so I would say, it's still in line with expectations and timing of some license has moved but I think our forward guidance captures what our expectations are.

Neal Mitra: Okay, perfect. Thank you so much.

Speaker Change: Okay perfect. Thank you so much.

Operator: Thank you one moment for our next question. Our next question comes from the line of A.J. O'Donnell of TPH. Your line is now open.

Speaker Change: Thank you Juan for next question.

Speaker Change: Our next question comes from the line of AGL O'donnell of Tpa. Your line is now open.

A.J. O'Donnell: Hey, good morning. Thanks for taking my question. I just wanted to go back to some of the comments around the forward curve. You mentioned next year that those curves might not accurately price in some of the conversations that you're having. I'm just curious if you see, you know, gross differentials between Midland and Houston widening out beyond the average transport rate, and is that like a more of a 25 thing, or is that later on in 26? Certainly not something we give forward guidance on, but if you look

AGL O'donnell: Hey, good morning, Thanks for taking my question I just wanted to go back to some of the comments around the forward curves.

Speaker Change: You mentioned next year that those curve might not accurately be pricing in some of the conversations that youre having.

Speaker Change: Just curious if you see gross differentials between.

Speaker Change: And then in Houston widening out.

Speaker Change: Beyond the average transport rate.

Speaker Change: Is that like more of a 'twenty five thing or is that later on in 'twenty six.

Jeremy Goebel: Certainly not something we give forward guidance on, but if you look at NEH's It's something that doesn't reflect an on-the-water number, so the prices for water and the realized prices to the coast are 30 to 50 cents higher than that. So, you have to start from there. There's the disconnect. And then from there...

Speaker Change: Certainly not something we give forward guidance on but if you look.

Speaker Change: <unk>.

Speaker Change: It's something that doesn't reflect on the water number so the prices to the water and the realized prices to the coasts are 30% to 50% higher than that so you have to start from there. There is a disconnect and then from there.

Jeremy Goebel: When you get into long-term contracting, you're looking over a five-year period, so the prompt doesn't impact the total rate. It's just a blended rate over time. So I guess what I would say is 2025 does show a lower number, but you have to get to the water, and that premium is higher, both in Corpus and in Houston. And then it's market-driven, Corpus versus Houston versus Nederland. So it's more nuanced than that, but near-term, the pipes are filling. And in 2026 plus, I think...

AGL O'donnell: When you get into long term contracting youre looking over a five year period. So the prompt doesn't impact. The total rate is just a blended rate over time. So I guess, what I would say is 2025 does show a lower number but you have to get to the water and that premium is higher both in corpus and Houston.

Speaker Change: And then it's market driven corpus versus Houston versus Nederland, So it's more nuanced than that but near term. The pipes are filling and in 2026, plus I think those are constructive dialogues between us and our customers.

Willie Chak: AJ, I think we've all experienced how forward curves are usually not good predictors of future prices. It's just a methodology to be able to hedge and protect the future price. But as Jeremy said, when you start running out of spare capacity... The pricing signals change, have different behaviors, so I would expect that as spare capacity tightens, we'll start to see wider opportunities.

A J: A J, we've I think we've all experienced how forward curves are usually not good predictors of future prices. It's just a methodology to be able to hedge and protect the future price, but as Jeremy said is when you start running out of spare capacity.

A J: The pricing signals change different behaviors. So I would expect that as spare capacity tightens, we'll start to see wider wider opportunities.

A.J. O'Donnell: Okay, thanks for that. Maybe just one last one on the NGL business. Just going back to some comments about wider spreads between ISO and normal butane.

Speaker Change: Okay. Thanks for that maybe just one last one on the NGL business.

Speaker Change: Going back to some comments about wider spreads between.

Jeremy Goebel: I'm just curious about the opportunity there. Has that facility always been up and running? And if it hasn't, I mean, you know, going forward, will that be a quarter to quarter decision? Or how are you treating that? Terry Gay, uh, we have multiple... One runs all the time.

Speaker Change: So in normal butane just curious about the opportunity there has that facility only has been up and running.

Speaker Change: If it Hasnt I mean.

Speaker Change: Going forward will that be a quarter to quarter decision or how are you treating that.

Jeremy Goebel: Sure, AJ. We have multiple facilities. One runs all the time; one is more opportunistic. The spread flew out in Q2 wider than the historical norm. We've got our outlook for the remainder of the year in it, but I'd say the biggest impact was in Q2, a modest impact in Q3, and while we don't forecast it in future periods, if it does, we'll turn it on, and we'll operate. So it's just I would speed it up.

J: Sure a J.

Speaker Change: We have multiple facilities one runs all the time and one is more opportunistic.

Speaker Change: The spreads blew out in Q2 wider than historical norm.

Speaker Change: We've got our outlook for the remainder of the year in it but I'd say the biggest impact was in Q2 modest impact in Q3, and while we don't forecast it in future periods. If it does we will turn it on and will operate.

J: It's just I would view that as more of the opportunistic and when it's there we're capturing it.

Speaker Change: Great. Thanks.

J: Thank you Amit for next question.

Operator: Thank you, one moment for our next question. Our next question comes from the line of Sunil Sibal of Seaboard Global. Your line is now open.

Speaker Change: Our next question comes from the line of Thanos Civil Seaborne Global your line is now open.

Sunil Sibal: Hi, good morning, everybody. And thanks for all the color.

Sunil Sibal: So, seems like you know, the kind of base operating assumptions for forward years are 200 to 300,000 barrels of production growth per day in Permian, say 3 to 4%. How should we think about that in the context of the Plains Permian system? So, should we expect a similar kind of trajectory in volumes and cash flows from that system, or should there be some, you know, expected changes? Seems like, you know, there has been a little bit of realignment in terms of your competitors in the basin. So, I just wanted to understand that a little bit. I'm saying that we're

Speaker Change: Yes, hi, good morning, everybody and thanks for all the color.

Thanos Civil: It seems like you had.

Speaker Change: Kind of base operating assumptions for Florida deals 200.

Speaker Change: And Boes per day of production growth in Permian say, 3% to 4%.

Speaker Change: How should we think about that in the context of planes what immune system. So should we expect a similar kind of trajectory.

Speaker Change: In volumes and cash flows from that system.

Speaker Change: There should be some unexpected changes seems like there has been a little bit of realignment and comes up your competitor chosen the basin. So I just wanted to understand that a little bit.

Jeremy Goebel: I'd say that we are a good proxy for the basin's overall growth.

Speaker Change: I would say that we're a good proxy for the basin overall growth I think thats a fair assessment.

Sunil Sibal: Okay, fair enough. And then one housekeeping item for me seems like, you know, your cash taxes are tracking fairly, you know, higher versus last year. Are there any timing issues there? Or how should we think about that for the remainder of 24?

Speaker Change: Okay Fair enough and then one housekeeping for me it seems like.

Speaker Change: Cash taxes.

J: Our tracking fairly.

J: Higher versus last year.

Speaker Change: Issues, there or how should we think about that for the remainder of the fourth.

Chris Chandler: Yeah, they have been. Part of it's income-based. Higher, like this increase in guidance, part of that is coming from our Canadian business. The taxes follow it. Also, in 2024, we repatriated a significant amount of money back and had a small withholding tax on that, as well as some refinements in our estimates as to depreciation and that. We would expect in 2025 to see taxes come back off of this higher level in 2025.

Speaker Change: Yes, they have been part of it part of its income based.

Speaker Change: Higher like this increase in guidance part of that is coming from our Canadian business.

J: Taxes follow it.

J: Also in 2024.

J: Repatriated a significant amount of <unk>.

J: Money.

J: Back and had a small withholding tax on that.

J: And as well as just just some refinements in our in our estimate is too.

Speaker Change: Depreciation on that.

Speaker Change: We would expect.

Speaker Change: In 2025 to see taxes come back off of this higher level in 2025.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you Paul Newman for next question.

Speaker Change: Yeah.

Operator: Thank you. We'll move on to our next question. Our next question comes from the line of Neal Dingmann of Tree Securities. Your line is now open.

Speaker Change: Our next question comes from the line of Neal Dingmann of Tree Securities. Your line is now open.

Neal Dingmann: Morning, thanks for the time guys. My first question is on M&A specifically. I'm just wondering if there are any packages currently in the market that would make strategic sense for you all and, given your available capacity out there, I'm just wondering, you know, are you more inclined to continue to grow organically? Neal, thank you for the question; unfortunately, we can't.

Neal Dingmann: Good morning, Thanks for the time guys. My first question is on M&A, specifically I'm. Just wondering are there any packages come into the market that would make strategic sense for you all and given your availability available capacity out there I'm just wondering.

Speaker Change: Are you more inclined to continue to grow organically.

Willie Chak: Neal, thank you for the question. Unfortunately, we can't really talk about active processes or M&A. It's something we talk about after it's over, but I don't think it changes our approach to be disciplined, and it's got to be something where we can add significant value and compress the multiple through synergies and our ability to operate. So regardless of size, it's got to be something that's additive to our broader business so we can extract synergies and be more competitive than others. And if we can't, we just won't buy it.

Speaker Change: Neil Thank you for the question. Unfortunately, we can't really talk about active processes. Our M&A is something we talk about afterwards over but.

Speaker Change: I don't think it changes our approach to be disciplined and it's got to be something where we can add significant value and compressed multiple through synergies and our ability to operate so.

Speaker Change: Regardless of size and it's got to be something that's additive to our broader business that we can extract synergies and see more.

Speaker Change: Competitive than others, and if we can't we just won't buy it.

Neal Dingmann: Very helpful. And then, just secondly, on hedging, specifically given the strip that you're seeing out there, do you plan to continue having the majority of the C3 plus sales hedge going forward, or is there a scenario where it would cause you to take a bit more exposure? Hi, this is Jeremy. We do not...

Speaker Change: That's very helpful. And then just secondly on hedging typically given the strip.

Speaker Change: You are seeing out there do you plan to continue have a majority of the C. III plus sales hedge going forward or is there a scenario, where you would cause them to take a bit more exposure.

Jeremy Goebel: This is Jeremy. We do not leave a lot of... There's a certain time of year when you sell NGLs, and we're towards the end of that, so we've got the vast majority of our barrels placed on firm contracts through this season. And then next year, when it comes up at the beginning of the year, you're selling for the next year. So I think what I would tell you is incremental production we have to sell, but we're very rigorous in making sure that when it's produced and when there's the time to sell, we lock in our storage spread, we lock in...

Speaker Change: Yes. This is Jeremy we do not.

Speaker Change: Leave a lot of like that.

Speaker Change: There is a certain heavier when you sell npls and were towards the end of that so we've got the vast majority of our barrels placed on firm contracts through this season, and then next year when it comes out beginning of the year, you're selling over the next year. So I think.

Speaker Change: What I would tell you with incremental production, we have to sell but we are very rigorous in making sure that when it's produced and when there is the time to sell we lock in our storage spreads we lock in the downstream economics associated with it we're not sitting with.

Speaker Change: They've maintenance exposure.

Neal Dingmann: Sir, you've done a nice job with this. Thank you.

Speaker Change: Sort of you've done a nice job with us. Thank you.

Operator: Thank you, one moment for our next question. Our next question comes from the line of John Mackay of Goldman. Your line is now open.

Speaker Change: Thank you Bowen for next question.

Speaker Change: Our next question comes from the line of John Mccain of Goldman Your line is now open.

John Mackay: Hey guys, thanks for the time. I just wanted to look at the kind of second quarter career performance versus the implied guide for the rest of the year. Just curious if you could kind of unpack a little more in terms of maybe what you caught in the marketing this quarter, or maybe from pipeline and loss allowances, or the movement in OPEC, versus kind of getting the benefit from some of these farming efficiencies because we like the back half of your guidance; it kind of implies flat in the second quarter versus, you know, we're talking about the fourth quarter step up here potentially. So just trying to unpack kind of that cadence.

John Mccain: Hey, guys. Thanks for the time.

John Mccain: Wanted to look at the kind of second quarter crude outperformance versus the implied guide for the back of the year.

Speaker Change: Curious if you kind of unpack a little more in terms of maybe what you're caught in the marketing this quarter or maybe from pipeline off allowances and the movement in Opex.

Speaker Change: Versus kind of getting the benefit from some of these Permian efficiencies because we were like in the back half of the year guidance kind of implies.

Speaker Change: Flat on second quarter.

Speaker Change: Versus you know, we're talking about the fourth quarter step up here potentially trying to unpack kind of that cadence.

Al Swanson: Thanks. Sure. Sure. I think Al's vote and Chris' vote is part of the operating expenses.

Al Swanson: [inaudible]

John Mackay: I appreciate that. There is just one last thing for me.

Speaker Change: Sure sure I think Al's boats and Chris spoke to some of the operating expenses lower utilities in the second quarter for movements on <unk> that doesn't repeat in the second half. So that's part of it I'd say the other part of it or is there some storage economics in the second quarter that we won't see going forward, we had locked those in earlier in the year and have taken those positions.

Speaker Change: Awesome second quarters I'd tell you is part trading in.

Speaker Change: Operating expense for the pieces that now.

Speaker Change: The rest of the outperformance you Britney.

Jeremy Goebel: You know, we see the volumes elsewhere in crude outside the Permian kind of move around quarter to quarter, and a lot of that is the accounting for volumes and sums on the marketing side. But maybe if you could just give us a quick update on maybe just the run rate EBITDA generation off of that footprint and maybe how that should trend over the next couple of years, given you've laid out a pretty clear story on the permitting side. Thanks. Sure.

Speaker Change: I appreciate that just one last one for me.

Speaker Change: We see that volume elsewhere in crude outside the Permian kind of move around quarter to quarter. No. A lot of that is just kind of accounting of volumes and some smaller marketing side, but maybe if you could just give us a quick update on maybe just the run rate EBITDA generation off of that footprint and maybe how that should trend over.

Speaker Change: The next couple of years given the beef.

Speaker Change: You've laid out a pretty clear story on the Permian side right.

Jeremy Goebel: Sure, what I would say is we see outperformance in the Rockies, both rails from Uinta, that production growth continues, and that goes into a couple of our facilities today, and we expect that to continue. So that's been a good surprise, and then our Rockies pipes remain full. Our customers are happy along those pipes, and we continue to see opportunities. So I'd say in Canada, gathering assets like Rainbow, the cross-border pipe, and the Rocky integrated system that we have in Cushing. That's been a source of our performance plus the rails in the U.N. The rest is performed in line with next.

Speaker Change: Sure what I would say is we see outperformance in the Rockies both.

Speaker Change: Rail from the Uinta that production growth continues and that goes into a couple of our facilities today and we expect that to continue so that's been a good surprise and then our Rockies pipes remains to be for our customers are happy along those pipes and we continue to see opportunities. So I would say.

Speaker Change: In Canada gathering assets like Rainbow.

Speaker Change: The cross border pipes.

Speaker Change: And the Rockies integrated system that we have into Cushing and that's been a source of outperformance plus the rails in the winter.

Speaker Change: The rest is performed in line with expectations.

John Mackay: All right, I appreciate the time. Thank you.

Speaker Change: Alright, thank you.

Operator: Thank you. One moment for the next question. Our next question comes from the line of Theresa Chen of Barclays. Your line is now open.

Speaker Change: Thank you Bruno for next question.

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

Theresa Chen: Hi, would you be able to quantify the ISO to normal butane uplift in your results this quarter? And just thinking about the repeatability of this uplift, are you selling the ISO domestically for Inland or just Inland alkylation feedstock in general? Or is this more related to, you know, getting your ISO across the water for export? I.e., is it seasonal from driving demand, or can you take advantage of the global shortage of octane agnostic of seasonality?

Theresa Chen: Would you be able to quantify on the ISO to normal butane uplift on in Europe results this quarter and just thinking about the repeatability at this uplift is selling the ISO domestically for England, or just England alkylation feedstock in general or is it.

Speaker Change: It's more related to.

Speaker Change: Getting your ISO across the water for export I E is it seasonal from driving demand or can you take advantage of the global shortage of arcane agnostic seasonality.

Jeremy Goebel: Sure, Theresa. I'd put it in the Q2 roughly $15 million range, and then Q3 probably in the $5 million range, roughly. And we find domestic shorts; we have a pretty big rail footprint in Canada, and we're able to hit any specific market. So we actually have unique access to specific markets that are short, and so when it blows up, we optimize that. The same thing we do with our C3 sales and C4 sales from our straddles, we're able to do the same thing with ISO.

Speaker Change: Sure Theresa I put it in the Q2, roughly $15 million range, and then Q3, probably in the $5 million range roughly.

Speaker Change: And we find domestic short so we have a pretty big rail footprint in Canada, and we're able to hit any specific market. So we actually have unique access to specific markets that are short and so when it loads that we optimize that's the same thing we do with our <unk> sales and <unk>.

Speaker Change: Q4 sales from our straddle.

Speaker Change: To do the same thing with ISO.

Willie Chak: Theresa, this is Willie. As you think about the iso-normal example that we just talked about, I don't... I wouldn't characterize that as a structural change. If you look at the large system we have, there's always going to be opportunities, market opportunities that we can capture. And I think what we're seeing now is as infrastructure becomes a little tighter, some more of those are coming to fruition. We went through a period where it was very difficult to capture those markets because there was lots of spare capacity and lots of infrastructure. I understand your question, but I also wanted to reinforce that our system is big, it's got a lot of optionality, and if there are opportunities out there, we're able to capture them.

Speaker Change: Theresa This is Willie as you think about the ISO normal example that we just talked about.

Theresa: I don't.

Theresa Chen: I wouldn't care that characterize that as a structural change you look at the large system. We have there's always going to be opportunities market opportunities and we can capture and I think what we're seeing now is S infrastructure becomes a little tighter.

Speaker Change: More of those are coming to fruition, we went through a period, where it was very difficult to to capture those markets because there's lots of spare capacity and lots of infrastructure. So I would I would I understand your question, but I would also I wanted to reinforce that our system is big it's got a lot of Optionality and if there are opportunities out there.

Speaker Change: We're able to capture them.

Theresa Chen: I meant more the structural demand for octane and ISO as the feedstock for alkylation for that demand. So turning to the cost commentary of cost deferred into the third quarter and maybe fourth quarter, any quantification or, you know, end points we should think about of how much that moved over?

Theresa: Understood.

Theresa: Structural demand for octane and ISO as feedstock for alkylation.

Theresa: Sure.

Speaker Change: So.

Speaker Change: Turning to the cost commentary cost deferred into the third quarter and 84 quarter any quantification or.

Speaker Change: We should think about.

Speaker Change: How much that in October.

Chris Chandler: Hi Theresa, it's Chris Chandler. No is the short answer, as in we won't quantify the amount that is deferred versus sustainable cost savings. I would just reinforce our continued commitment to cost discipline and cost efficiency, and we'll continue to look for opportunities to defer costs from the second half into the following years. And there are a number of factors we take a look at, including expectations from customers, volumes on systems, weather, supplier availability, all the things you might imagine around optimizing our cost footprint. We'll continue to do so.

Speaker Change: Hi, Theresa its Chris Chandler.

Speaker Change: No is the short answer.

Speaker Change: We won't quantify the amount that is deferred versus sustainable cost savings I would just reinforce our continued commitment to cost discipline and cost efficiency.

Speaker Change: We will continue to look for opportunities to defer costs from the second half into following years.

Speaker Change: And there is a number of factors we take a look at.

Speaker Change: Including.

Speaker Change: Expectations from customers volumes on system weather.

Speaker Change: Supplier availability all the things you might imagine around optimizing our cost footprint will continue to do that.

Blake Fernandez: And Theresa, this is Blake. I would just add, obviously, we've contemplated that into our forward guidance, so.

Blake Fernandez: Curious if this is Blake I would just add obviously, we've contemplated that into our forward guidance. So.

Speaker Change: Yes.

Theresa Chen: Got it. Thank you very much.

Speaker Change: Got it thank you very much.

Teresa: Thanks Teresa.

Plains: Thank you. I'm showing no further questions at this time. I'd now like to turn it back to Plains for closing remarks.

Speaker Change: Thank you I'm showing no further questions at this time I would now like to turn it back to <unk> for closing remarks.

Plains: Well, listen, thanks for all of your questions. We look forward to seeing you soon on the road. Have a great day.

Speaker Change: Well listen thanks for all of your questions. We look forward to seeing you soon on the road have a great day.

Speaker Change: Yeah.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

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