Q2 2024 Enterprise Products Partners LP Earnings Call
Thank you for standing by and welcome to Enterprise Products Partners LP's second quarter 2024 earnings conference call.
Operator: Q2 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Operator: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone to remove yourself from the queue. Then, you may press star one one again.
Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. To remove yourself from the queue, you may press star 1 1 again. I would now like to hand the call over to Libby Strait, Senior Director of Investor Relations. Please, go ahead.
Speaker Change: At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Libby Strait, Senior Director of Investor Relations. Please go ahead.
Libby Strait: I would now like to hand the call over to Libby Strait, Senior Director of Investor Relations. Please go ahead. Good morning and welcome to the Enterprise Products Partners conference call to discuss second quarter 2024 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprises General Partner, Jim Teague, and Randy Fowler. Other members of our senior management team are also in attendance on the call today. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, based on the beliefs of the company, as well as assumptions made by, and information currently available to, Enterprise's management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that those expectations will prove to be correct.
Libby Strait: Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. With that, I'll turn it over to Jim. Thank you, Libby.
Libby Strait: Good morning, and welcome to the Enterprise Products Partners conference call to discuss second quarter 2024 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprises General Partner, Jim Teague, and Randy Fowler. Other members of our senior management team are also in attendance for the call today. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act.
Jim Teague: We had another solid quarter, both in terms of volume and cash flow. We reported adjusted EBITDA of $2.4 billion, compared to $2.2 billion in the same quarter last year, and generated $1.8 billion of distributable cash flow. We had 1.6 times coverage for the quarter.
Speaker Change: Good morning and welcome to the Enterprise Products Partners conference call to discuss second quarter 2024 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprises General Partner Jim Teague and Randy Fowler. Other members of our senior management team are also in attendance for the call today.
Speaker Change: During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, based on the beliefs of the company, as well as assumptions made by, and information currently available to, Enterprises Management Team.
Speaker Change: Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
Speaker Change: Please refer to our latest filings with the FCC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call.
Jim Teague: We retained $661 million of DCF in the second quarter, and we're at $1.5 billion here today. You know, the second quarter can be seasonally our weakest quarter. Our company handles a new record 12.6 million barrels per day or crude oil equivalent volume, and 2.2 million barrels a day of marine terminal volume. Will has record natural gas processing and record NGL pipeline and fractionation volume. Investments to support growth in the Permian Basin are visible both volumetrically and financially in our NGO pipeline and service sector, which reported a 19% increase in gross operating margin compared to the second quarter of last year, primarily attributable to our four new natural gas processing plants in the Permian and our 12th NGL fractionator at our Mont Belvieu
Jim Teague: We also benefited from improvements in natural gas processing margins compared to last year. Our natural gas pipelines and service segment also reported a 23% increase in gross operating margin compared to the same quarter in 2023. This increase was primarily driven by higher transportation revenues and higher marketing margins associated with the wider spreads between WAOP and higher-valued market hubs. We had a very good quarter in spite of the challenges of our PDH plan. They've been somewhat of a headwind throughout the year.
Speaker Change: With that, I'll turn it over to Jim. Thank you, Libby.
Jim: We had another solid quarter, both in terms of volume and cash flow.
Jim: We reported adjusted EBITDA of $2.4 billion, compared to $2.2 billion in the same quarter last year.
Jim: We generated $1.8 billion of distributable cash flow. We had 1.6 times coverage for the quarter. We retained $661 million of DCF in the second quarter, and we're at $1.5 billion here today.
Jim: Even though the second quarter can be seasonally our weakest quarter, our company handle a near record 12.6 million barrels per day of crude oil equivalent volumes.
Jim: and 2.2 million barrels a day of marine terminal volumes.
Jim: as well as record natural gas processing and record NGL pipeline and fractionation volumes.
Jim: Our investments to support growth in the Permian Basin are visible both volumetrically and financially in our NGL pipeline and service segment.
Jim: which reported a 19% increase in gross operating margin compared to the second quarter of last year.
Jim: Primarily attributable to our four new natural gas processing plants in the Permian.
Jim: and our 12th NBIA NGL Fractionator at our Mont Belvieu area complex. In addition,
Jim: We also benefited from improvements in natural gas processing margins compared to last year. Our natural gas pipelines and service segment also reported a 23% increase in gross operating margin compared to the same quarter in 2023.
Jim: This increase was primarily driven by higher transportation revenues and higher marketing margins associated with the wider spreads between WHA and higher-valued market hubs.
Jim: We had a very good quarter in spite of the challenges of our PDH plants. They've been somewhat of a headwind throughout the year. We recently completed our turnaround at PDH 1. Planning for the turnaround...
Jim Teague: We recently completed our turnaround at PDH1. Planning for the turnaround took over a year and involved a dedicated turnaround team, in addition to field engineering and maintenance personnel. This team documented every issue we've had with this plant and developed solutions for each. The turnaround took 100 days. A few factoids: the turnaround took over 1.25 million hours. At the peak, we had 1,250 people per shift.
Jim Teague: We had 590 work packages executed. 17 million pounds of catalyst handle, 1465 Crane Lift, 190 18-wheeler deliveries, 52800 BRICS Hand Inspector, and over 41,000 replaced. Those bricks are the catalyst support and the catalyst reactor.
Jim: took over a year and involved a dedicated turnaround team.
Jim: in addition to field engineering and maintenance personnel.
Jim: This team documented every issue we've had with this plant and developed solutions for each one.
Jim: The turnaround took 100 days. A few factoids.
Jim: I turned around and it was over 1.25 million hours worked.
Jim: At the peak, we had 1,250 people per shift.
Jim: We had 590 work packages executed.
Jim: 17 million pounds of catalyst handle
Jim: 1,465 crane lifts.
Jim: 119 18-wheeler deliveries.
Jim: 52,800 bricks hand-inspected.
Jim: Over 41,000 replaced.
Jim: Those bricks are the catalyst support and the catalyst reactor.
Jim Teague: The plant is now up and running and exceeding its nameplate. PDH2 is currently in turnaround, and we expect it to be producing PGP sometime around mid August. The PDH-2 turnaround is not nearly as involved as PDH-1.
Jim: The plan is now up and running and is exceeding its nameplate.
Speaker Change: PDH2 is currently in turnaround. We expect it to be producing PGP sometime around mid-August.
Speaker Change: The PDH-2 turnaround is not nearly as involved as PDH-1.
Jim Teague: I'd like to thank our Mount Bellevue team and our supporting service providers for their long hours and hard work during these back-to-back turnarounds. We're confident that these two plants will be a tailwind the rest of the year. We also completed our diluent open season on the TE Products System, will close the open season with 100,000 barrels a day of new and reached contracted commitment. I think those are five-year deals
Speaker Change: I'd like to thank our Mount Bellevue team.
Speaker Change: and our supporting service providers.
Speaker Change: for their long hours and hard work during these back-to-back turnarounds.
Speaker Change: We're confident that these two plants will be a tailwind the rest of the year.
Speaker Change: We also completed our Diluent Open Season on the TE Products System.
Speaker Change: We close the open season with 100,000 barrels a day of new and reached contracted commitments.
Jim Teague: We then accommodate this incremental demand with a suite of bottlenecks and horsepower additions while ensuring we do not impact our existing customers. Finally, our company has 6.7 billion in projects under construction that provide visibility to future earnings and cash flow growth. These projects include three processing plants, one in the Midland Basin, two in the Delaware, and Associated Gathering, our Bahia NGO pipeline.
Speaker Change: And I think those are five-year deals.
Speaker Change: We can accommodate this incremental demand with a suite of de-bottlenecks and horsepower additions while ensuring we do not impact our existing customers.
Speaker Change: Finally, our company has 6.7 billion of projects under construction.
Speaker Change: Provide visibility to future earnings and cash flow growth.
Speaker Change: These projects include three processing plants, one in the Midland Basin, two in the Delaware and Associated Gathering, our Bahia NGO Pipeline, Fract 14,
Jim Teague: Blackport, and Export Expansions at the Nature's River Terminal and the Ship Channel. All of these projects are backed by long-term contracts and significantly enhance what is already a very strong NGL value chain. And as has been the case for several years running, we continue to see even more rich gas volumes coming from the Permian than we had previously forecasted. And Tony may get something on this in the Q&A. And with that, I'll turn it over to Randy.
Speaker Change: and Export Expansions at the Nature's River Terminal and the Ship Channel. All of these projects are backed by long-term contracts and significantly enhance what is already a very strong NGL value chain.
Speaker Change: And, as has been the case for several years running, we continue to see even more rich gas volumes coming from the Permian.
Speaker Change: and we have previously forecasted and Tony may get something on this in the Q&A. And with that, I'll turn it over to Randy. All right. Thank you, Jim. Good morning, everyone.
Randy Fowler: All right. Thank you, Jim. Good morning, everyone.
Randy Fowler: Starting with the income statement, net income attributable to common unit holders was $1.4 billion, or 64 cents per unit, for the second quarter of 2024. This was a 12% increase over the second quarter of 2023. Our adjusted cash flow from operations, which is cash flow from operating activities on the cash flow statement before changes in working capital, this number increased 11% to $2.1 billion for the second quarter of 2024, compared to $1.9 billion for the second quarter of last year. We declared a distribution of 52 and a half cents per common unit for the second quarter of 2024.
Randy: Starting with the income statement, net income attributable to common unit holders was $1.4 billion, or 64 cents per unit for the second quarter of 2024. This was a 12% increase over the second quarter of 2023.
Randy: Our adjusted cash flow from operations, which is cash flow from operating activities on the cash flow statement before changes in working capital, this number increased 11%.
Randy: to $2.1 billion for the second quarter of 2024 compared to $1.9 billion for the second quarter of last year.
Randy Fowler: This is a 5% increase over the distribution declared for the second quarter of last year. The distribution will be paid on August 14 to common unit holders of record as of the close of business tomorrow, July 31. In the second quarter, the partnership purchased approximately 1.4 million common units off the open market for $40 million. Total purchases for the 12 months ending June 30, 2024 were $176 million, or approximately $6.5 million in Enterprise Common Units.
Randy: We declared a distribution of 52.5 cents per common unit for the second quarter of 2024. This is a 5% increase over the distribution declared for the second quarter of last year.
Randy: The distribution will be paid on August 14th to common unit holders of record as of the close of business tomorrow, July 31st.
Randy: In the second quarter, the partnership purchased approximately 1.4 million common units off the open market for $40 million.
Randy: Total purchases for the 12 months ending June 30, 2024 were 176 million or approximately 6.5 million Enterprise Common Units.
Randy Fowler: And this brings total repurchases under our buyback program to approximately $1 billion, or about 50% of the total program amount. In addition to buybacks, our distribution reinvestment plan and employee unit purchase plan purchased a combined 6.3 million common units on the open market for $171 million during the last 12 months, including 1.8 million common units on the open market for $50 million during the second quarter of 2024. For the 12 months ending June 30, 2024, Enterprise paid out $4.4 billion in distributions to limited partners. Combined with the $176 million of common unit purchases over the same Total capital investments in the second quarter of 2024 were $1.3 billion, which included $1 billion for growth capital projects and $245 million for sustaining capital expenditures.
Randy: And this brings total repurchases under our buyback program to approximately $1 billion, or about 50% of the total program amount.
Randy: For the 12 months ending June 30, 2024, Enterprise paid out $4.4 billion in distributions to limited partners.
Randy: Combined with the $176 million of common unit purchases over the same period, Enterprise's payout ratio of adjusted cash flow from operations was 55%.
Randy Fowler: While our expected growth capital expenditures for 2024 did not change, as a result of the LPG export announcement we announced this morning, we did refine the bottom of our range. Our current estimate of growth capital expenditures for 2024 is now in a range of $3.5 to $3.75 billion. We continue to expect 2025 growth capital investments to be in the range of $3.25 to $3.75 billion. 2024 sustaining capital expenditures are elevated due to planned turnarounds for our PDH1 plant and our IBDH facility and our high purity isobutylene facility. These turnarounds typically occur every three to four years.
Randy: While our expected growth capital expenditures for 2024 did not change, as a result of the LPG export announcement we announced this morning, we did refine the bottom of our range.
Randy: Our current estimate of growth capital expenditures for 2024 is now in a range of $3.5 to $3.75 billion. We continue to expect 2025 growth capital investments to be in the range of $3.25 to $3.75 billion.
Randy Fowler: We now estimate 2024 sustaining capital expenditures to be approximately $600 million, up from $550 million, primarily due to higher capital costs associated with the turnaround at the PDH1 facility, which was completed in June. The turnaround at the PDH-2 facility began in late June 2024, and as Jim noted, we anticipate completion in the middle of August. As of June 30, 2024, our total debt principal outstanding was approximately 30.6 billion. Assuming the final maturity date for our hybrid, the weighted average life of our debt portfolio was approximately 18 years.
Randy: 2024 sustaining capital expenditures are elevated due to planned turnarounds for our PDH-1 plant.
Randy: and our IBDH facility and our high-purity isobutylene facility. These turnarounds typically occur every three to four years.
Randy: We now estimate 2024 sustaining capital expenditures to be approximately $600 million, up from $550 million.
Randy: Primarily due to higher capital costs associated with the turnaround at the PDH-1 facility, which was completed in June .
Randy: The turnaround at the PDH-2 facility began in late June 2024, and as Jim noted, we anticipate completion in the middle of August .
Randy: As of June 30, 2024, our total debt principal outstanding was approximately $30.6 billion. Assuming the final maturity date for our hybrids...
Randy Fowler: Our weighted average cost of debt was 4.7%, and approximately 95% of our debt was fixed rate. Our consolidated liquidity was approximately $3.4 billion at the end of the quarter, including availability under our credit facilities and unrestricted cash. Our adjusted EBITDA was $2.4 billion for the second quarter and $9.7 billion for the 12 months ending June 30, 2024. As of June 2024, our consolidated leverage ratio was 3.0 times on a net basis when adjusted for the partial equity treatment of our hybrids and reduced by the partnership's unrestricted cash on hand.
Jim: The weighted average life of our debt portfolio was approximately 18 years. Our weighted average cost of debt was 4.7%, and approximately 95% of our debt was fixed rate.
Jim: As of June 2024, our consolidated leverage ratio was 3.0 times on a net basis when adjusted for the partial equity treatment of our hybrids and reduced by the partnership's unrestricted cash on hand.
Jim: Our leverage target remains 3.0 times, plus or minus 0.25 times.
Randy Fowler: Our leverage target remains 3.0 times, plus or minus 0.25 times. With that, Libby, I think we can open it up for questions. Thank you, Randy. And operator, we are ready to open the call to questions from our participants. As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again.
Jim: With that, Libby, I think we can open it up for questions.
Libby Strait: Thank you, Randy. Operator, we are ready to open the call for questions from our participants.
Libby Strait: As a reminder, to ask a question, you will need to press star 11 on your telephone.
Speaker Change: To remove yourself from the queue, you may press star 11 again. We ask that you please limit yourself to two questions or one question and one follow-up.
Speaker Change: Please stand by while we compile the Q&A roster.
Operator: We ask that you please limit yourself to two questions or one question and one follow-up. Please stand by while we compile the Q&A list. Our first question comes from the line of Theresa Chen of Barclays. Morning, thank you for taking my questions. Maybe starting with the LPG export. So on that front, you've executed and announced multiple expansions, with another one just today. Can you just help us think about what inning we are in terms of export expansion buildup for the industry and across your system?
Speaker Change: Our first question.
Speaker Change: comes from the line of Theresa Chen of Barclays.
Theresa Chen: Good morning. Thank you for taking my questions.
Theresa Chen: Maybe starting with the LPG export. So on that front, you've executed multiple expansions with another one just today.
Theresa Chen: Can you just help us think about what inning are we in terms of export expansion buildup for the industry and across your system, you know, how much more brownfield capacity expansion do you have left?
Operator: You know, how much more brownfield capacity expansion do you have left? Yeah, so the market's obviously calling for additional capacity. We announced that expansion this morning, around call it 85 to 90% of our existing and expansion capacity. But as far as our brownfield capacity, we have additional opportunities to execute that this product was using existing infrastructure, and as far as our term contracts are concerned, they were out there at highly competitive rates. And, you know, like I said, we have additional brownfield opportunities ahead of us. Okay, and Brent, if you can just, you know, help us think about, like, from a commercial perspective, what is the going rate for brownfield expansion across your system, maybe on a per gallon or other unit basis?
Speaker Change: Yeah, so the market's obviously calling for additional capacity. We announced that expansion this morning around, call it 85 to 90 percent contracted of our existing and expansion capacity.
Speaker Change: But as far as our brownfield capacity, we have additional opportunities to execute that. This project was using existing infrastructure. Concerning our term contracts, we're out there at highly competitive rates, and like I said, we have additional brownfield opportunities ahead of us.
Speaker Change: Okay and Brent if you can just you know help us think about like from a commercial perspective what what is the going rate for brownfield expansion across your system maybe on a per gallon or other unit basis and how does that compare with greenfield expansion someone wanted to get into this part of NGL Valley chain right now?
Operator: And how does that compare with greenfield expansion? Someone wants to get into this part of the NGL Valley chain, right? Theresa, this is Tug talking, but I won't get into a specific rate, but relative to Greenfield, it's significantly more competitive.
Speaker Change: Theresa, this is Tug talking, but I won't get into a specific rate, but relative to Greenfield, it's significantly more competitive.
Theresa Chen: Okay, thank you, Ted. And as a follow-up, do you have an update on the commercialization of spot at this point? Jim, I'll take that.
Speaker Change: Okay, thank you, Ted. And as a follow-up, do you have an update on the commercialization of SPOT at this point?
Unknown Executive: Yeah, we you know, up until now. What we've been marketing is a concept, and since we've gotten our license to construct, we're marketing a real project now. And we've done a heck of a lot of work to determine how competitive we are versus single-lighting and multi-lighting. Now, if we look at the single lightering. We tracked 563 ships that were single-litering.
Speaker Change: This is Jim, I'll take that.
Jim: Yeah, we, you know, up until now.
Jim: What we've been marketing is a concept, and since we've gotten our license to construct, we're marketing a...
Jim: a real project now. And we've done a heck of a lot of work to determine
Jim: How competitive we are versus a single-lighting and multi-lighting.
Jim Teague: And out of those 563, we put them into quartiles, and we were hands down better at 280 of those, and competed very effectively with the first two quartiles, and the multilatering, we looked at over 400. And we beat those hands down across the board. So if you looked at all the ships we tracked, we tracked 969 ships, and we beat hands down 686 of those ships over that time frame.
Jim: And now if we'll look at the single light ring.
Speaker Change: We tracked about 163.
Speaker Change: Ships.
Speaker Change: that were single-lidering.
Speaker Change: And out of those 563, we put it into quartiles.
Speaker Change: And we were hands-down better.
Speaker Change: There have been 280 of those.
Speaker Change: and competed very effectively with the first two quartiles.
Speaker Change: And the multilatering, we looked at over 400.
Speaker Change: and we beat those hand down across the board. So if you looked at all the ships we tracked, we tracked 969 ships and we beat hands down 686 of those ships over that time frame. So now we're gonna see if the market wants it.
Michael Jacob Blum: So now we're going to see what the market wants. Thank you so much. Thank you. Our next question comes from the line of Michael Blum of Wells Fargo. Thank you. Good morning, everyone.
Speaker Change: Thank you so much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Michael Blum of Wells Fargo.
Tug: So just wanted to go back to the LPG export discussion a little bit. I wonder if you can just refresh us on what you're seeing for end market demand as you continue to expand capacity, and I guess I'm particularly interested in whether you're seeing a lot of that incremental demand coming from China. Yeah, this is Tug.
Michael Jacob Blum: Thank you. Good morning, everyone. So just wanted to go back to the LPG export discussion a little bit. I wonder if you can just refresh us on
Michael Jacob Blum: What you're seeing for end market demand as you continue to expand capacity, and I guess I'm particularly interested in if you're seeing a lot of that incremental demand coming from China. Thanks.
Tug: So the demand equation is, you know, obviously important to our LPG export expansions. But fundamentally, at the end of the day, the barrel has to clear the US, and the barrel price accordingly has to do so. With respect to China, right now, our exports stand around 43% going to China, but we're also, you know, around call it 21% to the Americas and 13% to Europe. So we're seeing robust demand across the board. Is that LPG? What percentage of LPG does it have, around 40 or 43% opium butane. Opium and Butane.
Tug: Yeah, this is Tug. So the demand equation is, you know, obviously important to our LPG export expansions, but fundamentally at the end of the day, the barrel has to clear the U.S. and the barrel of price accordingly to do so.
Speaker Change: With respect to China, right now our exports stand around 43% going to China, but we're also You know around call it 21% to the Americas and 13% to Europe . So we're seeing a robust demand across the board
Speaker Change: Doug is that LPG? That's LPG. What percentage of LPG?
Speaker Change: [inaudible]
Michael Jacob Blum: Okay. PDH plans. Great. No, I appreciate that.
Speaker Change: around 40 around 43 percent that's open butane propane butane okay pdh plants okay
Randy Fowler: And then I just wanted to revisit the capital allocation discussion around buybacks. I think we all understand at this point that, you know, enterprise, your preferred method of returning cash is distribution growth over buybacks. So I'm wondering if you can just refresh us on the criteria where you decide to allocate capital to buybacks, especially given that it seems like you have a pretty nice slate of organic growth opportunities that have attractive returns. Thanks. Yeah, Michael. This is Randy.
Doug: Great, no, I appreciate that. And then I just wanted to revisit...
Speaker Change: in the capital allocation discussion around buybacks. I think we all understand at this point that.
Speaker Change: You know, Enterprise, your definitely preferred method of returning cash is distribution growth over buyback. So I'm wondering if you can just refresh us on the...
Speaker Change: criteria where you decide to allocate capital to buybacks, especially given that it seems like you have a pretty nice slate of organic growth opportunities that have attractive returns. Thanks.
Randy Fowler: Yeah, Mike, what we've been targeting, you know, over the last few years, and 2024 is not that different, is probably coming in and doing buybacks in the $200 million range. And what that does is, you know, we do issue equity as a component of compensation. But when you come in and take a look at what we issue in terms of compensation and what we buy back, you'll see that over the last four years, there's been a decrease in the number of overall units outstanding.
Speaker Change: Yeah, Michael, this is Randy. Yeah, Michael, what we've been...
Speaker Change: You know, targeting, you know, over the last few years, and 2024 is not that different, is probably coming in and doing buybacks in the 200 million dollar range.
Speaker Change: And what that's done is, you know, we do issue equity as a component of compensation, but when you come in and take a look at what we issue in terms of compensation and what we buy back, you'll see over the last...
Speaker Change: For years there are there was a decrease in the number of overall units outstanding. So You know, I think that's our focus
Randy Fowler: So, you know, I think that's our focus, uh once we get back out, you know, this year and next year again, you know we're talking growth capital expenditures in the 3.5 to 3.75 billion dollar range growth capex next year we're still estimating at three and a quarter to 3.75 um, that's probably going to keep those buybacks in that 200 million dollar range once we get back out to 2026. Thanks, Randy.
Speaker Change: Once we get back out, you know, this year and next year, again, you know, we're talking
Speaker Change: This year, growth capital expenditures in the $3.5 to $3.75 billion range. Growth capex next year, we're still estimating at $3.25 to $3.75.
Speaker Change: That's probably going to keep those buybacks in that $200 million range. Once we get back out to 2026...
Speaker Change: You know, there we were thinking growth capex could be call it around 2.5 billion. Then I think we have more room to return capital. And then I think we really just need to get some visibility on 2026 to see
Speaker Change: of what form that increase in the return of capital would look like as far as distributions and buybacks.
Randy: Great. Thanks, Randy.
Jeremy Bryan Tonet: Thank you. Our next question comes from the line of Jeremy Tonet of JPMorgan. Hi, good morning. Hello, good morning.
Randy: Thank you.
Speaker Change: Our next question comes from the line of Jeremy Tonet of J.P. Morgan.
Jeremy Bryan Tonet: Good morning, Jeremy. Just wanted to make sure you could hear me there. Thank you. Just wanted to see, I guess, you know, there's been some of your midstream peers out there have been acquiring assets, there's been some bolt-ons, and I just want to, you know, get your thoughts about enterprise's role within industry consolidation at this point. And I wanted to see, you know, I guess. Any thoughts you could share on that at this point? This is the last major wave of consolidation in mid- Okay, Jimmy, I'll take the first crack at that.
Jeremy Bryan Tonet: Hi, good morning.
Speaker Change: All right.
Speaker Change: Hello, good morning. Good morning, Jeremy.
Jeremy Bryan Tonet: Just wanted to make sure you could hear me there. Thank you. Just wanted to see, I guess, you know, there's been some of your midstream peers out there have been acquiring assets, there's been some bolt-ons and
Speaker Change: I just wanted to, you know, get your thoughts about Enterprise's role within industry consolidation at this point, and wanted to see, you know, I guess, any thoughts you could share on that at this point, if this is the last major wave of consolidation in midstream.
Jeremy Bryan Tonet: And from a strategic standpoint, I'll let Jim comment, but I think our first and foremost is returns on capital, and what gives us the best returns on capital and growing cash flow per unit. Because at the end of the day, that's what's going to drive value.
Speaker Change: Okay, Jeremy, I'll take first crack of that and from a strategic standpoint, I'll let Jim comment, but I think our first and foremost, what we're looking at is returns on capital and what gives us the best returns on capital and growing cash flow per unit.
Jim: Because at the end of the day, that's what's going to drive value. We've taken a look at a number of opportunities, more asset acquisitions than I would say public company M&A. But what we've seen thus far is...
Unknown Executive: And we've taken a look at a number of opportunities, more asset acquisitions, and I would say, public company M&A. But, you know, what we've seen thus far is organic growth is providing us good opportunities at good, good returns on capital, relatively better returns on capital, and growing cash flow per unit. Obviously, the Navitas deal that we did, that also provided good, good returns on capital and good, good cash flow
Jim: Organic growth is providing us good opportunities and good returns on capital.
John R. Burkhalter: and John Burkhalter. Bye.
John R. Burkhalter: Relatively better returns on capital.
John R. Burkhalter: and in growing cash flow per unit, obviously the Novitas deal that we did.
Jim Teague: So that's really where our focus Strategically, I think we've always said it kind of has to fit what we already have. And, you know, we talked about the plants we're building in the Permian. I don't think we're through building plants. So the price has got to be right. It's got to fit who we are.
John R. Burkhalter: That also provided good returns on capital, good cash flow growth. So that's really where our focus is.
John R. Burkhalter: Strategically, I think we've always said it kind of has to fit what we already have.
John R. Burkhalter: And, you know, we talked about the plants we're building in the Permian. I don't think we're through building plants. So it's got to be, the price has got to be right. It's got to fit who we are.
Jim Teague: And when you build a plant, you can put it where it fits who we are. So I like the organic side, but we look at everything that comes along from a broader point of view. We have more investment bankers come in here than you can say grace over. Got it. It makes sense there. Just wanted to also, I guess, get your thoughts as it relates to power in Texas overall. We've seen, you know, instability in the ERCOT market and other issues out there, and I was just wondering how you feel about that going forward. Could there be room for your own generation or other measures to kind of ensure, I guess, stability? This is Graham.
John R. Burkhalter: And when you build a plant, you can put it where it fits who we are. So I like the organic side, but we look at everything that comes along from a... We have more investment bankers come in here than you can say grace over.
Speaker Change: Got it, makes sense there.
Speaker Change: Just wanted to also, I guess, get your thoughts as it relates to power in Texas overall. We've seen, you know, instability in the ERCOT market and other issues out there. And just wondering how you feel.
Speaker Change: about that going forward. Could there be room for your own generation or other measures to kind of ensure, I guess, stability?
Graham: I'll take that. Certainly, power in Texas is a challenge, and it evolves consistently. We're doing things with our projects to basically do some hedging of that through the purchase of power generation and looking at other options. We work very closely with the power providers and their status, and evaluate whether grid power will be acceptable, or we need to have either backup power, or we need to have other power sources available. And each situation is different. Every provider is different, whether you're working out in West Texas or East Texas.
Speaker Change: This is Graham. I'll take that. Yeah, certainly power in Texas.
Speaker Change: It can be a challenge and it evolves consistently. We're doing things with our projects to basically do some hedging of that through purchase of power generation and looking at other options.
Speaker Change: We work very closely with the power providers and their status.
Speaker Change: evaluate whether grid power will be acceptable or we need to have other
Speaker Change: Either backup power or we need to have other power sources available and each situation is different. Every provider is different, whether you're working out in West Texas or East Texas. So each situation is individual.
Graham: So each situation is individual. Got it. Makes sense. I'll leave it there. Thank you. Our next question comes from the line of Tristan Richardson of Scotiabank. Hi, good morning, guys.
Speaker Change: Got it. Makes sense. I'll leave it there. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Tristan Richardson of Scotiabank.
Tristan James Richardson: On Bahia, can you give a general update on progress there and how you see utilization ramping as that project comes on? And then maybe just your updated thoughts on a base case for Seminole, based on what you're seeing on the supply growth side. Yeah, Tristan, this is Justin Kleider.
Tristan James Richardson: Hi, good morning guys. Just on Bahia, can you give a general update on progress there and maybe how you see utilization ramping as that project comes on and then maybe just your updated thoughts on a base case for Seminole based on what you're seeing on the supply growth side?
Justin M. Kleiderer: I mean, I think updates on VCRs are still on track from a timing perspective and from a commercial perspective. Go back a couple quarters from what we talked about strategically about it. And that is, you know, the growth is underpinned by our GMP platform, which Jim just spoke to the fact that we don't think we're done building plants. So he'll be there to catch those volumes.
Tristan James Richardson: Yeah, Tristan, this is Justin Kleiderer. I mean, I think updates on VCRs, we're still on track from a timing perspective, from a commercial perspective, I think.
Speaker Change: Go back a couple quarters from how we sort of talk strategically about it, and that is it's, you know, the growth is underpinned by our GMP platform, which Jim just spoke to, the fact that we don't think we're done building plants, so he'll be there to catch those volumes.
Justin M. Kleiderer: And then when you think about NGL pipelines, you have to also understand the totality of the system that feeds them, which we think we have a premier system with all the connectivity to every, a majority of the third-party plants that have supply that can feed the system as well. So you really have to look at plant connectivity to really understand what capacity and utilization could look like. And then third, we always have the sort of optionality that all of our pipelines give us in terms of potential conversions and things like that. So with respect to Seminole, I think it's a prime candidate for repurposing.
Speaker Change: And then when you think about NGL pipelines, you have to also understand the totality of the system that feeds them.
Speaker Change: in which we think we have a premier system with all the connectivity to every.
Speaker Change: A majority of the third party plants that have supply that can feed the system as well. So you really have to look at plant connectivity to really understand what capacity and utilization could look like. And then third, we always have the sort of optionality that
Speaker Change: All of our pipelines give us, in terms of potential conversions and things like that. So, with respect to Seminole, I think it's a prime candidate for repurposing. I think we've been public with that. In which case, if that happens, then those NGLs will feed into Bahia.
Justin M. Kleiderer: I think we've been public with that, in which case, if that happens, then those NGLs will feed into Bahia. Great, thank you. And then, maybe just a clarification question.
Unknown Executive: Sorry if I missed this, but could you talk about the EHT expansion you announced this morning and the 300 a day versus maybe what you had talked about previously in that capital slide for EHT? I think you guys referred to it as facility upgrades versus an outright expansion. Can you maybe talk a little bit about the distinction there?
Speaker Change: Great, thank you. And then maybe just a clarification question. Sorry if I missed this, but could you talk about the EHT expansion you announced this morning and
Speaker Change: and the 300 a day versus maybe what you had talked about in
Speaker Change: Previously in that capital slide for EHT, I think you guys referred to it as facility upgrades versus an outright expansion. Can you maybe talk a little bit about the distinction there?
Unknown Executive: I mean, it's an additional refrigeration unit there, expanding the existing dock infrastructure, or you can utilize an existing dock infrastructure and pipeline infrastructure that's ultimately getting up to 300,000 barrels a day. The original project that was on there was more of a flexibility project between different commodities, which this new train ends up providing. That's great. Thank you guys very much.
Speaker Change: I mean, it's surrounding an additional refrigeration unit there, expanding the existing dock infrastructure or to utilize an existing dock infrastructure and pipeline infrastructure that's ultimately getting us to 300,000 barrels a day.
Speaker Change: The original project that was on there was more of a flexibility project between different commodities, which this new train ends up providing.
Speaker Change: Great, thank you guys very much, appreciate it.
Tristan James Richardson: I appreciate it. Thank you. Our next question comes from the line of Spiro Dounis of City. Thanks, Albert. Morning, team.
Speaker Change: Thank you. Our next question comes from the line of Spiro Dounis of Citi.
Spiro Michael Dounis: First question is just on CapEx, but I really kind of want to focus on what's uncommitted at this point. Obviously, SPOT's a big one. And you've mentioned a few times now the potential for more crossing plants to get built. But as you think about the rest of the system, you've obviously got plenty of pipeline, plenty of export expansion, obviously some fracs in there. Curious for me to give us a sense of what you think is still missing from that system, or maybe areas where customers are coming to you, like with this export expansion, and demanding more. Yeah, I remember Dan one time.
Spiro Michael Dounis: Thanks, Everett and team. First question is just on CAPEX, but really kind of want to focus on what's uncommitted at this point. Obviously, SPOT's a big one, and you've mentioned a few times now the potential for more processing plants to get built.
Speaker Change: But as you think about the rest of the system, you've obviously got plenty of pipeline, plenty of export expansion, obviously some fracks in there. Curious if you could give us a sense of what you think is still missing from that system or maybe areas where customers are coming to you like with this export expansion and demanding more.
Jim Teague: This is Jim. He told me we were looking at something, and he said, you know, this might be the last deal, Jim. They keep coming at us. I think we are doing a pretty good job of expanding our primary Petrochemical Products System, meaning our ethylene system and our propylene system. And I think we'll be surprised in the years to come how well we do in that, and I mean, I don't think we have enough export capability based on what I see coming at us in the future.
Speaker Change: Yeah, I remember Dan one time.
Speaker Change: this is Jim told me we were looking at something and he said you know this might be the last deal Jim
Speaker Change: and they keep coming at us.
Jim: I think we are doing a pretty good job.
Jim: of expanding our primary...
Speaker Change: Petrochemical Products System, meaning our ethylene system and our propylene system, and I think we'll be surprised in the years to come how good we'll do in that.
Speaker Change: And I mean, I don't think we have enough export capability based on what I see coming at us in the future. We believe that...
Jim Teague: We believe that, uh... That rich gas out of the Permian is going to be a couple of 3 BCF a day more than we have forecasted in the past. We're on that export. Gotcha. I guess it does tie to my second question a bit.
Speaker Change: That rich gas out of the Permian is going to be a couple of 3 bcf a day more than we have forecasted in the past so
Speaker Change: We're on that export train.
Tony: But just thinking about producers here. Curious, maybe this one's for Tony on how you think about the outlook or what happens next. But curious, have you seen any change in behavior?
Speaker Change: Gotcha. I guess it does tie in my second question a bit, but just thinking about producers here.
Speaker Change: I'm curious, maybe this one's for Tony, on how you're thinking about the outlook or what happens next, but curious if you've seen any change in behavior, obviously steam gas kind of turned over here a little bit again, and crude of course has kind of come off the highs, so are producers acting differently yet? Just curious how you're seeing maybe the next cold median term.
Tony: Obviously, steam gas kind of turned over here a little bit again, and creative forces have kind of come off the highs. So are producers acting differently? Yeah, just curious how you're seeing maybe the next coal medium firm. Yeah. Sarah, this is Tony.
Tony: You know, Jim mentioned in his prepared remarks, I guess, first of all, we don't see significant changes in producers. In other words, there is a lot of money on the table for producers to continue to produce because of the price of oil and how profitable they are, and, frankly, they get more profitable every day.
Speaker Change: Yeah, um...
Speaker Change: Sarah, this is Tony. You know, Jim mentioned in his prepared remarks, I guess, first of all,
Tony: We don't see significant changes in producers. In other words, there is a lot of money on the tables for producers to continue to produce.
Tony: Because of the price of oil and how profitable they are, and frankly they get more profitable every day. So while certainly none of them can like very weak prices at OAHA, that doesn't keep them from putting barrels on the table.
Tony: So while certainly none of them can like very weak prices at OAHA, that doesn't keep them from putting barrels on the table. Jim, in his remarks, mentioned that rich gas continues the trend of exceeding both ours and producers' expectations. What I'd like to add to that is, you know, with Natalie's team, we spend a lot of time with commercial people, producers, and technical people, and in those meetings with producers, we're definitely discussing incremental rich gas over and above, frankly, the type curves that we have in our forecast.
Tony: Jim, in his remarks, mentioned that rich gas continues the trend of exceeding both ours and producers' expectations.
Speaker Change: What I'd like to add to that is, you know, with Natalie's team, we spend a lot of time with commercial people, producers, and technical people in those meetings with producers.
Speaker Change: We're definitely discussing incremental rich gas over and above, frankly, the type curves that we have in our forecast.
Tony: I think there are a number of reasons for this, but to boil it down, I think it boils down to some of the richer, gassier benches now being drilled and planned by producers, especially in the Delaware Basin.
Speaker Change: I think there's a number of reasons for this, but to boil it down, I think it boils down to some of the richer, gassier benches now being drilled and planned by producers, especially in the Delaware Basin.
Tony: Plus some of the GOR increases that we're predicting driven by the multi-bench completion methods, whatever you want to call them, that continue to evolve. When we talked about that in our analyst meeting, Natalie always reminds me that we want to be directionally correct in our forecast. But no forecast is perfect.
Speaker Change: Plus some of the GOR increases that we're predicting driven by the multi-bench completion methods, whatever you want to call them, that continue to evolve.
Natalie: When we talked about that in our analyst meeting, you know, Natalie always reminds me that we want to be directionally correct in our forecast. No forecast is correct.
Tony: But without talking to you about what we're seeing, again, in these commercial and technical meetings, I think, I think are directionally correct, I think we'd be lacking. Jim, I think you mentioned two to three incremental bees. I would say that's over and above the approximately 30 bees of which rich gas at 2030 that we had in our portfolio. When you look at a basin producing that much gas, you think, well, that's not really a big number.
Speaker Change: But without talking to y'all about what we're seeing, again, in these commercial and technical meetings, I think...
Speaker Change: I think from directionally correct, I think we'd be lacking.
Speaker Change: Jim, I think you mentioned...
Jim: 2 to 3 incremental B's. I would say that's over and above the approximately 30 B's of rich gas at 2030 that we had in our forecast.
Tony: But when you consider the fact that it's liquid rich and as rich as it is, it gets to be a pretty big number pretty quick. So that's the reality of what we're dealing with. Anybody else want to add anything?
Speaker Change: When you look at a basin producing that much gas, you think, well, that's not really a big number. But when you consider the fact that it's liquid rich, and as rich as it is, it gets to be a pretty big number pretty quick.
Natalie: Natalie, you agree? Yeah, the only thing I'd add is when you think about that much incremental rich gas and more efficient plants in the basin that are capable of extracting higher ethane than before, it becomes a very quick NGL growth number also. So one thing that I think has surprised people to the upside is the NGL production out of the basin prices said to do it. So the capability of the plants and the portfolio of processing plants now there in the Permian is just much greater than in the past. I got it.
Jim: So that's that's the reality of what we're dealing with. Anybody else want to add anything? Natalie, you agree?
Natalie: Yeah, the only thing I'd add is, when you think about that much incremental rich gas...
Natalie: and more efficient plants in the basin that are capable of extracting higher ethane than before.
Natalie: It becomes a very quick NGL growth number, also. So, one thing that I think has surprised people to the upside is the NGL production out of the basin. Price has said to do it, so the capability of the plants and the portfolio of processing plants now there in the Permian, just is...
Natalie: is much greater than the past.
Spiro Michael Dounis: I'll leave it there. Thanks, as always. Thank you. Our next question comes from the line of Keith Stanley of Wolfe Research. Hi, uh, good morning.
Speaker Change: Got it. I'll leave it there. Thanks as always.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Keith Stanley of Wolf Research.
Keith T. Stanley: Following up on the Houston LPG export project, is this a sign that you're perhaps seeing more demand for Phase 2 at the Natchez River project to be all ethane instead of a mix of ethane and propane, and so you have to do the Houston project to accommodate the propane side? And then can you just give an update on how much of the Natchez River capacity is contracted on both phases? Sure, this is Tug.
Keith T. Stanley: Hi, good morning.
Keith T. Stanley: Following up on the Houston LPG export project.
Keith T. Stanley: Is this a sign that you're perhaps seeing more demand for Phase II at the...
Speaker Change: Nature's River project to be all ethane instead of a mix of ethane and propane.
Speaker Change: And so you have to do the Houston project to accommodate the propane side.
Speaker Change: And then can you just give an update on how much of the Natchez River capacity is contracted at this point on both phases?
Tug: So, you're exactly right. We will maintain the flexibility at the Natrix River facility to do LPG. However, as the BLEC order book continues to get delivered out between now and the end of 26, that facility will be an ethane service long term. As far as the contract level we have on that facility, it is 100% contracted. I will tell you that we have additional deep bottlenecking projects that we can execute fairly capital-efficiently to get additional capacity there if the market asks for it.
Tug: Sure, this is Tug. So, you're exactly right. We will maintain the flexibility at the Nature's River facility to do LPG. However, as the VLEC order book continues to get delivered out between now and, call it, into 26, that facility will be an ethane service long-term.
Tug: As far as the contract level we have on that facility, it is 100% contracted.
Tug: I will tell you, we have additional deep bottlenecking projects that we can execute, fairly capital efficient, to get additional capacity there if the market asks for it. We're in good discussions around that capacity right now, and we'll evaluate if we proceed with that.
Tug: We're in good discussions around that capacity right now, and we'll evaluate if we proceed with that. So yeah, I could see it being out there in the long term. Great, thank you. And second question, not a technical one, but just any ability for the company to benefit from the wide isobutane to butane spreads that we've seen? Or is the focus really still just MTB?
Tug: So yeah, I could see it being out there in the long term.
Speaker Change: Great, thank you. And second question, any, kind of a technical one, but just any ability for the company to benefit from the wide isobutane to butane spreads that we've seen or is the focus really still just MTB to butane?
Speaker Change: From ISA butane to butane. Yes.
Speaker Change: Got it. Thank you.
Unknown Executive: We benefit from that spread from IWTN. Got it. Thank you. Thank you. Our next question comes from the line of John Mackay of Goldman Sachs. Hey, everyone. Good morning.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of John Mackay of Goldman Sachs.
John Ross Mackay: Thanks for the time. I want to go back to, I think maybe it was Michael's question about China. We're seeing at least oil demand kind of trending decently below expectations right now. I guess I'd just be curious to hear from your perspective, kind of where demand is trending overall versus your forecast, your expectations on maybe when that could start to pick up, and maybe just how sensitive your outlook could be to that global demand picture, acknowledging the high contracting level. Oh, this is Tug. I'll pass it over to Tony, but... As far as enterprises export to China, around 43%, the U.S. is around 52%, so we're a little bit lower than the U.S. average.
John Ross Mackay: Hey everyone, good morning, thanks for the time. I want to go back to, I think maybe it was Michael's question on China. We're seeing at least oil demand kind of trending decently below expectations right now.
Speaker Change: I guess I'd just be curious to hear...
Speaker Change: From your perspective, kind of where demand is trending overall, versus your forecast, your expectations on maybe when that could start to pick up, and maybe just how sensitive your outlook could be to that global demand picture, acknowledging the high contracting level. Thanks.
Speaker Change: I'll just a tug I'll pass it over to Tony but
Speaker Change: As far as enterprises' exports to China, as of around 43%, the U.S. is around 52%, so we're a little bit lower than the U.S. average.
Tug: I will add that our product does go to China. It's all indirect, so we don't have any direct contract exposure, per se, on the LPG side, but we are seeing it ramp up quarter over quarter. Yeah, if you talk about other liquid demand, and Tug is referencing the barrels going to China, that's, we all know, we've been watching the build-out of PDHs in China for the last three years, and it's nothing short of eye-popping. They dominate the elephant market in Asia at this point, especially relative to PDH activity.
Speaker Change: Our product does go to China. It's all indirect, so we don't have any direct contract exposure per se on the LPG side. But we are seeing it ramp up quarter over quarter.
Tony: If you talk about other liquids demand, and Tug is referencing the barrels going to China, we all know we've been watching the build-out of PDHs in China for the last three years, and it's nothing short of eye-popping.
Speaker Change: They dominate the olefins market in Asia at this point, especially relative to the PDH activity.
Tony: So it's really important in the equation. If you're also referring to oil demand, I will tell you, from our view, there's nothing wrong with oil demand globally. Probably on track to be some growth somewhere between 1.2 to 1.4 million barrels a day, year on year. That's not a bad number.
Speaker Change: So it's really important in the equation. If you're also referring to oil demand, I will tell you from our view, there's nothing wrong with oil demand globally.
Speaker Change: probably on track to be some growth somewhere between 1.2 to 1.4 million barrels a day year-on-year that's not a bad number you know especially with China demand that somewhat weak economies
Tony: You know, especially with China's demand and somewhat weak economies. So I think other forecasters will tell you the same that that's about the trajectory we're on. I don't think we should underestimate the benefits that LPG has with places like Africa and India as a transition fuel from wood and coal.
Speaker Change: So, I think other forecasters will tell you the same, that that's about the trajectory we're on.
Speaker Change: And this, Jim, I don't think we can undersell.
Jim: The benefits that LPG has with
Jim: Places like Africa and India as a transition fuel from wood and coal and what we're seeing is that's that's a lot stickier demand and it doesn't go away.
Unknown Executive: And what we're seeing is that that's a lot stickier demand; it doesn't go away. In that regard, for those of you who want to search the internet for Total Energy's recent commercial that they have been running specifically on LPG in Africa, it's pretty moving. I appreciate all that. Thanks. I might push for just one more.
Speaker Change: In that regard, for those of you who want to search the internet for Total Energy's recent commercial that they have been running specifically on LPG in Africa, it's a pretty moving commercial.
John Ross Mackay: I mean, looking ahead to November, you know, tariffs are obviously front of mind. Are those coming up in your commercialization discussions, either around kind of incremental NGL sales, or maybe on spot? What say the question again, I'm sorry, tariffs, export tariffs. So we're talking about the risk of incremental tariffs starting next year. It gets brought up occasionally, but I'll tell you the truth. If you were to ask me that question two or three years ago, four years ago, especially in the later days of when Trump was in office, it was brought up quite often. We've been over to Asia a couple times this year.
Speaker Change: I appreciate all that. Thanks. I might push for just one more. I mean, looking ahead to November , you know, tariffs are obviously front of mind. Are those coming up in your commercialization discussions, either around kind of incremental NGL sales or maybe on spot?
Speaker Change: What, say the question again, I'm sorry. Tariffs. Export tariffs. We're talking about the risk of incremental tariffs starting next year, if that's having any impact on commercialization. It gets brought up occasionally, but I'll tell you the truth, it...
Speaker Change: If you were to ask me that question 2 or 3 years ago, 4 years ago, especially at the later days of when Trump was in office, it was brought up quite often.
Unknown Executive: Those questions and those conversations don't happen at the frequency that they once did. The LNG policy is going to depend on the U.S. Aren't you getting some of that? Yeah, I mean, I think people question in terms of what projects are real and if we're going to continue to expand the export capabilities of this country. I think obviously the people that have contracts in place, that the incumbent assets, I think, benefit, but in terms of trying to expand anything that they have, especially over in Asia, I think you know that that makes them pause if they can continue to grow and depend on the US.
Speaker Change: We've been over to Asia a couple times this year. Those questions and those conversations don't happen near the frequency that they once did.
Speaker Change: What does happen?
Speaker Change: I think people question in terms of what projects are real and if we're going to continue to expand the export capabilities of this country.
Speaker Change: I think, obviously, the people that have contracts in place...
Speaker Change: That the incumbent assets, I think, benefit, but in terms of trying to expand anything that they have, especially over in Asia, I think, you know, that makes them pause if they can continue to grow and depend on the U.S.
Unknown Executive: But the tariff side, again, I'll just... And on that, on the tariff side, you know, I think we fundamentally believe that if the U.S. If the U.S. product has to price itself to export, then ultimately, the U.S. price has to overcome that tariff based on just pure geography and the transit that they have to incur.
Speaker Change: but the tariff side again I'll just
Speaker Change: And on that, on the tariff side, you know, I think we fundamentally believe that if the U.S.
Speaker Change: If the U.S. product has to price to export, then ultimately the U.S. price has to overcome that tariff based on just pure geography and the transit that they have to incur.
Speaker Change: So, I mean, that's probably more of a reflection of what happens to the U.S. price.
Speaker Change: All right, that's very clear. I appreciate all the thoughts today. Thank you.
Unknown Executive: I mean, that's probably more of a reflection of what the US price will be. All right, that's very clear. I appreciate all the talks we had today. Thank you. Thank you. Our next question comes from the line of Neal Dingmann of Truist. Morning all, thanks for the time. My first question: I just always appreciate that capital project slide. I'm just wondering, something you mentioned earlier kind of got my attention.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Neal Dingmann of Truist.
Unknown Executive: I'm just wondering, is it fair to say you won't spend future CapEx until it's largely contracted or maybe say in another way, wondering if you have a certain amount that needs to be contracted or percent of volumes that need to be contracted before FID or CapEx is spent? It kind of depends on the project, if you want to know the truth.
Neal David Dingmann: Morning all, thanks for the time. My first question, I just always appreciate that capital project slide. I'm just wondering
Neal David Dingmann: Something you've mentioned earlier kind of got my attention, I'm just wondering, is it fair to say...
Speaker Change: You won't spend future CapEx until, you know, it's largely contracted or maybe say in another way, wondering if you have a, you know, an amount that needs to be contracted or percent of volumes that need to be contracted before FID or CapEx is spent.
Neal David Dingmann: On PDH, we wanted to make sure we had every bit of that contracted and turned into an annuity. If we see a lot of upside, we'll probably take less of a contract need because we see upside on the asset. So it really depends on the asset. For example, on spot, I'm not gonna tell you what it is, but we know what we have to have contracted in order to make a lot of sense.
Speaker Change: It kind of depends on the project, if you want to know the truth. On PDH, we wanted to make sure we had every bit of that contracted and turned into an annuity. If we see a lot of upside, we'll probably take less of a contract.
Speaker Change: needs, because we see upside on the asset. So it really depends on the asset. For example, on spot, I'm not gonna tell you what it is, but we know what we have to have contracted in order to build it.
Speaker Change: That makes a lot of sense. Thanks, Jim. And then just one follow-up. Quarter date, the marketing margin continues to look quite strong, and I'm just wondering what about a third of the...
Speaker Change: Third quarter now in the books and WAHA prices remaining still quite volatile. I think anything from $1.50 to negative two, just any update you would give on that marketing margin. Thank you.
Jim Teague: Thanks, Jim. And then just one follow-up, quarter date, the marketing margin continues to look quite, quite strong. And I'm just wondering what about a third of the third quarter now in the books, and waha prices remaining still quite volatile, I think where anything from $1.50 to negative two, just any update you would give on that marketing margin. Thank you. Yeah, this is this is Brent.
Speaker Change: Yeah, this is Brent. So, from Enterprise's perspective...
Brent: So from the enterprise's perspective, our number is still the same. We have about 380 million days of exposure. We've hedged a small amount for the balance of this year. But by and large, we still have a lot of exposure to all gas markets that originate from Oaxaca.
Speaker Change: Our number is still the same. We have about 380 million a day of exposure. We've hedged a small amount for the balance of this year, but by and large, we still have a lot of exposure to all gas markets that originate from Oahu.
Brent: Perfect. Thanks, Brent. Yes, sir. Thank you. Our next question comes from the line of Manav Gupta of UBS. Bye. Bye. Oh, hi. This is Manav from UBS. My first question is, can we talk a little bit about the capex creep that happened in 2024? What were the drivers of this?
Speaker Change: Perfect. Thanks, Brent. Yes, sir.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Manav Gupta of UBS.
Manav Gupta: Hi, this is Manav from UBS. My first question is, can we talk a little bit about the capex creep that happened in 2024? What were the drivers of this? And could this repeat in 2025? Do you have confidence that, you know, this will not happen in 2025?
Speaker Change: I think we would come in and say we really didn't see CapEx creep in 2024. We did modify the range. That's why we gave the market an upper range. So the lower part of the range changed, but the upper part of the range is still $3.75 billion.
Speaker Change: And where we sit currently, we're still, you know, 2025, we still feel good about a range of 3.25 to 3.75.
Speaker Change: Okay, and in terms of PDH, do you get it up in August ? So should we assume it runs like that full rates by September or do you think it's more of like you get to the full rate in the fourth quarter?
Speaker Change: I'm looking at Graham, and I'm expecting to run up at full rates in September . We should be at full rates in September .
Speaker Change: Thank you.
Speaker Change: Thank you. As there are no further questions in queue, I would now like to turn the conference back to Libby Strait for closing remarks.
Libby Strait: Thank you to our participants for joining us today. That concludes our remarks. Have a good day.
Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Thanks for watching!
Manav Gupta: And could this repeat in 2025? Do you have confidence that, you know, this will not happen in 2025? I think we would come in and say we really didn't see CapEx creep in 2024. We did modify the range. That's why we gave the market an upper range. So the lower part of the range changed, but the upper part of the range is still $3.75 billion.
Speaker Change: Thank you for standing by, and welcome to Enterprise Products Partners LP's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session.
Speaker Change: To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Libby Strait, Senior Director of Investor Relations. Please go ahead.
Unknown Executive: And where we sit currently, we're still, you know, 2025; we still feel good about a range of 3.25 to 3.75. Okay. And in terms of PDH, do you get it up in August? So should we assume it runs at full rates by September? Or do you think it's more of like you get to the full rate in the fourth quarter?
Unknown Executive: I'm looking at Graham, and I'm expecting it to run up to full rates in September. We should be at full rates in September. Thank you. Thank you. As there are no further questions in queue, I would now like to turn the conference back to Libby Strait for closing remarks. Thank you to our participants for joining us today. That concludes our remarks. Have a good day.
Speaker Change: Good morning and welcome to the Enterprise Products Partners conference call to discuss second quarter 2024 earnings. Our speakers today will be co-chief executive officers of Enterprises General Partner, Jim Teague and Randy Fowler. Other members of our senior management team are also in attendance for the call today.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thank you for standing by and welcome to Enterprise Products Partners LP's second quarter 2024 earnings conference call.