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

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Operator: Good day, and thank you for standing by. Welcome to the 2024 second quarter Plains All-American Pipeline Earnings Call.

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

Operator: 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 that your hand is raised. 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.

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

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

Ask a question during this session you will need to press star one on your telephone you will then.

Speaker Change: Here, an automated message revising your hand is race.

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

Blake: 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 planes.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 Chiang; 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.

Speaker Change: <unk> 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.

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

Speaker Change: Consolidating balance sheet for PAGP.

Speaker Change: And other reference materials are in the appendix.

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

Willie Chiang: Decorative vice President and CFO Al Swanson and other members of our management team with that I will now turn the call over to Willy. Thank.

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

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

Willie Chiang: 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.

Willie Chiang: 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 to.

Willie Chiang: To two 775 billion.

Willie Chiang: Our 2024 production outlook remains unchanged at an increase of 200,000 to 300,000 barrels a day from end to end 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.

Willie Chiang: 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 Chiang: 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.

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

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

Willie Chiang: 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'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.

Willie Chiang: 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 5 provides an overview of our bolt-on activity since the second half of 2022. During this time, we've completed 8 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, Willie.

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

al: 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 dollars. 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: Thanks, Willie we reported second quarter, adjusted EBITDA net to PAA of $674 million.

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

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

Willie Chiang: 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 shifts.

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

Willie Chiang: Excluding changes in assets and liabilities and including $130 million of bolt on acquisitions with approximately <unk>, one $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.

al: $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: Okay.

Willie Chiang: 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.

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

al: 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.

al: Cash flow in our NGL segment.

Willie Chiang: 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 cash flow 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.

al: <unk> meaningful free cash flow and increasing return on capital to your unit holders, while maintaining financial flexibility.

Speaker Change: 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: 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 queue. 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. Your line is now open.

Speaker Change: Yeah.

Marvin: Thank you at this time, we will conduct a question and answer session.

Speaker Change: 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 will be composite Q&A roster.

Speaker Change: 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.

Tristan Richardson: Maybe just a question, Willie, on the crude segment, seeing the guide come up there, and you noted that your producer customers are seeing greater efficiencies. Curious if, I mean, are those efficiencies better than expected, kind of the key source of the change in the outlook for the crude 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. You'd be kind of curious, sort of, 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.

Speaker Change: Maybe just.

Speaker Change: <unk> really on the crude segment seeing the guidance come up there and you noted youre seeing you.

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

Speaker Change: I guess, we've heard from producers this earning season.

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

Speaker Change: Kind of 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: 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, with a little bit of outperformance in the Midland and a little underperformance in the Delaware, driven by infrastructure constraints and lower natural gas prices.

Speaker Change: Hey, Jason this is Jeremy.

Speaker Change: Overall guidance change was part of 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 that's been in line with expectations, but the producers have been able to do less with more.

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

Speaker Change: Production growth guidance, a little bit of outperformance in the Midland a little under performance in the Delaware driven by.

Speaker Change: Infrastructure constraints and lower natural gas prices, but we see those deferral of completions in the beginning of next year. So we think.

Jeremy: But we see those deferrals of completions into the beginning of next year. So we think a healthier, efficient producer is good for our business long term. Increasing recovery, lower cycle time, us chasing fewer connections, more efficient capital on their side and 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: Healthier 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: 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 in the mix, you know, especially next year, curious how we should think about, you know, 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.

Speaker Change: I appreciate that Jeremy and then maybe just the follow up on the NGL segment.

Speaker Change: Presumably as as.

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: Hi Tristan, it's Jeremy again. What I would say is we're not going to get four guns 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, so 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. So 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.

Speaker Change: Yes, Justin this is Jeremy again.

Speaker Change: I would say is we're not going to give forward guidance on the NGL segment, but we've entered into a 15 plus year contracts, which is replaced roughly a third of our frac spread exposure.

Speaker Change: We're investing $150 million to $200 million.

Speaker Change: Place 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 up less than $50 50, So I'd say longer term. This is definitely a more.

Speaker Change: Sure.

Speaker Change: 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 Chiang: 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 a fee-based system, trying to flatten the saddle out, and 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 and gone to a more fee based trying to flatten the saddle out expanding our our facilities over at Fort Saskatchewan all play into that.

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

Speaker Change: 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 Amit for next question.

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

Michael Blum: Thanks. Good morning, everyone. I wanted to ask 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: Thanks, Good morning, everyone.

Michael <unk>: I wanted to ask on your.

Michael: Last call you said that you expected the crude segment EBITDA in 2026, roughly flat with 2004 EBITDA just wondering if thats still.

Speaker Change: That's true statement given the increase in.

Speaker Change: In 2004, our EBITDA guidance here.

Willie Chiang: 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 so 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 were thinking was to make sure people understood that with these renegotiations of contracts, we don't expect the cliff falling off in 'twenty six.

Willie Chiang: 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.

Speaker Change: 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.

Speaker Change: To bolster our crude business and more guidance will come as we outlined $25 26 as far as the 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? Michael, this is Jeremy.

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

Speaker Change: Continuing with 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: 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. 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. Forward 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: In the near term, like we said, there's some infrastructure.

Jeremy: Michael This is Jeremy.

Speaker Change: The near term like we said there is an infrastructure constraints more closely in new Mexico that being water gas and lower gas prices just led more completions in the Midland basin, but we see that as.

Speaker Change: Pipelines come on if another one announced yesterday, but.

Speaker Change: 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 a directionally continuing increase in the two to 300000 barrels of oil a day a year that we've.

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

Jeremy: 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.

Jeremy: Yes.

Operator: Thank you one more for the 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 Andrea.

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.

Andrea: Hey, Jeremy.

Jeremy: Hey, just wanted to.

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

Willie Chiang: 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 show this 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: Yeah. Thanks for the question Jeremy.

Speaker Change: You've heard us talk about.

Speaker Change: 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.

Speaker Change: 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 Chiang: So a lot of these bolt-ons, you know, they aren't processes that come out formally, 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 So, we'll continue to try to advance and develop those.

Speaker Change: They arent processes that are formally that.

Speaker Change: That 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 a great use of our free cash flow.

Speaker Change: 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.

Willie Chiang: 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, 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, 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, or downstream, just because capital is more expensive and you start growing a little bit more through efficiencies and synergies.

Speaker Change: Current 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 will just continue to plug away on that and then maybe just to take it one step further.

Speaker Change: We're asking about broader M&A and opportunity sets.

Speaker Change: We've 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.

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

Speaker Change: <unk>.

Willie Chiang: 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...

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

Speaker Change: Maybe going 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: 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 affiliates buy. But with our third-party customers, we're having very constructive dialogue, but we're gonna be patient.

Speaker Change: I would say that with.

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 bias or interest.

Speaker Change: There was 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 are having very constructive.

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

Willie Chiang: Jeremy, this is Willie. A couple of other things on that. You know, 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 on the 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>.

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, 29, 30 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.

Speaker Change: Thank you.

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.

Speaker Change: Thank you one moment 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.

Manav Gupta: And to understand what part of it is sticky.

Speaker Change: What can actually gone and benefit you in the second half of 2024 that good in 'twenty five as it relates to lowering 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.

Manav Gupta: 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.

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

Speaker Change: Okay, and any commentary on the possibility of maybe I mean, the preferred in the future that good lawyer Kostov catheter.

al: 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.

al: We will reevaluate that.

Lee: Thank you Lee.

Speaker Change: Thank you Juan for next question.

Chris Chandler: 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: Our.

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

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?

Al Swanson: 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 that. Thank you, guys.

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

Keith Stanley: Hmm.

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

Speaker Change: Capital allocation.

Speaker Change: You have any 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.

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

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

Speaker Change: 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.

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

Speaker Change: Have sustainable EBITDA going forward, we absolutely will consider that as we do our annual reviews on distribution.

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 on 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 would potentially be on the table again? Or should we still assume 15 cents per unit in Q4 as the target?

Speaker Change: We've done 220 <unk> increases.

Speaker Change: We've stated that <unk> and its an annual increase that we look at early every year, but to answer your question again, it's it's 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: Second.

Speaker Change: 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. 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 comes on, just any thoughts just directionally for next year? You know, Keith, this is Willie again.

Willie Chiang: 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 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 Chiang: You know, Keith, this is Willie again. 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. Our growth of 200 to 300, I think we've directionally said we expect that kind of to be more close to that than some of the incredible growth numbers that we've had in the

Speaker Change: Our growth of two to 300, I think Directionally said, we expect that kind of it 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.

Willie Chiang: There will be constraints, and 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, or more efficiently, not responsibly.

Speaker Change: Lumpiness 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 it 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 Mahmud for next question.

Speaker Change: Okay.

Speaker Change: Yes.

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

Spiro Dounis: Thanks, operator. Morning, guys. Wanted to go back to permit egress just quickly.

Spiro: Thanks, operator, good morning, guys.

Spiro: 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 on maybe what's opened contract here.

Speaker Change: Sensitized kind of think about the impact.

Spiro: And then as we think kind of at the 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: 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...

Spiro Dounis: 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 to 2026 plus, 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.

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

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

Spiro: Alex.

Speaker Change: Contracted capacity Bridgetex does has some as well, but we're at 20% non operated interests that you might want to talk to one of them there, but cactus wanted to are largely contracted.

Speaker Change: We've retained some space to fulfill our dock and there's some other things that we do and then.

Spiro: Some space available to Cushing as well.

Speaker Change: Got it okay. Thanks, Jeremy.

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

Jeremy: Got it. Okay. Thanks, Jeremy. Second one, maybe just quickly on the volume guidance, notice that the Permian intrabasin looks like that's stepped up a bit, the gathering stepped down a bit. And so sorry if I missed, maybe you could just walk us through the dynamic there of what's going on. Sure. This is Jeremy again.

Jeremy: 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 Basin has some other stuff.

Spiro: Sure. This is Jeremy again.

Speaker Change: It's largely associated with transportation to Colorado city to hit other connecting carriers that space.

Spiro: The pipeline of towards Corpus are all holes or this is just getting additional barrels production growth from the base in the out to Colorado city, and hitting the Houston or make how the markets and some of that to reflect in <unk>.

Jeremy: It's largely associated with transportation to Colorado City to hit other connecting carriers to have space, the pipeline.

Jeremy: Sure, this is Jeremy again. It's largely associated with transportation to Colorado City to hit other connecting carriers out of space. The pipelines towards 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 reflected in TMX. You see, if the heavy barrels leave the mid-continent, there's some other barrels that have to take their place.

Spiro: If the heavy barrels leave the mid continent. There are some other barrels that after taking into play so we've seen some impact on basin and so on.

Jeremy: So we've seen some impact on the basin and some on... Since Wayne-to-Webster 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.

Spiro: Since wink to Webster extended into Beaumont Youre seeing more flows into Houston that can have a prop bridgetex. So it's just as new pipeline dynamics added as production goes positive five new markets.

Spiro Dounis: Got it. Helpful as always. Thanks, team.

Dave: Got it helpful as always thanks, Dave.

Operator: Thank you. One moment for the 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 one moment for our next question.

Dave: Yeah.

Neal Mitra: Hi Neal, thanks for taking my question. It looks like the 25 frac spread in Canada has, you know, in 25 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 edging on a fork.

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.

Speaker Change: It looks like the 25.

Speaker Change: Frac spread in Canada.

Speaker Change: In 'twenty five peaked up close to 70 cents a gallon have you started looking at hedging that out and adding more stability on top of <unk>.

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

Jeremy: 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 a forward basis, but it's definitely something we monitor and are active in.

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

Neil: Current year crop 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.

Neil: We're opportunistic around trading around those positions and putting hedges on as well. So we continue to look at it on the way to provide an update now, but we absolutely pay attention to the forward crack spread as steeply backward dated and so the opportunities are fewer and liquidity fewer on the forward basis, but it's definitely something we monitor.

Jeremy: 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.

Neil: After that.

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

Speaker Change: And as you will know as you probably know the liquidity for the ability to hedge it.

Speaker Change: 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 whether Q4 is heavier on growth versus Q3 or if your initial projections are unchanged?

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 guar prices.

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: Now the Maverick, Oregon delayed into.

Speaker Change: Early Q4, do you have any different expectations on.

Speaker Change: If Q4 is heavier on growth versus Q3 or if.

Speaker Change: If your initial projections are unchanged.

Jeremy: So Neal, I think we're still in the range of two to three hundred thousand 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.

Speaker Change: So Neil I think we're still in the range of $2 to 300000 barrels a day can 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 flattened out for a period, but we continue to see growth weather has not been as hot this year than it had been so you've seen even grosser in the summer where maybe you didn't.

Jeremy: 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's still in line with expectations, although the timing of some completions has moved

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

Speaker Change: Maybe it's delayed completions in new Mexico, and places that are more impacted but that's really did in the quarter. So that can be into 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 timing of completions as move, but I think our for 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 the next question. Our next question comes from the line of A.J. O'Donnell of PPH. Your line is now open.

Neil: Thank you Mohammed for next question.

Speaker Change: Our next question comes from the line of Adrienne O'donnell of TBH. 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 more of a 25 thing, or is that later on in 26? Certainly not something we give forward guidance on, but if you look...

Adrienne 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.

Speaker Change: Kurt 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 Houston widening out.

Speaker Change: The average transport rate.

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

Jeremy: Certainly not something we give forward guidance on. It's something that doesn't reflect in the water number, so the prices for water and the realized prices for 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 it on the water number so the prices to the water and the realized prices to the coasts are 30% to 50 cents higher than that so you have to start from there. There is a disconnect and then from there.

Jeremy: 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 those...

Speaker Change: When you get into long term contracting youre looking over a five year period. So the problem. It 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 Chiang: 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, and 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 our 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 NGO 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.

A.J. O'Donnell: I'm just curious about the opportunity there. Has that facility always been up and running? And if it hasn't, I mean, going forward, will that be a quarter to quarter decision? Or how are you treating that?

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

Speaker Change: If it hasn't.

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

Jeremy: Sure. We have multiple facilities. One runs all the time.

A J: Sure.

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

Jeremy: One is more opportunistic. The spread flew out in Q2, wider than historical norms. We've got our outlook for the remainder of the year in it, but I'd say the biggest impact was in Q2, and 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 view that as more of an opportunistic approach. And when it's there, we're

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

Speaker Change: We've got our outlook for the remainder of the year in it but I would 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'll turn it on and will operate.

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

Speaker Change: Great. Thanks.

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.

A J: Thank you Omar for next question.

Speaker Change: Yeah.

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

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

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

Thanos Civil: Yes, hi, good morning, everybody and thanks for all the color.

Speaker Change: It seems like you had known.

Thanos Civil: Kind of a base operating assumptions for Florida.

Speaker Change: Got it.

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: Sure.

Speaker Change: Should be some unexpected changes seems like there has been a little bit of realignment in terms of your competitor chosen the basin. So I just wanted to understand that.

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

Speaker Change: I'd say that we're a good proxy for the basin overall growth I think that's 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.

Speaker Change: Are tracking fairly.

Speaker Change: Higher versus last year.

Speaker Change: Any timing issues, there or how should we be.

Speaker Change: 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. And as well as just 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.

Speaker Change: Texas follow it.

Speaker Change: Also in 2024.

Speaker Change: Repatriated a significant amount of of.

Speaker Change: Money.

Speaker Change: Back and had a small withholding tax on that.

Speaker Change: And as well as just some refinements in our in our estimates as to depreciation on that.

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

Speaker Change: 25.

Speaker Change: Okay. Thanks.

Operator: Thank you one moment for our next question. Our next question comes from the line of Neal Dingmann of Tree Securities. Your line is now open.

Speaker Change: Thank you Paul Newman for next question.

Speaker Change: Okay.

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, are there 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 really talk.

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 for the market that would make strategic sense for you all in.

Speaker Change: Given your availability available capacity out there I'm just wondering.

Speaker Change: Or are you more inclined to continue to grow organically.

Jeremy: 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.

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 it 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.

Jeremy: 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, and we can extract synergies and be more competitive than others. And if we can't, we just won't buy it.

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

Speaker Change: <unk> and others and if we can't we just won't buy it.

Neal Dingmann: Very helpful. And then just secondly, on hedging, typically 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 you 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: No I think youre seeing out there do you plan to continue to have a majority of the C. III plus sales hedge going forward or is there a scenario, where you could take a bit more exposure.

Jeremy: This is Jeremy. We do not leave with a lot of money. There's a certain time of year when you sell NGLs, and we're towards the end of that. We've got the vast majority of our barrel of pies 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

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

Speaker Change: Leave a lot of looks at.

Speaker Change: There's a certain heavier when you sell empty.

Speaker Change: And we are 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 or 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: Big bases exposure.

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

Speaker Change: 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 common 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, can you kind of unpack a little more in terms of, you know, 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 the year guidance. It kind of implies Al Swanson, Chris Chandler, Indraneel Mitra, Vrathan Reddy, Manav Gupta, Theresa Chen, Douglas Irwin, Zackery Everen, Naomi Marfatia, Plains All Amer

John Mccain: Hey, guys. Thanks for the time I just wanted to look at the kind of second quarter crude outperformance versus the implied guide for the back of the year.

Unnamed: [inaudible]

Speaker Change: So you kind of unpack a little more in terms of maybe what you're caught in the marketing. This quarter are made from pipeline loss 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 it 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.

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 was there were 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: Often second quarters I'd tell you, it's part trading in <unk>.

Speaker Change: Operating expense for the pieces that are the the rest of the outperformance.

John Mackay: I appreciate that. Just one last one for me.

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

Speaker Change: Yes, obviously the volumes elsewhere in crude outside the Permian kind of move around quarter to quarter. No. A lot of that is just kind of get accounting of volumes and some of 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.

John Mackay: You know, we see the volume elsewhere in crude outside the perimeter kind of move around quarter, quarter. A lot of that is, and the marketing side. Maybe if you could give us a quick update on the run rate generation off of that footprint and maybe how that should trend over the next couple of years given that you've laid out a pretty clear story on the Permian side. Thank you. Sure, what would I say...

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

Speaker Change: Laid out a pretty clear story on the Permian side. Thanks.

Jeremy: Sure. What I would say is we see our performance in the Rockies on 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 will 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.

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: <unk>, Canada gathering assets like Rainbow.

Speaker Change: The cross border pipes.

Speaker Change: And the Rockies integrated system that we have in 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 appreciate the time thank you.

Operator: Thank you one more 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 England or just England 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: Hi would you be able to quantify on the ISO to normal butane uplift in Europe results this quarter and just thinking about the repeatability of this uplift and then 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 octane agnostic seasonality.

Jeremy: 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. That's 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 and probably in the $5 million range roughly.

Speaker Change: And we find domestic shorts, we have.

Speaker Change: 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 at the same thing we do with our <unk> sales.

Speaker Change: For sales from our straddle.

Speaker Change: <unk> able to do the same thing with ISO.

Willie Chiang: 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'd think about the ISO normal example, that we just talked about.

Speaker Change: I don't.

Speaker Change: 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 as infrastructure becomes a little tighter.

Speaker Change: Some 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.

Speaker Change: 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: Understandable, 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, you know, end points we should think about of how much that moved over?

Speaker Change: Understood.

Speaker Change: Structural demand for octane and ISO as feedstock for alkylation.

Speaker Change: Sure.

Speaker Change: So.

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

Speaker Change: <unk>.

Speaker Change: We should think about.

Speaker Change: How much that moved over.

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.

Speaker Change: 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 the 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 systems, whether supplier availability all the things you might imagine around optimizing of our cost footprint will continue to do that.

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

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

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: <unk>.

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.

Speaker Change: We look forward to seeing you soon on the road have a great day.

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.

Speaker Change: Yeah.

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