Q4 2024 Enterprise Products Partners L.P. Earnings Call
Yeah.
Okay.
Speaker Change: Thank you for standing by and welcome to Enterprise products Partners L. P. S fourth quarter 2024 earnings conference call.
At this time all participants are in a listen only mode.
Speaker Change: After the speaker presentation, there will be a question and answer.
Speaker Change: It's actually you will need to press star one.
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Speaker Change: I would now like to hand, the call over to let me straight senior director of Investor Relations. Please go ahead.
Speaker Change: Good morning, and welcome to the Enterprise products Partners conference call to discuss fourth quarter 2020 for Ernie.
Speaker Change: Our speakers today will be co chief executive officers of Enterprise's General partner, Jim Keegan, 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 21 E of the Securities Exchange Act of $19 34 based on the beliefs of the company as well as assumptions made by and information currently available to Enterprise's 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 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.
Jim: Thank you Luca.
Jim: I wanted to just go through some bullet points.
Jim: Unlike some other things we achieved in 2024.
Jim: And a few other things.
Jim: We expect to do.
Jim: And this year first of all.
Jim: 2020 for EBITDA of $9 9 billion.
Speaker Change: Randy It reminds me of the line in our Frankie Valli sign so close so close and yet.
Jim: So far.
Seven: Seven 8 billion of DCF.
Jim: We had one seven times coverage.
Jim: $3 $2 billion of retained DCF, Chris I thought that was a record, but it's not but it's close.
Jim: 12 financial records.
Jim: 16 operational records.
Jim: During 2024.
Jim: Move 12, 9 million barrels of oil equivalent a day.
Jim: In the fourth quarter.
Jim: Removed.
Jim: <unk> 6 million barrels of oil equivalent per day.
Jim: In the fourth quarter, we loaded out on.
Jim: Export two 1 million barrels a day of liquid hydrocarbons against our commitment.
Jim: Two 5 million barrels a day.
Jim: 24 in early 'twenty five we completed two processing plants in the Permian.
Jim: Purchased opinion.
Jim: Acquired the GP interest in.
Jim: Midland to Echo one crude oil pipeline.
Jim: And the JV interest.
Jim: And our seventh and eighth fractionator.
Jim: For 2025, we will add two gas processing plants in the Permian.
Jim: The Bahia NGL pipeline.
Jim: 14.
Jim: First phase of our NGL export on the natures River.
Jim: And expansions of our ethane and ethylene terminal at <unk>.
Jim: Morgan point.
Jim: That list almost needs to pause and take a breath.
Jim: We get a lot of questions on spot.
Jim: To give you a status report on where we are with spot.
Jim: I believe that spot should be the poster child for the need for permit reform.
Jim: By law the record of this decision should be issued.
Jim: 356 days and you can have clock stoppages on top of that.
Jim: Frankly, I thought $3 56 was a typo.
Jim: But it was.
Jim: Although it took over five years to get the spot license, including almost four years to get the record of decision.
Jim: And a year and a half to get the license to construct.
Jim: Our initial application.
Jim: <unk> thousand pages.
Jim: I thought that was ridiculous, but by the time, we completed the process.
Jim: A final solution submission was over 30000 pages.
Jim: We addressed over 80000 comments.
Over to comment periods predominantly from Ngos.
Jim: One Ngos comment.
Jim: 50 pages long.
Jim: We had to answer a ton of questions.
Jim: One of my favorites was from a lady from myriad.
Jim: Asking how we plan to motor right away.
Jim: She was concerned that youll mice would be protected from Hawks.
Jim: The process, we went through due to federal bureaucracy pushed us beyond the drop dead date.
Jim: Our anchor customer.
Jim: The opt out of their contract, which they did.
Jim: Granted a lot has changed since we entered our spot application in January 2019.
Jim: When we started that application that was assumed that the majority of crude exports.
Jim: Would go to Asia on Vlccs.
Jim: A lot of forecasters predicting by 2024.
Jim: The U S would be exporting between seven and 8 million barrels a day.
Jim: Instead, we're exporting around 4 million barrels a day.
Jim: All of that with Russia invading Ukraine.
Jim: Which has resulted in the amount of crude oil exports out of the U S to Europe.
Jim: <unk> doubled to over 2 million barrels a day and that will grow more.
Jim: I've moved to Europe can be done on an Aframax suezmax.
Jim: To date, we have not gotten enough traction commercializing spot.
Jim: We continue.
Jim: To promote spot as we are the only company with a license to construct.
Jim: We did a lot of research.
Jim: Around cost.
Jim: And our data shows that the cost load on our spot project are always much lower than.
Jim: Multi reverse lighters DLC.
Jim: And have a lower all in cost 50% of single reversed lighter meals trees.
Jim: They are competitive with the best 50% single reverse flatter vlccs.
Jim: However in order to build spot.
Jim: We know what we need and volumes.
Jim: These terms.
Jim: We're not going to establish a drop dead day, but if we can achieve these within a reasonable amount of time, we will move on this.
Jim: This is not a build it will come project.
Speaker Change: Regardless enterprise remains laser focused on growing our exports as I said earlier, we currently have expansion projects on the nitrous River in Beaumont.
Jim: Mortgage corn on the ship channel.
Speaker Change: And at our main terminal on the ship channel.
Speaker Change: We exported over 70 million barrels of hydrocarbons in December.
Speaker Change: Everything from ethylene crude oil and our goal is that we will export over 100 million barrels a package for carbon to a month by 2027.
Speaker Change: We recently contracted with yet another uptake ethane uptake customer in Asia. This one with a plant in Vietnam.
Speaker Change: And we were we are working with numerous other customers.
Speaker Change: Customers around the world on hydrocarbon supply agreements.
Speaker Change: The last 24 months with over 25 cities to sell U S hydrocarbons, we visited multiple times.
Speaker Change: I've been in Mumbai.
Speaker Change: At least four times.
Speaker Change: Someone from enterprise is almost always in Asia or Europe.
Speaker Change: And no one even comes close to having the history and experience we have.
Speaker Change: Think about it we built our first LPG import terminal.
Speaker Change: 1983.
Speaker Change: And our first export terminal and 1999.
Speaker Change: We've been active in the international market.
Speaker Change: 40 years.
On a personal note.
Speaker Change: Well I was down there.
Speaker Change: First cargo.
Speaker Change: Ported propane that ever purchased went through.
Speaker Change: The enterprise terminal.
Speaker Change: And our total and in total I term commitments at our docks today exceed two 5 million barrels a day.
Speaker Change: Hydrocarbons.
Speaker Change: Ethylene to crude oil.
Speaker Change: Three fourths of the way to reach our goal.
Randy: Of 100 million barrels a month and with that I'll turn it over to Randy. Thank you, Jim and good morning to everyone on the call.
Speaker Change: Starting with fourth quarter income statement items net income attributable to common unit holders for the fourth quarter of 2024 was $1 $6 billion or 74 cents per common unit on a fully diluted basis. This was a 3% increase compared to $1 6 billion or <unk> 72 per <unk>.
Randy: Unit for the same quarter in 2023 adjusted.
Randy: Adjusted cash flow from operations, which is cash flow from operating activities before changes in working capital increased 4% to $2 3 billion for the fourth quarter. This compares to $2 2 billion for the fourth quarter of 2023.
Randy: We declared a distribution of $53.05 per common unit for the fourth quarter of 2024, which is a 4% increase over the distribution declared for the fourth quarter of 2023. The distribution will be paid February 4th to common unit holders of record as of the close of business on January.
Randy: 31.
Randy: In the fourth quarter. The partnership purchased approximately two 1 million common units on the open market for $63 million total purchases for 2024 or.
Randy: $219 million or approximately $7 6 million enterprise common units, bringing total purchases under our buyback program to approximately $1 $1 billion.
Randy: In addition to buybacks our distribution reinvestment plan and employee unit purchase plan purchased a combined $6 5 million common units on the open market.
Randy: Our $188 million in 2024. This includes $1 6 million common units for $48 million during the fourth quarter of 2024 of note almost half of our employees participate in the employee unit purchase plan.
Randy: For 2020 for enterprise played out of approximately $4 6 billion.
Randy: And cash distributions to limited partners combined with the 219 million of common unit repurchases over the same period enterprises total capital return of $4 8 billion resulted in a payout ratio of 55%.
Randy: Since our IPO in 1988 1998, we have returned approximately approximately $56 billion to unit holders in the form of distributions and buybacks while building one of the largest energy infrastructure networks in North America.
Randy: Total capital investments in the fourth quarter of 2024 were $2 billion, which includes $946 million for growth capital projects $949 million for the acquisition of opinion midstream and $113 million of sustaining capital expenditures.
Randy: Capital investments for the full year of 2024 were $5 5 billion, which includes $3 9 billion for organic growth capital projects, the $945 million for opinion and $667 million for sustaining capital expenditures.
Randy: As mentioned in last quarter's earnings call. We have received noteworthy support from our producer customers. Following the opinion acquisition and for that reason, we are fine tuning our 2020 estimated growth capital expenditures.
Randy: Range to four to $4 5 billion to include new opportunities and sour gas gathering and treating projects as well as additional NASA.
Randy: Natural gas gathering and compression projects in the Delaware Basin, our expected range of growth capital expenditures for 2026 remains unchanged at two to two 5 billion.
Randy: We expect 2025 sustaining capital expenditures will be approximately $525 million, which includes a planned turnaround of our octane enhancement plan.
Randy: Moving to capitalization, our total debt principal outstanding was approximately $32 2 billion as of December 31, 2024, assuming the final maturity date for our hybrids. The weighted average life of our debt portfolio was approximately 18, here's our weighted average cost of debt was four seven.
Randy: <unk> percent and approximately 98% of our debt was fixed rate or.
Randy: Our consolidated liquidity was approximately $4 8 billion at the end of the year, including availability under our credit facilities and unrestricted cash on hand.
Speaker Change: Our adjusted EBITDA was $2 6 billion for the fourth quarter and as Jim mentioned $9 9 billion for 2024, we ended the year with a consolidated ratio.
Speaker Change: Average ratio of three one times on a net basis after adjusting debt for the partial equity treatment of our hybrid debt and reduced by the partnerships unrestricted cash on hand.
Speaker Change: Our leverage target remains three times, plus or minus a quarter. So in the range of $2 75 to three and a quarter and with that let me I think we can open up for questions. Thank.
Speaker Change: Thank you Andy operator, we are ready to open up the call for questions.
Speaker Change: Thank you as a reminder to ask a question you will need to press star one on your telephone.
Speaker Change: To remove yourself from the queue you May press star one again.
Speaker Change: Please limit yourself to one question and one follow up or two questions to allow everyone the opportunity to participate.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: Our first question.
Spiro: It comes from the line of Spiro <unk> of Citi.
Speaker Change: Your question please spiro.
Speaker Change: Thanks, operator, good morning, everybody.
Speaker Change: First question, maybe just go to the outlook for 2025, I know you guys don't provide guidance, but we just get results. The way you close the year. It seemed like it was pretty strong. So just curious two part question here any reason that that's not a good baseline to sort of run rate as we think about 2025 and then if you could maybe just outright outlines some of the bigger driver.
Speaker Change: <unk> of growth this year.
Speaker Change: Yes.
Speaker Change: I'll go back to what we said on our.
Speaker Change: Our Investor day call a year ago that really we think near term we've got the potential for call. It mid single digit cash flow growth.
Speaker Change: Over the near to intermediate term and I think thats sort of our view going into 2025.
Speaker Change: Jim Jim mentioned, the number of projects that we have coming on most of them.
Speaker Change: The larger ones for sure come on later in the year. So.
Speaker Change: We'll see some of that growth growth on the second half of the year, but.
Speaker Change: 25 is setting up a strong year, especially when you come in and just look at it.
Speaker Change: Industry fundamentals.
Speaker Change: Great. That's helpful. Thanks, Randy second question just to go back to spot. So I know youre not providing a drop dead date to get that facility need but two parts here. Once again does it seem less likely or unlikely at this point that 2025 F idea as possible and you also mentioned being the only one license just curious.
Speaker Change: Can you just talk about license expiration timing, what that looks like and what it would take to renew it if you don't let's call within two years.
Speaker Change: Yes, I think we've we've renewed one permit Bob.
Speaker Change: We're needing the air permit right Ram to 2028.
Speaker Change: Yeah.
Speaker Change: Alright.
Speaker Change: Yeah, we're not we're not that worried about renewing permits if we need to.
Speaker Change: Okay and does it seem like a 25%.
Speaker Change: Based on customer feedback at this point, maybe less likely.
Speaker Change: Im not going to I'm, not going to admit to that.
Speaker Change: [laughter], Okay, I tried to get to.
Speaker Change: I appreciate the color I'll leave it there. Thank you guys.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: Comes from the line of.
Speaker Change: <unk> Chen Barclays. Please go ahead Teresa.
Teresa Chen: And thank you for taking my questions.
Teresa Chen: A follow up to the cadence of earnings growth in 2025 can you help us think about the.
Teresa Chen: The tax rate for the pet Chem segment, and what are the puts and takes there and as far as operations in utilization and got us for departure.
Teresa Chen: Projects and how is that going at this point.
Teresa Chen: Okay.
Teresa Chen: We've got to run the PTH, that's one thing from our perspective and we will.
Teresa Chen: From a petrochemical market perspective, I don't think Christmas here.
Speaker Change: I know there is.
Teresa Chen: But.
Teresa Chen: It looks.
Teresa Chen: Pretty bad right and have that Chris.
Speaker Change: Yes, I think what we're hearing from most of our customers domestically is are seeing moderate.
Teresa Chen: Improvement from last year, and I'm, not expecting anything anything much bigger.
Teresa Chen: Globally the market is oversupplied, so that's what's the headwind there.
Teresa Chen: Yes.
Teresa Chen: Yes.
Teresa Chen: Yes, Chris this is Jim.
Teresa Chen: What I see is we are we are signing.
Teresa Chen: We just signed recently within the last two or three weeks the contract with the Southeast Asian petrochemical company for a sizable ethane contract I think we'll be back in southeast Asia for another one.
Teresa Chen: <unk>.
Teresa Chen: The other thing that I.
Teresa Chen: I wouldn't be surprised that is.
Teresa Chen: Ethane feedstock to.
Teresa Chen: Two crackers in other parts of the World is advantaged to naphtha.
Speaker Change: It wouldn't surprise me and help me Chris to see Cracker shutdown in other parts of the world and ethylene exports beginning to build that board, yes, I mean, we're already seeing some of that.
Teresa Chen: That helps not only.
Teresa Chen: Our ethylene, but it also helps the propylene market does not the crackers in the rest of the World also do make.
Teresa Chen: The amount of propylene so that'll help rationalization.
Teresa Chen: Interesting. Thank you so much and then on the LPG side following a competitor announcements as a new export project in Galveston Bay and <unk>.
Teresa Chen: Today, how do you think about the potential change to export economics to competitive economics.
Teresa Chen: Our region.
Teresa Chen: Okay.
Teresa Chen: Trish this is Brent.
Teresa Chen: <unk>.
As you're seeing capacity come online and as industry capacity come online this year.
Teresa Chen:
We'll have some in the back half of this year as well.
Teresa Chen: And then a larger expansion for next year, but.
Teresa Chen: Right now the dock the Doc F O P values are pretty healthy obviously as this capacity comes online this will start to become eroded.
Teresa Chen: When you look at our our capital for expansion.
Teresa Chen: Less than a third of what a greenfield expansion is.
Teresa Chen: So we will see I didn't listen to the call but.
Teresa Chen: That's.
Teresa Chen: In terms of when we run the numbers that's a that's a little bit of a challenging project.
Teresa Chen: Theresa This is Jim we're not going to give up our LPG export franchise.
Teresa Chen: Please more favorable to our customers than anyone.
Teresa Chen: Understood nor would I expect you to give anything up Ken. Thank you.
Teresa Chen: Okay.
Teresa Chen: Okay.
Teresa Chen: Thank you.
Speaker Change: Our next question comes from the line of Jean Ann Salisbury, It'd be a bank. Your question. Please Jean Ann.
Speaker Change: Good morning can you talk about how you see the size of the eventual price or being able to handle sour gas in the Permian do you expect Sara gas to grow much faster with a share or is it mainly a strategy to be able to have a broader customer offer in any of our customers.
Natalie: Hey, Jamie this is Natalie I don't think anything's really.
Speaker Change: Fast.
Speaker Change: However, we are permitting third agi well.
Speaker Change: We're in the front of it we're also expanding the <unk> there.
Speaker Change: <unk> built a slight strain and then we have our eyes on assets.
Speaker Change: I dunno, how quickly, but I think all.
Speaker Change: It does give us.
Speaker Change: Our new asset base to be able to.
Speaker Change: Expand the integrated value chain.
Speaker Change: Syed.
Speaker Change: Okay, and then as a follow up can you just kind of talk about how you expect your flex NGL exports to ramp as they come online.
Speaker Change: Roughly how much ethane versus propane service to start.
Speaker Change: Hi, Jan this is talking to them, we hear you on the ethane side. So we're fully contracted on a base capacity of 540000 barrels a day.
Speaker Change: When the process, we've identified low cost expansion and debottlenecking projects, and we're well on the contract and that additional capacity.
Speaker Change: So if you think about how that's going to play out we're waiting on the VLCC. The ships get delivered as those ships continue to get delivered and ramp our ethane exports at our Nature's River terminal that timing coincides with our ship channel.
Speaker Change: Spansion.
Speaker Change: Around 300000 barrels a day so long term, we expect it to be ethane at Natus and we'll have our <unk> channel expansion too.
Speaker Change: Thanks for that and we're continuing to see robust demand on ethane exports and as Brent alluded to we have a great brownfield expansion opportunities across all three of our export terminals because I'm going to if it comes on for LPG for 85% contracted for 85% contracted on Ltvs.
Speaker Change: Well, great that's great color I'll leave it there. Thank you.
Speaker Change: Thank you our next.
Speaker Change: Question comes from the line of Michael Blum of Wells Fargo. Your question. Please Michael.
Michael Blum: Thank you and good morning, everyone.
Speaker Change: So I appreciate the slide and the comment on capital allocation.
Michael Blum: Want to ask you about buyback specifically.
Michael Blum: Just if you're thinking about buybacks any differently as a component of capital return.
Michael Blum: Should we expect the cadence we've seen in the last couple of years should be consistent going forward or any change there.
Michael Blum: Yes, Michael good morning.
Michael Blum: Yes.
Michael Blum: It's sort of come in and carry that theme as far as the potential for cash flow growth to be mid single digits Jim.
Michael Blum: Jim mentioned earlier that we had $3 2 billion of excess distributable cash flow.
Michael Blum: In 2024, and if you take that forward a couple of years the 2026.
Michael Blum: Put you in the neighborhood of 353 6 billion of excess DCF.
Michael Blum: And then if we were up at the upper end of our growth Capex range of $2 5 billion that leaves you about 1 billion billion one of.
Michael Blum: Excess DCF after fully funding after fully funding your growth capex with excess DCF, that's left over for buybacks and debt retirement.
Michael Blum: We are.
Michael Blum: Our leverage target again is the range two and three quarters to three in a quarter or mid points three that's about where our leverage is today and so I think we'll have a lot more flexibility to do buybacks and maybe a little bit of debt retirement once we get out to 2020 search.
Michael Blum: Yes.
Speaker Change: Thanks for that Randy I appreciate it.
Michael Blum: And then just wanted to ask about.
Speaker Change: Head here into 2025.
Michael Blum: M&A landscape.
Michael Blum: How.
Michael Blum: <unk>.
Michael Blum: Out there for you and do you expect this to be an active year for enterprise. Thanks.
Michael Blum: Yes.
Michael Blum: Yes, 2024th was a pretty active year and.
Michael Blum: We've looked at virtually every asset package that came across.
Michael Blum: And.
Michael Blum: Again opinion was the most attractive tools.
Michael Blum: And we executed on that.
Michael Blum: We do see some additional asset packages of we think we will see some.
Michael Blum: Later in the year, and we will take a hard look at those and see.
Michael Blum: See what fits well.
Michael Blum: And our system public.
Michael Blum: Public company M&A, a little bit harder to do especially if you're if you're in.
Michael Blum: Goal is to drive cash flow per share cash flow per unit growth.
Michael Blum: Click M&A can be a little bit on the problematic.
Michael Blum: See as much value as we do with <unk>.
Michael Blum: With asset purchases, but it will take a look at the.
Michael Blum: Thank you.
Michael Blum: Thank you our next question.
Michael Blum: It comes from the line of Neal Dingmann of true Securities. Your question. Please Neil.
Neal Dingmann: Hey, good morning. Thanks for the time My first question guys just on <unk> I'm, just wondering it looks like that the processing spread and others have stayed well I guess they were pretty pretty stable for the remainder of last year are you expecting more of that issue or maybe just talk about the activity there.
Neal Dingmann: I mean, I think in terms of the forward curve Neal I think I think we think.
Neal Dingmann: That spread is going to be there, it's probably more when you look at what's a function of wockhardt gas price.
Neal Dingmann: Would probably think ethane is fairly stable.
Neal Dingmann: For this year.
Neal Dingmann: It's probably going to escalate a little bit but in terms of the processing spread in our system and the recovery of ethane is probably more of a function of the wall gas price.
Neal Dingmann: Got it Okay and then just one forward love to hear just on prospects of now where we sit on the macro side I'm just wondering based on.
Neal Dingmann: How you are looking at that you've talked about M&A now today.
Neal Dingmann: Is that predicated on what youre thinking on on the macro on both the oil and gas side I just wanted to hear kind of what's your what's your thinking for the remainder of the year on the on the macros commodity side.
Neal Dingmann: Hey, Neil would you mind would you mind repeating that.
Speaker Change: Yes, Randy you laid out kind of I know you guys were active on the M&A side and I'm. Just wondering is this predicated I would I'd love to hear you guys always give a pretty good forecast on what youre thinking the commodity wise, both both gas I'd say gas Ngls and oil and just wondering are you expecting a bit of a ramp a commodity.
Speaker Change: While the remainder of the year and I guess I'm asking is is M&A.
Speaker Change: Dedicated on this.
Speaker Change: I don't know if it emanates predicated on it but you're talking about a ramp and price are ramping into production.
Speaker Change: Just trying to figure out what you all are thinking for pricing the remainder of the year.
Speaker Change: Well price it would start with oil it's been range bound.
Speaker Change: Not really bad prices quite frankly, it's really been quite range bound.
Speaker Change: And not just for the last year, but even longer than that.
Speaker Change: Our belief is that.
Speaker Change: The OPEC plus continues to be very focused on that they don't want prices too high and they don't want them too low.
Speaker Change: I don't know what changes that landscape.
Speaker Change: Right now Theres a lot of discussion about will we move into a for lack of a better term quote unquote drill baby drill scenario.
Speaker Change: And all signs are that that we will not.
Speaker Change: But it will be.
Speaker Change: <unk>.
Speaker Change: Call it slow and steady from very large numbers already.
Speaker Change: That said.
Speaker Change: We continue to see that rich natural gas production, just sticking to the Permian continues to exceed our expectations.
Speaker Change: We will be re forecasting and publishing unfortunate forecast probably sometime in the second quarter were working on it now.
Speaker Change: And I'll say.
Speaker Change: Neil I wouldn't be surprised if our natural gas liquids forecast in the Permian specifically is not up again from the prior one but give us some time to work through it.
Speaker Change: That's what I was after that.
Speaker Change: And then <unk> pointed to.
Speaker Change: The natural gas equation is.
Speaker Change: Somewhat weather related.
Speaker Change: <unk> very much.
Speaker Change: What pipes can you count on running related.
Speaker Change: Matters a lot to us so there you have that.
Speaker Change: Perfect. Thank you.
Speaker Change: Last but not least we're pretty constructive on natural gas one time, just because of what we're seeing from the demand standpoint for LNG and for power.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line Jeremy Tonet of Jpmorgan Securities. Please go ahead Jeremy.
Speaker Change: Hi, good morning.
Speaker Change: Joining.
Speaker Change: Just wanted to start off I guess any updated thoughts out of D. C. Just wondering.
Speaker Change: Trump administration imagine permitting might be easier also talking about energy emergency and how that could impact that.
Speaker Change: Permitting overall just wondering.
Speaker Change: What you hear coming out of D C anything different and could that impact I guess your.
Speaker Change: Our growth strategy going forward.
Speaker Change: From a reform would be nice but.
Speaker Change: I got to see it to believe it frankly.
Speaker Change: Got anything else out of D. C. On your radar right now, we're just kind of business as usual.
Speaker Change: Uh huh.
Speaker Change: Jeremy.
Speaker Change: Again on the permanent reform just seems like.
Speaker Change: That's going to take some time and pretty involved.
Speaker Change: The other the other thing is just the what.
Speaker Change: What the administration is looking to do as far as from a tax packages and tax package and extend some of these.
Speaker Change: Some of these provisions that sunset at the end of 2025 to get extended.
Speaker Change: But thus far really no surprises from where we were frankly.
Speaker Change: Frankly, right after the election, it seems like the administration and Congress for following through with what they were talking about.
Speaker Change: During the election cycle and right after the election.
Speaker Change: Jeremy the lack of permit reform seems to make what we have in the ground a heck of a lot more valuable.
Speaker Change: Got it yes, no absolutely.
Speaker Change: And just wanted to touch base real quick on the PVH facilities wanting to where the current I guess to operating run rates and where do you see them going over the course of 'twenty, five and kind of hitting a normalized level.
Speaker Change: Graham.
Graham: Yes, Jim.
Speaker Change: This is graham.
Speaker Change: Right now we're.
Speaker Change: Looking to increase the.
Speaker Change: Run rates of the PVH is obviously they haven't met our expectations. Currently we're working through a mechanical issue on PTH, one, but coming out of our turnaround last year. It really ramped it ran pretty well we had a minor minor blip, we're working through right now, but expect to get us there.
Speaker Change: Stained run rate there.
Speaker Change: H two we're working through.
Speaker Change: Design issue with our licensor that has the rates the rates currently limited we expect to get that resolved.
Speaker Change: Are resolved in a long while.
Speaker Change: Long term harvest target is to have those operating in the upper 90% of utilization.
Speaker Change: Okay got it thank you.
Speaker Change: Thank you.
Speaker Change: Next question comes from the line John Mackay of Goldman Sachs. Please go ahead John.
John Mackay: Hey, good morning, Thanks for the time I want to stay on some of the policy stuff. We've obviously seen a lot of different headlines on the tariff front, we had some kind of retaliatory tariffs from China overnight I guess.
Speaker Change: So far from trying to they're not on the NGL front, but I guess I'd just be curious to hear your takes overall on any of this energy tariffs how do you think about that and.
Speaker Change: The context of your export footprint. Thank you.
Speaker Change: China imports.
Speaker Change: We don't have I think we have one contract with one Chinese companies on propane.
Speaker Change: Does that make sense.
Speaker Change: But a lot of a lot of propane out of U S goes to China are.
Speaker Change: Are there PVH plants tab.
I've got a lot of PVH plants, and they don't have any propane so I don't see it affecting that.
Speaker Change: Ethane contracts with one customer two customers.
Speaker Change: And Oh.
Speaker Change: Those crackers can only use ethane time right. So they don't have any ethane so from an NGL perspective, I'm not worried now.
Speaker Change: Yes.
Speaker Change: Most of what we do.
Speaker Change: On the LPG that goes to China goes through trading companies.
Speaker Change: Getting interest in places.
Speaker Change: Like Southeast Asia.
Speaker Change: Where we're at.
Speaker Change: We're gonna have.
Speaker Change: Two contracts before it's all set and done.
Speaker Change: And we're expanding another contract in Asia.
Speaker Change: 40000 barrels a day.
Speaker Change: And then we have a huge contract in Europe.
Speaker Change: So there's a little modest.
Speaker Change: When he says 540000.
Speaker Change: Where we will end up on ethane is 600000.
Speaker Change: And Oh, he's pointing higher.
Speaker Change: And then I think on I think.
Speaker Change: 5% of LPG.
Speaker Change: Contract that Outports offset and Todd.
Speaker Change: I appreciate all that thank you maybe just.
Speaker Change: Follow up I wanted to ask about the NGL pipeline side volume and we're just looking year over year I know, there's always a little bit of noise, but.
Speaker Change: Volumes were up a lot margin itself was another thing you guys called out some higher costs I'd just be curious of your take on kind of NGL pipe margins going from here how to think about those that extra opex side and then maybe comment on this in the context of broader NGL pipe competition.
Justin: Yes, Justin.
Justin: Two things going on the volume side, so as to cover that.
Justin: Significant.
Justin: Walk up volume, which incorporates a lot of our purity movements along with.
Justin: The trajectory that we see on just overall Y grade growth so youre seeing some.
Justin: A big quarterly step up as a function of some of those mark to market movements.
Justin: On the purity side.
Justin: But we are continuing to see that nice ramp of Y grade volumes trending in the right direction on the when you look at the <unk>.
Justin: AUM side, it's it's.
Justin: One thing to note that.
Justin: While Permian Y grade rates stay in the reinvestment economic range as we build out the here a lot of what changes associated to Rockies flows in those Rockies tariffs are significantly higher.
Justin: And so sometimes that can.
Justin: You look at this.
Justin: Volume and <unk> perspective can make the fee.
Justin: Otherwise skewed a fee so changes in our Rockies flows and sometimes.
Justin: Make that per unit.
Justin:
Justin: Otherwise more skewed than what than what you would anticipate so all in all though the growth that we're seeing in the Permian and continuous support reinvestment economics on the widebody side.
Justin: Sorry, just on the context of kind of competition from new pipes coming in how are you feeling about that.
Justin: Yes.
Justin: We still like our platform are still growing our G&P footprint I'd say when you look at in service.
Justin: But he.
Justin: In the fourth quarter.
Justin: We're quickly right behind that going to convert Seminole back to crude service.
Justin: Our guide to that in prior calls and.
Justin: And so when you take that into account.
Justin: Going into 2026, we would expect to hear to be 60% fall with more coming behind it as we continue to ramp. So we still feel like our platform gives us a pathway to being full over the coming years.
Speaker Change: Okay. That's clear I appreciate the time, thanks, so much.
Justin: Thank you.
Justin: Our next question.
Speaker Change: Comes from the line of a J O'donnell of Tpa.
Speaker Change: Your question, Please hey, Jay.
Jay: Yeah. Thanks, Good morning, everyone I was just hoping maybe we could.
Speaker Change: Start on NGL marketing.
Speaker Change: There were some notable strength there quarter over quarter I was wondering if you could expand a little bit on the prospects for 2025 in light of commodity price movements and.
Speaker Change: Maybe the potential to offset any.
Speaker Change: Lower margins from natural gas marketing as a result of higher <unk> spreads.
Speaker Change: Yes, I mean, that's a function of them we had some.
Speaker Change: Higher fob values across our dock on the LPG side, but.
Speaker Change: The bottom line is is volatility presents itself and the market will be there to monetize it and we continue to do that and those opportunities continue to present themselves.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks for that.
Speaker Change: Maybe just one more.
Speaker Change: Data centers.
Speaker Change: We saw the Stargate announcements and I'm just curious I know you guys have some interest state lines in the area.
Speaker Change: Is there any capacity on your Texas intrastate system to be able to feed that project.
Speaker Change: Yeah.
Speaker Change: It's still about the capacity on both of them are just depends on where that project is.
Speaker Change: Just to give you some perspective of how much data center demand is out there. We've got probably 20 data center projects in the key on the Texas side equates to over two Bcf a day of demand, we believe only probably 15% of this project.
Speaker Change: Are showing signs of progress.
Speaker Change: On the power plant side with Macy's data centers.
Speaker Change: Power from from them, we're looking at probably 15 potential projects around one one.
Speaker Change: Two Bcf a day and maybe 50% of those are.
Speaker Change: A real so it.
Speaker Change: Depends on where the data center project isn't it.
Speaker Change: All the way from Dallas San Antonio.
Speaker Change: So if our lines are closely we're going to take the opportunity to serve the data center, where it makes sense.
Speaker Change: Okay, great. Thank you.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: It comes from the line of Brandon Bingham.
Speaker Change: Scotia Bank your question please Brandon.
Speaker Change: Alright, thanks for taking the question.
Speaker Change: If we could go back to the volumes side and the volumes outperformance. This quarter, just wondering how sticky those volumes are and.
Speaker Change: And kind of how you you.
Speaker Change: See that progressing throughout 2025.
Speaker Change: Yeah.
Yeah, Brandon I think if you come in.
Brandon: Really just the growth at the wellhead, especially the growth at the Permian and.
Brandon: Really the benefit of our value chain. So it's flowing into our gas processing plants those liquids out of the processing plant flow into our downstream pipelines through our fractionator all the way to the dock. So what does that thing wellhead wellhead to water I think that's pretty much what youre seeing across our system.
Brandon: Awesome. Thank you and then if we could just quickly go back to the pet Chem side.
Speaker Change: And on the margin front you guys had previously discussed.
Brandon: <unk> plants.
Brandon: <unk> I think it was roughly $200 million a year in EBITDA whenever they are running as they should could you just talk about what margins were baked into that $200 million number and how those compare to what you're currently seeing.
Brandon: So the margins haven't changed because it's a formulaic price isn't that right Chris yes.
Brandon: The way our PVH contracts are setup, they're all they're all toll base. So it's cost plus so its really just a function of utilization rates.
Brandon: And really what we were talking about was I think.
Brandon: Our earnings were in 2024, we see the potential for the PD acres to contribute an incremental $200 million in 2025.
Brandon: Got it okay. Thank you.
Brandon: Okay.
Brandon: Thank you.
Brandon: Our next question.
Speaker Change: It comes from the line of Manav Gupta of UBS. Please go ahead.
Brandon: Okay.
Brandon: Good morning, Mike quick question here any update on the modern pinpoint fire.
Speaker Change: Expansion that you can provide.
Speaker Change: As far as an update on where we are with the yes, the Morgans point flex time, yes.
Christina: Yes. This is this is christina.
Christina: We finished the construction at the end of December of last year. So it's it's in service.
Speaker Change: In ready to serve today.
Speaker Change: It's mostly being filled for ethane because theres a theres a lot of.
Speaker Change: Both planned and unplanned outages on the cracker side that's limiting.
Speaker Change: The arb for ethylene.
Speaker Change: And the ethane opportunities are there.
Speaker Change: Perfect.
Speaker Change: One is more on the Haynesville side do you still see that as a growth basin and how youre looking at growth opportunities coming out of the Haynesville basin.
Speaker Change:
Haynesville.
Speaker Change: The growing basin, although rig.
Speaker Change: Rig counts Lytton, so that's true.
Speaker Change: We have seen some growth and our portfolio.
Speaker Change: And this is from new acreage development that.
Speaker Change: Producers are hitting.
Speaker Change: However, I don't know that the Haynesville has really grown over the last year I would say the opposite.
Speaker Change: Over the next year I think we do see some growth potential, but again gas price.
Speaker Change: Drive that story.
Speaker Change: Thank you so much.
Speaker Change: We'll be updating our haynesville forecast at least for its potential when we have better forecast in this segment.
Speaker Change: What its doing what its potential is.
Speaker Change: That's why I used the word potential.
Thank you.
Speaker Change: Thank you I would now like to turn the conference back to maybe strength for closing remarks.
Speaker Change: Thank you Charles Thanks for joining us today that concludes our remarks have a good day.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
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