Q3 2024 ONEOK Inc Earnings Call
Speaker Change: The day, and welcome to the one oak, third quarter, 2021 earnings conference call in Webcast. All participants will be in a listen-only mode, should you need assistance please signal a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions.
Speaker Change: Statements made during this call that might include one offs expectations or predictions should be considered forward looking statements and are covered by the safe Harbor provision of the securities acts of 1933 1934.
Speaker Change: Actual results could differ materially from those projected in forward looking statements.
Speaker Change: For a discussion of factors that could cause actual results to differ please refer to our SEC filings.
Speaker Change: Just a reminder for Q&A, we ask that you limit yourself to one question and a follow up in order to fit in as many of you as we can.
Speaker Change: With that I'll turn the call over to Pierce Norton, President and Chief Executive Officer peers. Thanks, Andrew Good.
Pierce Norton: Good morning, everyone and thank you for joining us.
Pierce Norton: On today's call is Walt Hulse, Chief Financial Officer, Treasurer, and Executive Vice President Investor Relations, and corporate development, and Sheridan Swords executive Vice President commercial liquids and natural gas gathering and processing.
Pierce Norton: Yesterday, we announced third quarter 2024 earnings and provided new consolidated guidance that includes contributions from Enlink and depending medallion acquisition.
Pierce Norton: We also increased our full year 2024 financial guidance on the Standalone basis.
Pierce Norton: The second time this year.
Our higher guidance expectations highlight one oak's ability to continue to deliver on synergy opportunities.
Pierce Norton: We're also maintaining a strong fee based earnings across our systems.
Pierce Norton: Our Standalone 2024, adjusted EBITA guidance, which excludes contributions from Enlink and medallion is well over double one hopes adjusted EBITDA just five years ago.
Pierce Norton: This extraordinary growth has been possible because of our employees focus on excellence service and innovation, our strategic assets and our intentional and disciplined approach to organic growth and acquisitions.
Pierce Norton: It has been more than a year since we completed the acquisition of Magellan and we continue to identify synergy opportunities related to the transaction exceeding our original expectations.
Pierce Norton: In mid October we completed our acquisition of rolling it out.
Pierce Norton: In the midstream.
Pierce Norton: Today, I'm able to announce the expiration of the Hart Scott Rodino Act waiting period related to the medallion acquisition.
Pierce Norton: We look forward to finalizing that equity acquisition in the coming days.
Pierce Norton: The Enlink and medallion acquisitions continue to build off the complementary assets of one oak, providing significant growth potential by establishing a fully integrated Permian basin platform at scale that will drive new service offerings, our customers expanding and extending one oak's footprint.
Pierce Norton: And the mid continent, and North Texas.
Pierce Norton: Providing a new asset position in Louisiana connected with the key demand centers, providing significant synergies through connections as complementary asset positions and finally, delivering immediate accretion and supporting our capital allocation strategy.
Speaker Change: These acquisitions Mark another exciting milestone in our company's history building on our proven track record of shareholder value creation, there's much to look forward to with these latest announcements, but theres a lot of momentum in one of his current businesses I'll turn it over to Walt and Sheridan discuss.
Speaker Change: Our latest guidance increases and a commercial update well.
Speaker Change: Thank you Bruce.
Walt Hulse: Start with a brief overview of our third quarter financial performance.
Walt Hulse: One oak's third quarter 2024, net income totaled $693 million or $1 18 per share, which included four cents per share of transaction expenses.
Walt Hulse: Third quarter, adjusted EBITDA totaled $1.55 billion.
Walt Hulse: The year over year increase was driven by continued strength in the Rocky Mountain region.
Walt Hulse: Increased transportation services, and the natural gas pipeline segment, and a full quarter contribution from our refined products include segment.
Walt Hulse: Moving on to our updated guidance.
Walt Hulse: In addition to increasing Standalone guidance.
Walt Hulse: We announced 2024 consolidated financial guidance, which doesn't does include contributions from Enlink and the pending medallion acquisition, but excludes transaction costs.
Walt Hulse: We expect a consolidated net income midpoint of approximately $3 billion and an adjusted EBITDA midpoint of $6.6 billion to $5 billion.
Walt Hulse: And Mike will be a.
Walt Hulse: <unk> a subsidiary of one up for GAAP financial reporting purposes, and we expect to report Enlink adjusted EBITDA within each of one oak's corresponding business segments, beginning in the fourth quarter of 2024.
On a standalone basis, we now expect a 2024 net income midpoint of $2 nine four of $5 billion and adjusted EBITDA midpoint of $6 $2 $75 billion, which is a $100 million higher than our guidance.
Walt Hulse: Increase in April.
Walt Hulse: These midpoint exclude contributions from earthquake and the pending medallion acquisition as well as related transaction costs in order to provide an apples to apples comparison with our original 2020 for guidance.
Walt Hulse: We continue to expect to meet or exceed our synergy expectations expectations in 2024 and continue to identify additional related opportunities.
Tailwind from new synergies sustained strength in our fee based earnings contributions from our acquired eastern assets.
Walt Hulse: And outperformance in our natural gas pipeline segment, all contributed to our increased guidance.
We continue to expect our total standalone capital expenditures, including growth and maintenance capital to be in the range of $1 75 billion to $1 $95 billion in 2024.
Walt Hulse: This remains consistent with our initial guidance and does not account for Enlink, our medallion capital.
Speaker Change: That's yours.
Speaker Change: As we look ahead, our financial outlook remains strong and as noted when we announced the Enlink and medallion transactions. We expect one oak's total combined EBITDA for 2025 to be comfortably above $8 billion, which is double one oak's EBIT run rate prior to the.
The javelin acquisition, just two years ago.
Speaker Change: Following the close of these transactions one of them expect pro forma 2025 year end net debt to EBITDA of approximately three nine times and expect leverage to trend towards our previously announced target of three five times in 2026 assist.
Speaker Change: Our systems are integrated and growth projects are placed in service.
Speaker Change: Now I'll turn the call over to Sharon for a commercial update.
Thank you well beginning with the natural gas liquids segment.
Sharon: Rocky Mountain volumes increased 7% year over year, driven by higher propane plus volumes from solid production in region.
Sharon: Partially offset by less ethane recovery year over year.
Sharon: The mid continent region also saw lower levels of ethane recovery during the third quarter.
Sharon: Natural gas and ethane prices presented your economic opportunities for recovery.
Sharon: Permian Basin NGL volume benefited from increased short term volume on our system in the third quarter of 'twenty 'twenty four.
Sharon: We expect short term volume could be replaced with long term committed volume as we near the completion of our West, Texas NGL pipeline expansion.
Sharon: In the Permian Basin. The completion of two third party processing plant that we had expected to contribute to third quarter.
Sharon: Order volumes were delayed we expect these plants to be completed and flowing volume in the fourth quarter. We expect a step up in Permian Basin NGL volumes in 2025 from the ramp up of these two new plants additional plants coming online new contracts and new volume from inmate.
Sharon: Plants ramping up the system.
Sharon: The West, Texas, NGL pipeline expansion and the N B six fractionator are on track to be in service by the end of this year.
Sharon: On the West, Texas, NGL expansion, the full pipeline looping providing capacity, it's 500000 barrels per day.
Sharon: It is expected by year end with remaining pump stations to be completed in mid 2025.
Sharon: Oh Creek pipeline expansion remains on track for first quarter 'twenty 'twenty five completion.
Sharon: Phase one of our Medford fractionator rebuild is expected to be completed in the fourth quarter of 2026, adding 100000 barrels per day of capacity with.
Sharon: With phase two expected in the first quarter 'twenty 'twenty seven adding the final 110000 barrels per day for a total capacity of 210000 barrels per day.
Sharon: This was our first quarter since acquiring the eastern energy NGL assets and we are happy with how these pipelines are performing and integrating into our Gulf coast and Houston area systems assist.
Sharon: The systems existing capacity from Mont Belvieu to the Houston ship channel is performing at a higher utilization rate with throughput increasing by nearly 30% since acquiring the assets.
Sharon: We continue to expect to complete connections from the legacy Eastern system to our Houston based assets beginning in mid 2025 through year end, 2025, which will help us realize additional synergies by Maxine maximizing their available capacity.
Sharon: Moving on to the refined products and crude segments.
Sharon: Gasoline and jet fuel demand benefited from a robust peak driving season and refinery maintenance or cross start system go long haul volumes during the third quarter.
Sharon: Total refined products volumes at nearly $1 6 million barrels per day was a new record for the system.
Sharon: In July all of our tariff adjustments when into effect, providing a mid single digit Terry tariff increase across our refined product system.
Sharon: But the started blending season in September we didn't see much of an impact in the third quarter, but that's but I have seen an increase in blending activities. Since then one up continues to benefit from the ability to execute certain blending related commercial synergies between the natural gas liquids and refined.
Sharon: Businesses.
Sharon: We expect these types of synergies to continue to ramp up its low capital synergy projects come online in the coming quarters.
Sharon: As it relates to growth projects, we continue to expect the expansion of our refined products pipeline system from Kansas to the greater Denver area, and Denver International Airport to complete to be completed in mid 'twenty 'twenty six.
Sharon: In July we provided a record volume of jet fuel to the Denver Airport.
Sharon: Further highlighting the need for additional capacity to this key market.
Sharon: Crude oil volume shipped on our wholly owned assets increased 10% year over year due to committed shipper volume ramps on longhorn in increased volumes and third party connections to the Houston distribution system. Our current volumes are good are a good base going forward.
Sharon: We remain excited about the pending medallion acquisition and what that will mean for our long haul crude pipelines.
Sharon: Among the minimal volume from medallion gathering as long on longhorn today.
Sharon: And a modest amount of Bridgetex volume originates from these assets. So we believe theres, a great deal of upside and synergy opportunity in bringing our systems together.
Sharon: Overtime, we expect an opportunity to direct more medallion barrels to our long haul pipelines as existing capacity on these medallion assets fill up.
Sharon: Moving on to the natural gas gathering and processing segment.
Sharon: Rocky Mountain region processing volumes had another record in the third quarter, averaging nearly one seven bcf per day.
Sharon: Williams would have likely been higher but we experienced planned and.
Sharon: And planned outages late in the quarter east carried over into early fourth quarter, but are now back online.
Sharon: Part of the unplanned outages resulted from North Dakota to wildfires in early October that caused volume disruptions for about one week due to producer shut ins power outages and high winds that also delayed completion crews.
Sharon: Our employees were quick to respond to these events and volumes have returned to levels seen before the buyers.
Sharon: There are currently 40 rigs in the Williston basin with 21 on our dedicated acreage.
Sharon: We continue to see benefits from the drilling of longer laterals and higher well performance on traditional laterals.
Sharon: We've updated our 'twenty 'twenty four well collect expectations to a range of 500 to 530 well connects to reflect the higher volumes, we're getting from fewer wells.
Sharon: Increasing gas to oil ratios in the bases continue to contribute to natural gas and NGL production strength G.
G O wars, intubation or near all time highs and combined with longer laterals support volume growth without requiring increase in drilling activity.
Sharon: We're currently seeing 42 rigs in Oklahoma with seven operating on our acreage and four on in links acreage we have seen additional wells drilled in oil your NGL rich areas, even if some wells in gassy areas that region had been delayed into 2025.
Sharon: We continue to expect approximately 65 well connects on one oak's acreage and expect approximately 90 well connects on Inmex acreage in the mid continent region. This year.
Sharon: And the natural gas pipeline segment, we benefited from higher firm and interruptible transportation rates in the third quarter strong performance. So far this year driven by firm demand contracts and continued high demand for natural gas storage is positioned in this segment well exceed expectations.
Sharon: 'twenty 'twenty four.
We continued to address increased natural gas storage needs of our customers recently activating three Bcf a previously idled storage capacity in Texas, and we remain on track to complete our Oklahoma storage expansion project in the second quarter 2025.
Sharon: Both projects have firm contracts extending beyond 2030.
Sharon: Additionally, we now have access to significant natural gas storage through the Enlink system, and we'll look for opportunities to best utilize our assets together in the future.
Sharon: That concludes my remarks.
Speaker Change: Thank you Sharon any mall.
Speaker Change: Before we wrap up.
Sharon: I want to take a moment to express my gratitude to our employees, who have been affected by severe weather events across our operations over the past quarter.
From the recent wildfires in North Dakota, due to preparations for Hurricanes on the Gulf Coast.
Sharon: These challenges have not only tested our operations, but have also disrupted the lives of our employees and their families.
Sharon: Sincerely. Thank you for your dedication to keeping our assets running safely and resilient.
Sharon: Beyond that I deeply appreciate the commitment many of you have shown to your communities.
Sharon: Whether through volunteer fire departments relief efforts are fund raising events your.
Sharon: Your contributions go beyond our business they make a meaningful difference in the lives of those around you think.
Sharon: For embodying our values and for making such a significant impact both within our company and in the communities, where we live and search.
Sharon: As we close out 2024, we expect an exciting.
Sharon: And busy end of the year as we close our pending acquisition of medallion and work towards phase two of the Italy transaction.
Sharon: Our employees have proven their ability to successfully integrate assets systems and teams and to achieve meaningful synergies.
Sharon: I am confident that with that with the support of our new colleagues from Enlink and medallion and Airtel.
Sharon: Our teams once again build on our strong track record of creating value for our stakeholders.
Sharon: Operator, we're now ready for questions.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you elect to withdraw your question. Please press Star then two.
Speaker Change: At this time, we'll pause momentarily to assemble our roster.
Speaker Change: And the first question will come from Theresa Chen with Barclays. Please go ahead.
Theresa Chen: Good morning, and thank you for taking my question.
Theresa Chen: Maybe going back to chevron's comments about your natural gas infrastructure.
Theresa Chen: And many of your peers have expressed enthusiasm and relate it to the robust growth outlook for natural gas infrastructure, given the backdrop that power demand for a variety of places, including incremental demand from data centers as commercial discussions have progressed over the past months and quarters can you talk about how you use your asset situated with.
Theresa Chen: This backdrop and how you can participate in testing.
Theresa This is Sheridan yeah, I think our assets are very well positioned there and right now we are in discussions perhaps 23 different projects across our system based on demand for natural gas and of those 23 10 of them. We've had people specifically site demand centers that their work.
Theresa Chen: And after so we think we're in a very good position with our assets going forward and then if you layer on in links assets and what they're seeing on there I think we are at a very good position to be able to capture our fair share amount of this growth in natural gas demand with data centers.
Speaker Change: Okay and then.
Thank you Sharon and earlier for giving us the data points on that medallion potential synergies tier long haul pipeline I'm curious if the current medallion volumes are they slowing primarily to corpus or to Houston already I E. If they can go on longhorn.
Speaker Change: Credentialing and Bridgetex and would the assumption be that they would also be additive to your Houston distribution system, especially in light of Lyondell step.
Speaker Change: Still planning to close that refinery in that area in 2025.
Theresa Chen: Yeah, Theresa, where we some volume from medallion, obviously as I said is moving on Bridgetex and much smaller on longhorn other volume for medallion is moving on to the Houston area of course, some are still moving down to Cortez area. We think that that's part of the big synergies, we see with medallion is to bring that.
Volume onto our long haul pipes through our distribution system going forward in terms of the overall.
Theresa Chen: Macro economics that we're seeing between corpus and Houston, where as the corporate pipes that buildup. We are seeing a much more demand for people wanting to get into the Houston area, even with the lyondell going down we're seeing more volume across our Seabrooks terminal once they know their volume being exported out of the Houston area. So we think we're very well positioned at this.
Theresa Chen: Time to be able to market volume coming off the medallions system into the Houston area.
Speaker Change: Thank you.
Speaker Change: The next question will come from Jeanine, Dallas Berry with Bank of America. Please go ahead.
Hi, good morning, and ethane demand for the last let's pretty flat for the next few quarters until more export facilities come online can you talk about what you think drives the minimum possible recovery of ethane in the Bakken them, whether it's a certain amount in a stream to float on the NGL infrastructure I'm, all right like hitting residue gas be to use back in I guess.
Speaker Change: More importantly, like how far away, we are from that from that floor.
Speaker Change: Sure.
Speaker Change: Think about you're right the.
Speaker Change: Overall ethane demand, it's kind of flat right now I'm, a little bit will change as crackers.
Speaker Change: Utilization rates on the crackers and on turnarounds and if they're all running but overall, but we think really is going to start driving where ethane comes out as we said before is going to be the gas price in the region because really you're looking at what can that they can be recovered in the region for sell into Mont belvieu price or sold as the natural gas price.
Speaker Change: In that region.
Speaker Change: We continue to think there's going to be opportunities in the Bakken, especially during the summer time or you see more depressed natural gas in that region, but we will be able to incentivize that ethane to come out as we have in the past. We've also been able to do some of that in the Oklahoma at times, when we see depressed prices in Oklahoma, we see that continuing to.
Speaker Change: We see that continuing into next.
Speaker Change: Next year, well I think it will help us a little bit with that Matterhorn coming on in the Permian. We've seen we will should see some increase in natural gas prices in the Permian area, which will make.
Speaker Change: Make it easier to bring it out of the Bakken because you'll need higher prices.
Speaker Change: Ethane to bring it out of the Permian.
Speaker Change: That makes sense. Thank you.
Speaker Change: And then as a follow up a lot of the kind of plateauing of Bakken G O or for the past few years has been caused by Bakken operators moving into higher oil cut areas and from talking to tier producers do you feel that that rate of change to the oily areas has kind of stabilized yet.
Speaker Change: Yeah, I think overall it stabilized I mean, I think what a lot of things going into the production what's happening on production up there in G Awards.
Speaker Change: Sided that how longer laterals that have an impact of higher IP rates that are driven by producers have more efficient operations are more completions with different techniques. All a lot of things that go into the growth and volume growth in G O ours and not only just the the oil play that they're pulling that theyre into now.
Speaker Change: But we think where they are now with where theyre going to stay for a period of time great.
Speaker Change: Great. That's all for me thank you.
Speaker Change: Okay.
Speaker Change: The next question will come from Michael Blum with Wells Fargo. Please go ahead.
Michael Blum: Thanks, Good morning, everyone, maybe we could just stay on the volume discussion in the Bakken.
Michael Blum: I'm trying to square your comments that you made in the prepared remarks about volumes in G O our trends with some of the the recent patient level data, we're looking at which seems to show.
Michael Blum: Crude volumes declining a bit the last few months gas production kind of flattening out. So what can you just talk about you know what you're seeing across your footprint relative to the overall basin.
Michael Blum: We can still see that R. R.
Our customers are drilling at a level that they had been for a period of time, obviously, we've had the wildfires did have an impact in October.
Michael Blum:
Michael Blum: For everybody as a lot of our producers had to shut in wells.
Michael Blum: To make sure we didn't have any issues with what else catching on fire also some of the unplanned outages on the natural gas.
Michael Blum: Assessing side in the third quarter had little impact on crude production. So I think there's a little bit of add normally on the infrastructure up there at this time, but as we as we've got through that we've seen volumes kind of move back to where we expect them to be at this time. So I think that's a little bit of noise, you're seeing in some of the volume data that you're looking at.
Speaker Change: Okay, and then I want to ask about just over $8 billion guidance EBITDA guidance for 'twenty fives right.
Speaker Change: I just simply annualize the Q4 results pro forma for a full year, a full quarter contribution for Enlink and medallion.
Speaker Change: We're getting something around a $3 billion EBITDA run rate and that's before any full year contributions from West, Texas Elk Creek etcetera. So just wanted to see if we're missing something there or is that.
Speaker Change: Over 8 billion kind of a conservative estimate thanks.
Speaker Change: Well, Michael I think we put the.
Speaker Change: The adder in there is that we were comfortably over $8 billion. So I can't argue with your math at all.
Michael Blum: Thank you.
Speaker Change: The next question will come from Brent and ready with J P. Morgan. Please go ahead.
Speaker Change: Hey, good morning for the Standalone adjusted EBITDA raised I was wondering if you could maybe just parse through how much of that is attributed attributable to the legacy asset sale that you guys had last quarter.
Speaker Change: In the east and Ngls acquisition versus base business strength, which you guys talked a bit about in the prepared remarks.
Speaker Change: I'm, sorry could you repeat that please.
Speaker Change: Just curious if you could parse through how much of the Standalone adjusted EBITDA guidance raise was the legacy asset sale that you guys had last quarter, our eastern NGL acquisition and base business strength.
Speaker Change: Well [laughter].
Speaker Change: Yes, I'd say it was actually caught up in the the first guidance uplift so as we moved into a.
Speaker Change: It was 100 million dollar increase it's really against strength across all of our businesses, which we listed out in my remarks I'm. So we're just seeing good good good momentum across all our all of the businesses as we head into 2025.
Speaker Change: Got it and on the Bakken, we've had a couple of different times, but on the lateral lengths. It looks like that was lowered a bit for the 'twenty 'twenty four guide I'm curious if you could walk through any drivers there that we haven't had already.
Speaker Change: Yes, it just kind of depends on who's drilling the wells in and what their acreage looks like and what they're trying to get bored and so it's we talk to them. There's been some of them have delayed some of that may push out a little bit into 2025, some of them a little bit more than 2025, but I will say the other thing we're also saying let alone.
Lateral lengths and that this kind of gets a little bit shadowed by the lateral link says we are seeing.
Speaker Change: There are completion techniques and the advancement in that and the efficiencies of that really starting to shine through and where we're really starting to see really good volumes coming out of all the wells are being completed.
Speaker Change: Great. Thank you.
Speaker Change: The next question will come from Neal Dingmann with the Truest. Please go ahead.
Neal Dingmann: Morning, guys I was hoping that maybe I could ask another question around the 8 billion 2025, EBITDA guide specifically, but just curious to maybe some of the base assumptions around that such as you know how you're thinking about for next year commodity prices or overall production along with your Capex and also maybe wondering I guess, maybe you all are.
What is different on these macro prices and volumes given just the specific company upside you see post all your accretive deals.
Speaker Change: Well first of all I wanted to just clarify that we didn't give a 2025 guidance. We kind of gave you a directional outlook is where we see things going.
Speaker Change: And we will provide a whole lot more clarity around all of the different variables that you laid out there in February when we give our full 2025 guidance, but until we get there we're going to leave it at our remarks with me today.
Speaker Change: Okay. That's that's well taken and then just a quick follow up on my questions on ethane I'm just wondering could you specifically remind me yes.
Yes, the the volatility that Youll continue to see with the product and I assume that the weak natural gas prices will cause such as we've seen and what well continue to be the driver behind the recovery decisions.
Speaker Change: Yeah, that's very true the price the price of natural gas is going to drive me. The main driver behind our recovery, but that price of natural gas you got to look at it for the regions you Gotta go all the way up what's gonna be what's the price of natural gas in the Bakken what the price of natural gas as the mid continent with the price of natural gas is in the Permian.
Very good I'll leave it there. Thank you all.
Speaker Change: The next question will come from Keith Stanley with Wolfe Research. Please go ahead.
Keith Stanley: Hi, good morning.
Keith Stanley: First wanted to check in and.
Keith Stanley: And see if the Enlink conflicts committee has determined a vote requirement yet to approve the sale of the public interest and then are there any other procedural steps that are needed prior to one of them being in a position to.
<unk> offered to buy the remaining stake.
Speaker Change:
You know we have disclosed our intention to pursue the acquisition of all the outstanding public units of Enlink.
Speaker Change: <unk> re transaction that would provide a meaningful dividend increase to all of you make unitholders.
Speaker Change: And when we have further information to disclose around that we will when it's appropriate.
Speaker Change: But I would say that Oh, we have cleared HSR review for both phase one and phase two so there are no more procedural.
The things that we need to get through.
Speaker Change: Got it thanks, a second one.
Speaker Change: I'm just curious on the the $2 billion buyback plan through 2027.
Speaker Change: And you know given where leverage is how youre thinking about capacity for buybacks next year, specifically and then kind of thinking back just more big picture. How are you viewing buybacks in the context of you just acquired VIP stake in Enlink in medallion and in what was a very equity friendly way as it was.
Speaker Change: Fully debt financed just curious if that impacts how you think about buybacks.
Speaker Change: Well I'm glad you pointed it out because I I would I could make the argument that we just did a $3 $3 billion buyback are they using that cash but that said.
We still have the same capital allocation strategy that we announced in January.
The Enlink and medallion transactions are you know roughly about a 20% accretive from a free cash flow standpoint. So we will continue to have even more cash flow as we go forward to think about our buybacks.
Now, we're going to let that leverage come down in line, where we are intended to before we change any of our predictions around buybacks, but we have not.
Speaker Change: At this point, we don't believe there's any reason to change the target on the $2 billion buyback that we've already gone out there, even though we did do a pretty big buyback.
Speaker Change: G I P as well.
Speaker Change: Thank you.
Speaker Change: The next question will come from Manav Gupta with UBS. Please go ahead.
Manav Gupta: Guys. My first question is it's been almost a year now that you have been operating these medallion assets and generally one year has passed there's always some upsides you know the assets performed better than.
Patients in certain areas. So if you could highlight that which is allowing you to raise the synergy and also if there is any area, where you probably had to do a little more work than you initially talked to capture those synergies.
Manav Gupta: Yeah. This is Sheridan yeah. As you said, we've been very pleased with how the synergies that have come in and especially and we will look into 2020 five as I said it in my remarks, we're going to start to see the.
Manav Gupta: Small capital projects that we put in place in 24 completed and see their earnings start growing from that and those are where I think we were probably the most surprised going into this is some of the small acquisitions I mean small capital project that we could do and the returns that we could get on that so we're coming into a time that we're pretty excited about.
Out how we're going to see the businesses go together I think the other area is.
Just inefficiencies across any part of our system as we've got the two when we get the two business groups together and got the people down in the business that really know how things are working and they are really became innovative in how we can reduce costs to get butane to the right locations. How we can.
Use of their assets to move volume better through our systems. How we can connect the two systems together to take trucks off the road moving butane to move them on to pipelines.
How we think about projects to upsize pipelines going into the Denver International Airport.
Manav Gupta: So I think there's a lot of things that we've been very excited about I really haven't seen too much where we think that it was a lot harder than we thought it was going to be mainly I've been surprised at all the additional synergies that the two teams getting together have to come up with and excited to see them really starting to come together in 2025.
By then and beyond.
I think my quick follow up is exactly like you have seen over with medallion and you've talked about you know some moving medallion volumes on your system have you also identified some growth project standalone at the medallion level, which will allow you to grow the EBITDA from the assets, we get about Bill player.
We haven't necessarily had the specific growth projects on medallion that we put in there we know there's going to be some what I will tell you is what we've learned through but Magellan is we have certain buckets that we're gonna get synergies in there, but we know there's going to be even more than that once we start looking under the hood and we start getting the teams together.
And really have been working together and figure out other ways to be creative that we'll find some of those low hanging fruit low capital projects that we hadn't bought out when we put it into buckets. When we went into the acquisition.
Thank you so much for taking my thank you so much for taking my questions.
Manav Gupta: Yeah.
Speaker Change: The next question will come from a J O'donnell with T. P. H. Please go ahead.
Good morning, everyone. Thanks for taking my question I was just wondering if I could go to the updated consolidated financial guidance.
Curious if you guys would be able to provide some comments as to the breakdown of the contributions.
<unk> is about $350 million to the midpoint of the Standalone Guy.
Speaker Change: Just curious how those parts come together and if there are any early synergies from the deal that are included in that number.
Manav Gupta: Yeah, No I think that you can just look at the public.
Manav Gupta: Public good data that we've seen out there we clearly gave you our our standalone guidance.
I think.
Manav Gupta: Use enlink the medallion will fall out is is the piece that isn't there.
Manav Gupta: No.
As we try to get grab synergies in the first two months is a that's a pretty aggressive challenge. So I think right now it's pretty much just additive from the.
[noise] businesses as they come in and we start to get the teams are really our agenda to work together so.
Manav Gupta: Stay tuned on the synergies as we go into 'twenty five.
Okay. Thanks, and then one more quick one I realize you know the enlink out that's a pretty fresh but now that they're under your control. Just curious if you guys are planning to continue.
And links gross capital backlog, particularly any of their growth projects are around the Louisiana area.
Speaker Change: Yeah clearly.
We're going to work with the team there to Oh look at all of the projects and I think it really look at what other opportunities we might be able to accelerate and are looking to really.
Really meet our customers' demand across all of their businesses. So.
We have not taken anything that was a planned off the table and we're going to spend time now to really.
Look at those and prioritize where we see the growth opportunities.
And this is pierce the only thing I would add to that is we do believe.
You know that.
Probably the majority of the growth will be.
Related to the natural gas side of the business because of it.
Manav Gupta: The size of the pipes and because of the capacities.
Manav Gupta: You know we've mentioned before.
A lot of industrial corridor is down there.
So as things expand in those areas.
Manav Gupta: So we feel very positive about the entrust stayed in the natural gas side of the business down there.
Speaker Change: Great. Thank you.
Manav Gupta: Yeah.
The next question will come from Sunil said, Ben with Seaport Global Securities. Please go ahead.
Speaker Change: Yeah, Hi, good morning, everybody and thanks for the time, so first of all just sticking to the consolidation team I was curious you know at the time of Magellan acquisition I think the range for synergies was given was around 200 to 400 plus.
Money at all do you know where do you think you are in that range as of now.
Speaker Change: I think we might have our medallion and our Magellan.
Talking about one year out what you're really referring to the Magellan.
Speaker Change: Energy is at that point.
Yes, so it's definitely the Magellan.
Yeah, we do that all the time, we get the two of them are.
Manav Gupta: Next up is we are as we've talked about them now I think we're right on track if not ahead of schedule a little bit as it related to the synergies that we've outlined.
Manav Gupta: Yeah.
As part of our specific guidance with.
With the second quarter, we said that we were very comfortable that we would meet or exceed.
The synergies and I think we feel the same way a same way today as we head into 2025 on the Magellan side. The teams are Sheridan said are working incredibly well together.
And Oh, we're just finding more and more opportunities and a lot of those were a low capital type of things that we've just been working on now and we'll start to see the benefits of 25 and 26.
Manav Gupta: We couldn't be more pleased with where we stand as it relates to the Magellan integration and how those synergies have come to school so far.
Speaker Change: Okay. Thanks for that.
And then I realize you are pretty good.
Speaker Change: I mean comes off and Lincoln medallion, but I was curious you know do you have any thoughts on sort of consolidation opportunities in this space.
Yeah, I think when we think about what we see in front of US I mean look at the maps until war, where he's been looking at and we think that the mid continent on the G&P side, there's a lot of opportunities there enlink gives us a little bit more coverage.
Coverage, especially on the western part of the state we have some more I'm using the two systems together I think it would be more efficient moving gas around obviously, we look down into the Permian, we've already talked about being able to you know.
You didn't fill our assets with the with US both in Lincoln medallion.
Beating our long haul pipes as we continue to go forward, we think being bringing a integrated value chain to that to the table that's going to make up both in Lincoln medallion, even more competitive on getting additional new volume in that area and then S. Peers, just mentioned, our Louisiana, We think theres a lot of opportunities in Louisiana.
S as Lisa and is a big demand center, both the industrial and for AI out there.
Okay. Thanks for that.
The last question for today will come from Craig Shere with Tuohy Brothers. Please go ahead.
Hi, Thanks for taking the questions. So just real quickly are you know things have shifted a little bit since you announced the latest skills a couple of months ago.
Manav Gupta: Sure.
Speaker Change: Could you see any notable acquisition upside are in terms of you know overall economics.
A notable relaxation of drilling in <unk> or LNG permitting rugs and do your latest acquisitions.
Manav Gupta: Just enhance your long term interests and ultimately getting into liquid its exports.
Speaker Change: Well Craig this surety of what I would say as we look at our Louisiana, Obviously, there's a lot of LNG exports out of there and with our pipe infrastructure. There we think that we have the ability.
With the larger diameter pipes that peers talked about to be able to pull volume through our system to be able to feed that island LNG.
The existing ones and new ones there, there's still wants to being talked about out there and if there were some relaxation in the regs I think you'll see even more come on different Louisiana shore. So we like the position that enlink puts us in there to be able to kind of be that last mile into some of these LNG facilities.
Manav Gupta: <unk>.
Manav Gupta: Yeah.
Manav Gupta: Okay.
Speaker Change: Thanks, any other thoughts about exports.
You know as we are we continue to think of new as energy continues to grow in the United States. It's gonna be exported and so we continue to look at where our position. There is there and evaluate where our needs are and at the right time, if we think we need to expand our abilities on exports, we will do it.
Fair enough. Thank you.
This concludes our question and answer session I would like to turn the conference back over to Mr. Andrew is iola for any closing remarks. Please go ahead.
Speaker Change: Well. Thank you all for joining us our quiet period for the fourth quarter and year end starts when we close our books early next year and extends until we release earnings in late February we'll provide details for that conference call. At a later date. Thank you all for joining us and have a good day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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