Q4 2024 Plains GP Holdings LP Earnings Call
Operator: Good day, and thank you for standing by. Welcome to the PAA and PAGP Q4 2024 earnings call. 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Blake Fernandez. Please go ahead.
Speaker Change: Good day and thank you for standing by. Welcome to the PAA and PAGP Fourth Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode.
Blake Fernandez: Thank you, Tanya. Good morning, and welcome to Plains All American Q4 2024 earnings call. Today's slide presentation is posted on the investor relations website under the News & Events section at ir.plains.com. An audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide 2. An overview of 2024 results and recent announcements are highlighted on slide 3. A condensed consolidated balance sheet for PAGP and other reference materials are in the appendix. Today's call will be hosted by Willie Chiang, Chairman and CEO, and Al Swanson, Executive Vice President and CFO, along with other members of our management team. With that, I'll turn the call over to Willie.
Willie Chiang: Thank you, Blake. Good morning, everyone, and thank you for joining us. Let me start with a few comments about our results and our outlook on 2025, and then I'll provide an update on our recent announcements. Let's start with the results. We just demonstrated another strong quarter of execution. We exceeded our expectations for Q4 and for the full year, reporting adjusted EBITDA attributable to Plains of $729 million and $2.78 billion respectively, with full-year results just above the high end of our guidance range and exceeding our initial 2024 guidance by approximately $105 million or 4%. Looking to 2025, and as highlighted on slide 4, we provided adjusted EBITDA guidance of $2.8 to $2.95 billion, or approximately 3% growth year over year at the midpoint of our guidance range.
Speaker Change: Thank you Blake and good morning, everyone and thank you for joining US let me start with a few comments about our results and our outlook on 2025, and then I'll provide an update on our recent announcements let's start with the results. We just demonstrated another strong quarter of execution, we exceeded our expectations for the fourth quarter and for the full year reporting.
Adjusted EBITDA attributable to plains of $729 million and $2 78 billion, respectively with full year results just above the high end of our guidance range and exceeding our initial 2024 guidance by approximately $105 million or 4% looking.
Looking to 2025 and as highlighted on slide four we provided adjusted EBITDA guidance of $2 eight to 95 billion approximately 3% growth year over year at the midpoint of our guidance range.
Willie Chiang: As shown on slide 5, we expect Permian crude production to grow 2 to 300,000 barrels a day year-end 2024 to year-end 2025, with overall basin volumes growing to approximately 6.7 million barrels a day by the end of 2025. We believe this sets up for a very constructive long-haul market over the next several years as volumes grow towards our full utilization of efficient operating capacity. In regard to our Permian long-haul assets for 2025, we expect continued high utilization on our Corpus Christi-bound assets, increased volumes on Basin Pipeline, and a modest MBC increase on Wink to Webster. Our Permian gathering JV continues to benefit from the embedded operational synergies and consistent producer activity on our over 4.7 million dedicated acres. Our outside Permian business tends to get less attention externally, it continues to perform well and generate significant excess cash flow for Plains.
Speaker Change: On slide five we expect Permian crude production to grow 2% to 300000 barrels a day year end 2040 year end 25, with overall basin volumes growing to approximately $6 7 million barrels a day by the end of 2025. We believe this sets up for a very constructive long haul market over the next several years as volumes grow towards our full.
Speaker Change: Utilization sufficient operating capacity.
In regard to our Permian long haul assets for 2025, we expect continued high utilization on our Corpus Christi bound assets increased volumes on based on pipeline and a modest NBC increased on wink to Webster, our Permian gathering JV continues to benefit from the embedded operational synergies and consistent producer.
Speaker Change: <unk> on our over $4 7 million dedicated acres.
Speaker Change: Our outside Permian business tends to get less attention externally, but it continues to perform well and generate significant excess cash flow for planes we.
Willie Chiang: We have selectively acquired complementary assets along this footprint over the past couple of years, including the recently acquired Midway Pipeline and Ironwood Gathering System, and we continue to explore and develop additional bolt-on opportunities. Before turning the call over to Al for more detail on our guidance and results, I want to provide an update on our recent announcements. Turning to slide 6, we've completed the acquisition of Ironwood Midstream Energy on 31 January, which extends and expands our integrated asset base in the Eagle Ford. As seen on slide 7, and as previously announced, we acquired the remaining 50% interest in Midway Pipeline, and a subsidiary of our Permian joint venture acquired the Medallion Delaware Basin crude gathering business. These transactions exemplify Plains' efficient growth strategy, which is focused on expanding our integrated asset base, streamlining operations, all while generating attractive returns for unit holders.
Speaker Change: We are selectively acquired complementary assets along this footprint over the past couple of years, including the recently acquired midway pipeline and Ironwood gathering system, and we continue to explore and develop additional bolt on opportunities.
al: Before turning the call over to al for more detail on our guidance and results.
al: I want to provide an update on our recent announcements turning to slide six we've completed the acquisition of Ironwood Midstream energy on January 31.
al: Which extends and expands our integrated asset base in the Eagle Ford.
al: As seen on slide seven and as previously announced we acquired the remaining 50% interest in midway pipeline and a subsidiary of our Permian Joint venture acquired the medallion, Delaware Basin crude gathering set gathering business.
al: These transactions exemplify planes efficient growth strategy, which is focused on expanding our integrated asset base streamlining operations, all while generating attractive returns for unit holders.
Willie Chiang: Additionally, on 31 January, we closed the purchase of approximately 12.7 million units or 18% of our outstanding Series A preferred units at par value of $26.25, which is reflective of our continued effort to not only optimize our asset base, but also our capital structure. Lastly, we accelerated the return of capital framework and announced a 20% increase in the quarterly distribution payable on 14 February for both PAA common units and PAGP Class A shares. On an annualized basis, the distribution represents a $0.25 per unit increase from the distribution we paid in November 2024, bringing the annual distribution to $1.52 per unit, representing a yield of approximately 7.5% based on the current equity price for PAA. With that, I'll turn the call over to Al.
al: Additionally on January 31, we closed the purchase of approximately $12 7 million units or 18% of our outstanding series, a preferred units at par value of $26 25.
al: Which is reflective of our continued effort to not only optimize our asset base, but also our capital structure.
al: Lastly, we accelerated the return on capital framework and announced a 20% increase in the quarterly distribution payable on February 14th for both PAA common units and PAGP class a shares.
al: Annualized basis of distribution represents a 25 cent per unit increase from the distribution. We paid in November 2020 for bringing the annual distribution to $1 52 per unit, representing a yield of approximately seven 5% based on the current equity price for PAA with that I'll turn the call over to al. Thanks, Lilly we ripped.
Al Swanson: Thanks, Willie. We reported Q4 adjusted EBITDA of $729 million, which includes crude oil segment benefits from higher volumes and pipeline tariff escalation. Our NGL segment benefited from higher than expected border flows, leading to increased C3+ spec product sales. Slides 8 and 9 in today's presentation contain segment EBITDA walks, which provide details on our Q4 performance. All in all, we executed well in 2024 and are well-positioned as we enter 2025. A summary of 2025 guidance and key assumptions are on slide 10. Looking at 2025 guidance compared to 2024 results, as illustrated by the EBITDA walk on slide 11, we expect adjusted EBITDA of $2.8 to $2.95 billion, with year-over-year growth in our crude oil segment and slightly lower NGL segment contributions.
al: For the fourth quarter, adjusted EBITDA of $729 million.
al: Which includes crude oil segment benefits from higher volumes and pipeline tariff escalation.
al: Our NGL segment benefited from higher than expected border flows leading to increased C III plus spec product sales.
al: Slides eight and nine in today's presentation contains segment EBITDA walks, which provide details on our fourth quarter performance. All in all we executed well in 2024 and are well positioned as we enter 2025.
al: A summary of 2025 guidance and key assumptions are on slide 10, looking at 2025 guidance compared to 2024 result, and as illustrated by the EBITDA walk on Slide 11, we expect adjusted EBITDA of $2 eight to $2 95 billion.
al: With year over year growth in our crude oil segment and slightly lower NGL segment contributions.
Al Swanson: Growth in our crude oil segment is primarily driven by contributions from bolt-on acquisitions, volume growth, and pipeline tariff escalation, partially offsetting these tailwinds on the previously discussed reset of certain long-haul contract tariffs that step down in H2 2025. While our NGL segment adjusted EBITDA is expected to be slightly lower year over year, the business is shifting to approximately 45% fee-based in 2025. I would note that our C3+ spec product sales volumes are approximately 70% hedged for the year in the low $0.70 per gallon level. We remain focused on making disciplined capital investments, and expect to invest approximately $400 million of growth capital and approximately $240 million of maintenance capital in 2025, net to PAA. This includes growth capital for the POP JV well connections and intrabasin improvements, integration of our recently completed acquisitions, and capital related to our Fort Saskatchewan debottleneck project.
al: Growth in our crude oil segment is primarily driven by contributions from bolt on acquisitions volume growth and pipeline tariff escalation, partially offsetting these tailwind previously discussed reset of certain long haul contract tariffs.
al: Down in the second half of 2025.
al: While our NGL segment adjusted EBITDA is expected to be slightly lower year over year. The business is shifting to approximately 45% fee based in 2025 I would note that our C. III plus spec product sales volumes are approximately 70% hedged for the year in the low 70 cents per gallon level.
al: We remain focused on making disciplined.
al: Disciplined capital investments and expect to invest approximately $400 million of growth capital and approximately $240 million of maintenance capital in 2025 net to PAA. This includes growth capital for the <unk> JV, well connections and intra basin improvements integration of our recently completed <unk>.
al: Acquisitions and capital related to our Fort Saskatchewan Debottleneck project.
Al Swanson: As illustrated on slide 12, in addition to capital discipline, we remain committed to significant returns of capital and maintaining financial flexibility. For 2025, we expect to generate approximately $1.15 billion of adjusted free cash flow, excluding changes in assets and liabilities, which is reduced by $580 million for the previously announced bolt-on transactions that closed in January. Regarding our balance sheet, we recently raised $1 billion of senior unsecured notes at a rate of 5.95%, maturing in 2035. Proceeds were used to fund the recently announced transactions. Regarding our senior note maturity profile, we have $1 billion maturing in October 2025, which we would expect to refinance all or a portion of during the year. Before I turn the call back to Willie, I wanted to provide detail on two charges that impacted our Q4 GAAP results.
al: Illustrated on Slide 12. In addition to capital discipline, we remain committed to significant returns of capital and maintaining financial flexibility for 2025, we expect to generate approximately one $1 $5 billion of adjusted free cash flow, excluding changes in assets and liabilities, which is.
al: Reduced by $580 million.
al: The previously announced bolt on transactions that closed in January.
al: Regarding our balance sheet, we raised recently raised $1 billion of senior unsecured notes at a rate of 595% maturing in 2035 proceeds were used to fund the recently announced transactions regarding our senior note maturity profile, we have $1 billion maturing in October 2025.
al: We would expect to refinance all or a portion of during the year before.
al: Before I turn the call back to Willie I wanted to provide detail on two charges that impacted our fourth quarter GAAP results. Our 2024 results include a $140 million noncash.
Al Swanson: Our 2024 results include a $140 million non-cash impairment related to 2 US NGL terminal assets. These are excluded from our adjusted results. Separately, regarding our claim for reimbursement from insurance carriers of $225 million that arose out of a 2022 class action settlement relating to our 2015 Line 901 incident, an arbitration panel ruled that we are not entitled to reimbursement of our $175 million claim against several of the insurers. With respect to our remaining $50 million claim against different insurance carriers, we now regard collection of those claims as being less than probable, and GAAP therefore requires that we write off the entire $225 million receivable and recognize any future collections as and if they are received. While disappointing, we still expect to operate at or below the low end of our leverage target ratio of 3.25 to 3.75 times in 2025.
al: Noncash impairment related to two U S NGL terminal assets.
al: These are excluded from our adjusted results.
al: <unk> regarding our claim for reimbursement from insurance carriers of $225 million that arose out of a 2022 class action settlement relating to our 2015 line 901 incident, an arbitration panel ruled that we are not entitled to reimbursement of our $175 million.
al: <unk> against several of the insurers.
al: With respect to our remaining $15 million claim against different insurance carriers.
al: We now regard collection of those claims as being less than probable and GAAP. Therefore requires that we write off the entire $225 million receivable and recognize any future collections.
al: And if they are received while disappointing we still expect to operate at or below the low end of our leverage target ratio of 325 to 375 times in 2025 with that I'll turn the call back to Willy.
Al Swanson: With that, I'll turn the call back to Willie.
Willie Chiang: Thank you, Al. 2024 was another solid year of execution for Plains, and we remain confident as we enter 2025 with strong operational momentum and are well-positioned to play offense in continuing to deliver value to our unitholders. As we show on slide 11, we've made meaningful progress on our financial objectives, and we've positioned ourselves to be the investment of choice. In summary, first, our balance sheet strength provides significant financial capacity and flexibility. Secondly, we continue to demonstrate capital discipline and the ability to execute on our efficient growth initiatives, including growing the business both organically and inorganically through accretive and synergistic bolt-on acquisitions. Finally, as demonstrated with our recent distribution increase announcement, we remain very focused on increasing return of capital to our unitholders through our multi-year capital allocation framework while still preserving financial flexibility.
Willy: 2024 was another solid year of execution complaints and we remain confident as we enter 2025 with strong operational momentum and are well positioned to play offense and continue to deliver value to our unit holders.
Willy: As we show on Slide 11, we've made meaningful progress on our financial objectives, and we've positioned ourselves to be the investment of choice in summary.
Willy: First our balance sheet strength provides significant financial capacity and flexibility secondly, we continue to demonstrate capital discipline and the ability to execute on our efficient growth initiatives, including growing the business, both organically and inorganically to accretive and synergistic bolt on acquisitions and finally as demonstrated with our <unk>.
Willy: Recent distribution increase announcement, we remained very focused on increasing return of capital to our unit holders through a multi year capital allocation framework, while still preserving financial flexibility.
Willie Chiang: From a broader perspective, we're optimistic about a new administration that values energy security and energy independence, one that also supports consumer choice and a level playing field for all sources of energy, including hydrocarbons. We believe the world will continue to need North American energy to maintain today's quality of living standards and to help elevate those that are less fortunate. Plains is well-positioned to support domestic energy growth with critical infrastructure to connect supply to demand centers across North America. With that, I'll turn the call back over to Blake, who will lead us into Q&A.
Willy: From a broader perspective, we are optimistic about a new administration that values energy security and energy independence, and one that also supports customer consumer choice and a level playing field for all sources of energy, including hydrocarbons. We believe the world will continue to need North American energy to maintain today's quality of <unk>.
Willy: Living standards.
Willy: And to help elevate those that are less fortunate plains is well positioned to support domestic energy growth with critical infrastructure to connect supply to demand centers across North America with desktop with that I'll turn the call back over to Blake, who will lead us into Q&A. Thanks, Willie as we enter the Q&A session. Please limit yourself to one question and one.
Al Swanson: Thanks, Willie. As we enter the Q&A session, please limit yourself to one question and one follow-up. For those with additional questions, please feel free to return to the queue. This will allow us to address as many questions as practical in our available time this morning. The IR team will also be available to address any questions you may have. Tanya, I believe we're ready to go to Q&A session.
Willy: Follow up for those with additional questions. Please feel free to return to the queue. This will allow us to address as many questions as practical in our available time. This morning. The IR team will also be available to address any questions you may have.
Willy: Tony I believe we're ready to go to Q&A session.
Operator: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. Our first question will come from Keith Stanley of Wolfe Research. Your line is open, Keith.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: And our first question will come from Keith Stanley of Wolfe Research. Your line is open Keith.
Keith Stanley: Hi. Good morning. Thank you. To start, maybe can you give a little background on how some of these tuck-ins came together in January? If it was a long process or it came together pretty quickly? Give a sense on if there's other meaningful opportunities you're working on currently or that you think are likely you'll be able to execute on this year?
Keith Stanley: Hi, good morning, Thank you.
Speaker Change: To start maybe.
Speaker Change: Can you give a little background on how some of these tuck ins came together in January if it was a long process or it came together pretty quickly and then give a sense on if theres other meaningful opportunities you are working on currently or that you think are likely youll be able to execute on this year.
Willie Chiang: Thanks, Keith. This is Willie. We entered 2025 with a lot of momentum, and obviously these deals don't happen overnight. Our organization, as you know, is constantly looking for opportunities, and we had a number of these that came together at the same time. It was a lot of work for our team. We were able to execute on all of it. As with these things, you can't pick the timing. We were pleased to be able to come in strong in the year. I think that just reinforces the comment that we've really moved from defense to offense. As far as more activity, we've been pretty public about that. We think there are more opportunities, and when you think about Plains' footprint and our integrated asset base, we're an infrastructure company.
Willie: Thanks, Pete this is Willie.
Speaker Change: We entered 2025 with a lot of momentum and obviously these deals don't happen overnight.
Speaker Change: Our organization as you know is constantly looking for opportunities and we had a number of these that came together at the same time and it was a lot of work for our team and we're able to execute on all of it.
Speaker Change: And that's why these things you can't pick the timing. So it was we were pleased to be able to come in strong in the year and I think that just reinforces the comment that we've really moved from defense to offense.
Speaker Change: As far as more activity, we've been pretty public about that we think there are more opportunities and when you think about planes as footprint and our integrated asset base, we're an infrastructure company. So we connect.
Willie Chiang: We connect supply to demand, and in that process, we have a lot of people that we talk to, and that opens up opportunities for us to create some of these options for opportunities to bolt on into our system. A lot of opportunities for synergies, and so as we go forward, we're nurturing a number of these. The one common thing is we're not growing for growth's sake, and all of these have to go through the lens of capital discipline and strategic need, and our ability to pull through the entire system, getting more synergies. I think you can expect more of these to come. Again, it's going to be hard to predict timing, and most importantly, we're only going to bring the projects forward that give us a good return for the unit holders.
Speaker Change: <unk> demand and in that process, we have a lot of people that we talk to and that opens up opportunities for us to create some of these options for opportunities to bolt on into our system a lot of opportunities for synergies and so as we go forward. We're nurturing a number of these.
Speaker Change: The one common thing is we're not growing for growth's sake, and all of these have to go through the.
Speaker Change: The lens of capital discipline, and strategic need and their ability to pull through the entire system getting more synergies. So I think you can expect more needs to come but again, it's going to be hard to make timing and most importantly, we're only going to bring the projects forward that that gives us a good return for the unit holders.
Jeremy Goebel: That's great. If I could shift gears for a second question. Wanted to ask on tariffs. We got the one-month pause here, but if we eventually do get tariffs on Canada, can you walk through some of the dynamics of how that could play out for both your NGL and crude business, and potential impacts for Plains?
Speaker Change: That's great.
Speaker Change: Could shift gears for a second question.
Speaker Change: Wanted to ask on tariffs, we got the one month pause here, but if we eventually do get tariffs on Canada can you walk through some of the dynamics of how that could play out for both your NGL and crude business and potential impacts for clients.
Willie Chiang: Well, Keith, I think we only have 1 hour for this call, so maybe I'll try to keep it pretty general. There are, as everyone on the call knows, there's literally 1 million scenarios that could play out, and we've been working on this for a number of months, going through the scenario planning for what could come for us. The short answer is, as you look at our guidance range, we think that guidance range easily encompasses the probable outcomes of what the tariffs may be. As far as jumping to the conclusions of what they might be and when they may take effect, I think it's just best to know that we've been spending time on it, and we've tried to mitigate a lot of these proactively.
Speaker Change: Well I think we only have an hour for this call. So maybe I'll try to keep it pretty general.
Speaker Change: There are as everyone on the call knows there is literally a $1 million million scenarios that could play out and we've been working on this for a number of months going through the scenario planning for what could come up for us.
Speaker Change: The short answer is as you look at our guidance range.
Speaker Change: That guidance range.
Speaker Change: Easily encompasses.
Speaker Change: And the probable probable outcomes of what the tariffs may be but as far as jumping to conclusions of what they might be and when they may take effect I think it's just best to know that we've been spending time on it and we've tried to mitigate a lot of these proactively and until the tariffs come out on what they might be or if they come out at all.
Willie Chiang: Until the tariffs come out on what they might be or if they come out at all, it's really a scenario planning exercise of what might happen in our system. You should know that we're ready for it, and again, at the end, if it comes, our impact is going to be within the guidance range.
Speaker Change: It's really a scenario planning exercise.
Speaker Change: Of what might happen in our in our system, but you should know that we're ready for it and again at the end if it comes our impact is going to be within the guidance range.
Jeremy Goebel: Great. Thank you.
Willie Chiang: Thank you, Keith.
Speaker Change: Great. Thank you. Thank you Keith.
Operator: One moment for our next question. Our next question will be coming from Manav Gupta of UBS. Your line is open.
Speaker Change: And one moment our next question.
Speaker Change: Our next question will be coming from Manav Gupta of UBS. Your line is open.
Manav Gupta: Good morning, team. When you provided the initial 2024 guide versus where it came, the number was much stronger. I'm just trying to understand, again, if the macro is supportive when we look at 2025 guide, what could drive you towards the upper end of that guide and possibly over it as you did in 2024?
Speaker Change: Okay.
Speaker Change: Good morning team.
Speaker Change: Yep.
Speaker Change: You provided the initial 2024 guide versus that it became the number was much stronger and I am just trying to understand again, if the macro is supportive but when you look at 2025 guide what could drive you towards the upper end of that guide and possibly all of it as you did in 2024.
Willie Chiang: Well, Manav, this is Willie. I'll start, and maybe others can jump in. When we look at 2025, I think it's important to throw the macro views that I talked about on the administration. Clearly, a big factor for us is volume growth and oil price. More activity would certainly drive higher volumes. We have a 200,000 to 300,000 barrel a day guidance for our growth in the Permian. As we go forward and you listen to some of the calls of some of the producers out there's a lot of activity that's going on. It's been consistent. It's also been more productive. They've been able to produce more volumes with lower rigs and completion rigs, completion activities. If I were to take the over or under on momentum, I would take the over into 2025.
Speaker Change: Well Manav. This is Willie I'll start and maybe others can jump in.
Speaker Change: When we look at 2025 I.
Speaker Change: I think it's important to throw the macro views that I talked about on the administration clearly a big factor for us is volume growth and oil price.
Speaker Change: So more activity with certainly drive.
Speaker Change: Higher volumes and we have a 2% to 300000 barrel a day guidance for our growth in the Permian, but as we go forward and you listen to some of the calls of some of the producers out there theres a lot of activity that's going on it's been consistent. It's also been more productive than they have been able to produce more volumes with lower a lower rigs.
Speaker Change: And completion rigs completion activities. So if I were to take the the over or under on momentum I would take the over into 2025 and listen to some of the key factors IC.
Willie Chiang: Those are some of the key factors I see.
Manav Gupta: Perfect. My quick follow-up here is on Ironwood. You're highlighting the fact that it bolsters your Western footprint, but it's also giving you a little bit of opportunity extending the footprint into the east. Given your strategy of bolt-on, can we think that maybe you could do more deals to further enhance this east footprint now that you have got a hold through this Ironwood midstream bolt-on?
Speaker Change: Okay.
Speaker Change: I think my quick follow up.
Speaker Change: I Didnt wood.
Speaker Change: Highlighting the fact that it bolstered field footprint, but it's also giving an uplink.
Speaker Change: Opportunity extending the footprint into the east so given your strategy of bolt on Kennedy.
Speaker Change: Think that maybe you could add to more deals to further enhance this east footprint now that you have got the whole ironwood.
Jeremy Goebel: Manav, this is Jeremy. Thank you for the question. The easiest way to think about it is we had a strong footprint in Eagle Ford. The Western assets of Ironwood overlay our existing system and create a number of synergies between capital and extending our value chain there. On the east side, it is a new area for us. It was basically an asset base run by a private equity company. We're trying to integrate it into our broader footprint and run it like a full integrated midstream business like we do. Over time what happened, this year's guide is more about integrating, getting under our foot, and getting those investments in place to allow it to be integrated. I think you'd see, just like we've proven with other acquisitions, the ability to compress the multiple over time by driving additional businesses and opportunities through that footprint.
Speaker Change: <unk> wood midstream bolt on.
Speaker Change: Manav. This is Jeremy Thank you for the question.
Speaker Change: The easiest way to think about it is we had a strong footprint in the Eagle Ford the western assets of Ironwood overlay, our existing system and create a number of synergies between capital and extending our value chain there.
Speaker Change: East side, it is a new area for us.
Speaker Change: It was basically an asset base run by a private equity company, we're trying to integrate it into our broader footprint and run it like a full integrated midstream business like we do so over time what happened. This year's guide, it's more about integrating getting under our footing in getting those investments in place to allow us to be integrated I think you'd see if like we've proven with other.
Speaker Change: <unk> the ability to compress the multiple over time by driving additional businesses and opportunities through that footprint.
Manav Gupta: Perfect. Congratulations. I think your strategy of going from defense to offense is really working. Thank you.
Speaker Change: Perfect. Congratulations I think its strategy of gleaned from defense to offense is really lifting. Thank you. Thanks Manav.
Willie Chiang: Thanks, Manav.
Operator: One moment for our next question. Our next question will be coming from Michael Blum of Wells Fargo. Your line is open, Michael.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Michael Blum of Wells Fargo. Your line is open Michael.
Michael Blum: Hey, good morning, everyone. I wanted to ask you, previously guided a flat EBITDA from 2024 to 2026. You said growth projects will offset Cactus recontracting. Here you're up a little bit in 2025, just wanted to get a sense of, do you now expect EBITDA is going to increase gradually from here on out? Or are there other puts and takes that we should be considering over the next couple of years?
Michael Blum: Hey, good morning, everyone.
Michael Blum: So I wanted to ask you previously guided flat EBITDA from 2024 to 2026 growth projects will offset cactus re contracting here youre up a little bit in 25. So just wanted to get a sense of do you now expect EBITDA is going to increase gradually from here on out or are there other puts and takes.
Willie Chiang: Michael, Willie again here. Thanks for the question. I really want to get away from this 2024 to 2026 flat guidance. I'll give you context again on why we talked about it back then. We had long-term contracts that were rolling off. These were very good contracts that rolled off back to market rates, which we expected. The purpose of the guide at that point in time was taking a point-in-time outlook of the business as we had it. We wanted people to realize there was not a cliff that was coming. That's why we talked about the flat 2024 to 2026 on the crude segment. Now, clearly, as we build our business and continue to grow, our expectations would be that 2026 is going to be over 2024.
Michael Blum: Considering over the next couple of years.
Speaker Change: Michael Willie again here. Thanks for the question I really want to get away from this 24 to 26 flat guidance I'll give you context again on why we talked about it back then we had long term contracts that were rolling off. These were very good contracts have rolled off back to market rates, which we expected.
Speaker Change: And the purpose of the guide at that point in time was taking a point in time outlook of the business as we had it we wanted people to realize there was not a cliff that was coming.
Speaker Change: And that's why we talked about the flat $2004 26 on the crude sector on the crude segment now clearly as we build our business and continue to grow.
Speaker Change: Our expectations would be that 26 is going to be over 24, and so with the just even with the deals we just announced as far as this first tranche as we think about playing offense.
Willie Chiang: Just even with the deals we just announced, as far as this first tranche, as we think about playing offense, that obviously adds to the base business. Going into 2026, I would say at this point in time, 2026 is going to be higher than 2024. The next question you'll likely ask is what's the pace and trajectory of that growth? I would tell you we're going to continue to grow our base business. We've got a lot of integration and footprint to be able to capture synergies. We've got streamlining efforts that are ongoing with this whole efficient growth strategy that we've embarked upon. Any bolt-ons that we might be able to do beyond that would just would add to it.
Speaker Change: That obviously adds to the to.
Speaker Change: So the base business, so going into 2006 I would say at this point in time 26 is going to be higher than 2024.
Speaker Change: The next question, you'll likely ask is what's the pace and trajectory of that growth.
Speaker Change: I would tell you we're going to continue to grow our base business.
Speaker Change: Got a lot of integration and footprint to be able to capture synergies. We've got streamlining efforts that are ongoing with this whole efficient growth strategy that we've embarked upon.
Speaker Change: And any bolt ons that we might be able to do beyond that with just would add to it and so that's a little bit of lumpiness in growth, but clearly our plan and our mission is to increase enterprise value for the unit holders and going forward. We're just going to continue to execute against this strategy.
Willie Chiang: That's a little bit of lumpiness in growth, but clearly our plan and our mission is to increase enterprise value for the unitholders, and going forward, we're just going to continue to execute against this strategy.
Michael Blum: Okay, great. Thanks for that, Willie. That's helpful. The other question I wanted to ask, in December you talked about initiatives to streamline operations. You talked about it could lead to higher margins, expense savings. I'm wondering if you could just provide an update on that, any details, and whether any of that is baked into the guidance for 2025. Thanks.
Speaker Change: Okay, great. Thanks for that that's helpful.
Speaker Change: Another question I wanted to ask.
Speaker Change: December you talked about initiatives to streamline operations talked about it could lead to higher margins expense savings.
Speaker Change: Wondering if you could just provide an update on that any details and whether any of that baked into the guidance for 25.
Willie Chiang: Yeah, Michael. The way I would think about the cost and streamlining effort is it's a continuous process. This is not something we're going to come out and proclaim a program on how much cost we can cut out of the organization or how we can streamline our business. It's what we do. There are some efficiency streamlining numbers in our numbers this year. Most importantly, as we kind of build our business with these synergies on some of the things that we bring into the system as far as bolt-ons, and we have an ERP project, enterprise risk, kind of consolidating our financial programs. We think that's going to give us an opportunity to drive some more synergies and get some opportunities to further streamline. It's really something that's baked into what we do every day.
Speaker Change: Yes, Michael.
Speaker Change: The way, we would I would think about our cost argument cost streamlining effort, it's a continuous process.
Speaker Change: <unk>. This is not something we're going to come out in <unk> and.
Speaker Change: And proclaimed that program on how much cost we can cut out of the organization. How we can streamline our business. It's what we do so there are some efficiency is streamlining numbers in our in our numbers this year, but most importantly.
Speaker Change: As we kind of build our business with the synergies on some of the things that we bring into the system as far as bolt ons and we have a <unk>.
Speaker Change: RP project enterprise risk.
Speaker Change: Enterprise kind of consolidating our financial progress, we think thats going to give us an opportunity to drive some more synergies and opportunities synergies and get some opportunities to further streamline so its really something thats baked into what we do every day and I think what you'll do is you'll see continuous progress as we go through the year and even into next year.
Willie Chiang: I think what you'll do is you'll see continuous progress as we go through the year and even into next year.
Michael Blum: Thank you.
Willie Chiang: Yeah. Thanks, Michael.
Speaker Change: Thank you.
Operator: Our next question will be coming from Jeremy Tonet of J.P. Morgan Securities LLC. Your line is open, Jeremy.
Michael: Thanks, Michael.
Speaker Change: And our next question will be coming from Jeremy Tonet Jpmorgan Securities LLC. Your line is open Jeremy.
Jeremy Tonet: Hi, good morning.
Willie Chiang: Good morning, Jeremy.
Jeremy Tonet: Thanks for all the color today. Just wanted to expand a bit more on the M&A strategy. Clearly all these bolt-on plans can drive very nice synergies just by connecting existing systems. Just curious, I guess, as you think about an asset in the MidCon, and maybe you can get a bunch of synergies, so that's kind of a one-time step up versus something near the Permian, where maybe there's kind of more continuous organic growth opportunities. How that factors maybe into your process and also just the opportunities that are in front of you. Do you see more of one or the other?
Jeremy Tonet: Hi, good morning.
Speaker Change: Good morning, Jeremy.
Speaker Change: Thanks for all the color today, just wanted to expand a bit more on M&A.
Speaker Change: Got it.
Speaker Change: Nearly all of these bolt ons.
Speaker Change: Right very nice synergies just like.
Speaker Change: Yes.
Speaker Change: But just curious I guess as you think about.
Speaker Change: An asset in the mid con.
Speaker Change: Synergies with kind of a one time step up.
Speaker Change: The Permian, where maybe there's like kind of more organic growth opportunities.
Speaker Change: Yes.
Speaker Change: That factors into your process.
Speaker Change: In front of me.
Willie Chiang: Jeremy, I'm not sure we heard all that, but the question was really how we think about bolt-ons and M&A across our footprint. Is that right?
Speaker Change: One.
Speaker Change: Jeremy I'm not sure we heard all of that but the question was really how we think about bolt ons and M&A across our footprint is that right. Yes, sorry about that just like in the mid con might be more mature onetime step up in synergies versus in the Permian, where if it could be the synergies for connecting but also <unk>.
Jeremy Tonet: Yeah. Sorry about that. Just like in the MidCon might be more mature, one time step up in synergies versus in the Permian where there could be the synergies for connecting, but also organic growth on top of it.
Jeremy Goebel: Sure. A couple examples from last year, the Stroud acquisition earlier in the year. That's creating a new platform and long-term contracted business. We're bringing WACS in. It creates throughput and blending into our terminal system through Cushing. It extends customers' reach within our facilities and their contracts in adjacent facilities that it's blending. That's a new platform and a step up. That has synergies to the asset itself, which you take an asset that has zero EBITDA and turn it into something that's a long-term business, and create stickiness to your terminal. You take the recent transaction with CVR, which was a win-win for them and us. We brought them in in 2017. They needed some financing for the projects that they're working on and the turnarounds.
Speaker Change: Growth on top of it sure a couple of examples from last year. The Stroud acquisition earlier in the year, that's creating a new platform in long term contracted business, we're bringing wax in it creates throughput and blending into our terminal system through Cushing and extends customers' reach within.
Speaker Change: Our facilities in their contracts and adjacent facilities that blending so that's a new platform and the step up and so that has synergy to the asset itself, which you take an asset that has zero EBITDA and turn it into something that's a long term business and then create stickiness to your terminal and you take the recent transaction with.
Speaker Change: CVR, which was a win win for them and US we brought them in in 2017, they needed some financing for the projects that they're working on and the turnarounds, we get very long dedications through our terminal and through the pipeline and significant commitments to that pipeline to allow us to have a very long term relationship with them.
Michael Blum: We get very long dedications through our terminal and through the pipeline, and significant commitments to that pipeline to allow us to have a very long-term relationship with them at mutually agreeable rates. I think Willie talked about it, that MidCon is a great long-term asset and our outside Permian assets for free cash flow generation, and this just ensures they'll be that way for decades.
Speaker Change: Mutually variable rate so I think it's.
Speaker Change: Willie talked about at that mid con as a great long term asset and our outside Permian assets for free cash flow generation and Thats, just insurance there'll be that way for decades.
Willie Chiang: Jeremy, this is Willie. Just to add something onto Jeremy's comments. If you think about our system, and you know it well, it's very dynamic. It gives us a lot of opportunity to do different things.
Speaker Change: Jeremy This is Willie just to add something on to Jeremy's comments.
Speaker Change: You think about our system and you know well.
Willie Chiang: Earlier, we had the question around what might happen around Canadian crude tariffs or, for example, crude tariffs. If you just look at our footprint, you could see if volumes didn't find their way to the US, which is not what our outlook is. We do have a big system that can swing and bring volumes from the Permian ultimately into Cushing into the Mid-Continent north. You can see there's a broad system that's very flexible that we think about lots of different option values, and it's good to have choices and options as we go forward.
Speaker Change: It is very dynamic it gives us a lot of opportunity to do different things and earlier, we had the question around what might happen around Canadian.
Speaker Change: Current tariffs are for example, crude tariffs and if you just look at our footprint you can see if volumes didn't find their way to the U S, which is not what our outlook is.
Speaker Change: We do have a big system that can swing and bring volumes from from the Permian ultimately into Cushing Cushing into the mid continent, North. So you can see there's a broad system that's very flexible.
We think about <unk>.
Speaker Change: Lots of different option values and it's good to have choices and options as we go forward.
Jeremy Tonet: Got it. Optionality. Makes sense. Maybe just taking a step back, if I could, if you could share your views, I guess, more on the macro side. Crude oil prices, how you see unfolding. Which basins do you see growth in over time? I guess just a longer-range look at the macro, how you guys feel about that.
Speaker Change: Got it Optionality makes sense.
Speaker Change: Just taken.
Speaker Change: Step back if I could if we could if you could share your views I guess more on the macro side.
Speaker Change: Crude oil prices, how you see unfolding and just kind of.
Speaker Change: Each basin do you see growth in over time, I guess, just a longer range youll look at the macro how do you guys feel about that sure if constructive.
Jeremy Goebel: Sure. It's constructive. You've heard a lot of our peers calls about low distillate inventories, globally lower crude inventories. You've got the supply and demand fundamentals which were in this neighborhood, but you've got a lot of policy that's driving crude prices right now. A lot of that could be more sanctions on Iran, more sanctions on Venezuela, tariffs. All of those things could lead to price increases, filling the SPR. There's a lot of things that are balancing, and so as the headlines are leading to driving price and people are a little bit confused as to which way it's going. We think the backdrop is constructive from a physical standpoint, from a demand standpoint, and then policy's only enhancing that. From a which basins are growing, there's pockets in the Rockies that are growing. There's Canada that's growing. The Permian's growing.
Speaker Change: You've heard a lot of our peers calls about load distillate inventories.
Speaker Change: Globally lower crude inventories.
Speaker Change: You've got the supply and demand fundamentals, which were in this neighborhood, but you've got a lot of policy thats driving crude prices right now and a lot of that could be more sanctions on Iran. More sanctions on Venezuela.
Speaker Change: Tariffs all of those things could lead to price increases filling the SBR. So theres a lot of things that are balancing and so the headlines are leading to driving price and people are a little bit confused as to which way its going but we think the backdrop is constructive from a physical standpoint from a demand standpoint, and then policies only enhancing that.
Speaker Change: Sure.
Speaker Change: And then from a which basins are growing.
Speaker Change: Pockets in the Rockies that are growing there is Canada, that's growing the Permian is growing and then we're even seeing new developments in the Eagle Ford area and the mid continent area that are drawing capital. So we see pockets of growth around the existing assets and then we see more broad longer term, we see Canada the Rockies.
Jeremy Goebel: We're even seeing new developments in the Eagle Ford area and the Mid-Continent area that are drawing capital. We see pockets of growth around existing assets, and then we see more broad, longer term. We see Canada, the Rockies, and the Permian as growth by different areas. That's where you're seeing a lot of the investment from us as well.
Speaker Change: In the Permian.
Speaker Change: Growth by different areas, and Thats, where youre seeing a lot of the investment from us as well.
Willie Chiang: Jeremy and Willie, again, you know this again, but if you think about our footprint, and Jeremy outlined that we expect flat growth outside the basins of the Permian and in Canada. We're in great ZIP codes. The Permian is the growth engine for the US. One could argue it's probably broader for the world even. Then Western Canada, let's not forget that we've got a footprint there that's able to take additional NGLs out of gas to produce NGLs that are needed. Two growth areas, Western Canadian Sedimentary Basin and the Permian Basin. We're in both of those ZIP codes.
Jeremy Tonet: Jeremy will again.
Jeremy Tonet: You notice again, but if you think about our footprint and Jeremy outlined that we expect a flat.
Jeremy Tonet: Flat growth in outside of the basin of the Permian and in Canada, but we're importing <unk> ZIP codes. The Permian is the growth engine for the U S.
Jeremy Tonet: One could argue it's probably broader for the world, even and then Western Canada, let's not forget that we've got a footprint there that's able to take.
Jeremy Tonet: Additional ngls out of out of gas to produce ngl's that are needed.
Jeremy Tonet: Two growth areas Western Canadian sedimentary basin in the Permian Basin.
Jeremy Tonet: Got it. Makes sense. Thank you for that.
Jeremy Tonet: We're in both of those Zip codes.
Chris Chandler: Thank you.
Operator: One moment for our next question. Our next question will be coming from Brandon Bingham of Scotiabank. Your line is open, Brandon.
Jeremy Tonet: Got it makes sense. Thank you for that.
Jeremy Tonet: Thank you.
Speaker Change: And one moment our next question.
Jeremy Tonet: Our next question will be coming from.
Brandon Bingham: Brandon Bingham.
Brandon Bingham: Hi. Good morning. Thanks for taking the question. I was just wondering maybe if we could go back to the EBITDA guide. If you could just maybe talk about what the underlying till POP count looks like that's going into that guide. Are customers generally increasing the well counts year over year? Decreasing? Is it flat? Just how does that compare versus where it came in for 2024? I know you said, and it's obvious guys are doing more with less now. I was just curious if the tone of those conversations with your customers is maybe incrementally more positive with, I don't know, Trump administration now or Chris Wright getting in there as Secretary of Energy. Just what are some of the moving pieces there that are underpinning the EBITDA guide and the macro outlook?
Jeremy Tonet: <unk> Bank your line is open Brandon.
Jeremy Tonet: Hi, good morning, Thanks for taking the question.
Jeremy Tonet: I was just wondering maybe excuse me if we could.
Jeremy Tonet: Kind of go back to the EBITDA Guide if you could just maybe talk about what the underlying tail pop count looks like that's going into that guide or customers.
Jeremy Tonet: Generally increasing the well counts year over year decreasing as it flat just how does how does that compare versus where it came in for 2024 and I know you said.
Jeremy Tonet: And it's obvious guys are doing more with less now, but I was just curious if if the tone of those conversations with your customers maybe incrementally more positive with.
Jeremy Tonet: Trump administration, now or Chris right getting in there as secretary of energy.
Jeremy Tonet: And what are kind of some of the moving pieces there that are under pending the EBITDA guide in the macro outlook.
Jeremy Goebel: Hi, Brandon. I would say it's very consistent if you stick to the Permian Basin, where our largest lease gathering activity and then the Eagle Ford, where we have the Ironwood. Very consistent from last year to this year. Consistent pace. There's not a bunch of chasing 1 and 2 well locations, which is very much more efficient for us and them. I'd say it's steady state to last year to this year. Very similar new connections, very similar behind pipe connections. Gives us additional confidence in the forecast that Willie outlined at the beginning of the call.
Brandon Bingham: Hey, Brandon I would say, it's very consistent if you stick to the Permian basin, where our largest lease gathering activity and then equal.
Brandon Bingham: We have the ironwood very consistent to left from last year to this year consistent pace.
Brandon Bingham: Not a bunch of chasing one and two well locations, which is very much more efficient for us and so I'd say, it's steady state until last year. This year very similar new connections very similar behind pipe connections.
Speaker Change: US additional confidence in the forecast that Willie outlined at the beginning of the call.
Brandon Bingham: Awesome. Great. Maybe if we could just turn to the CapEx guide for this year. Could you just help us understand some of the moving pieces embedded in the guide, if there's anything related to the deals from January that's in there for this year that might be even dropping lower next year? Was there any slippage from 2024 into this year? I know Q4 CapEx came in a little light versus our expectations. Just any detail you guys could provide would be helpful.
Speaker Change: Awesome, Great and then maybe if we could just turn to the Capex guide for this year could you just help us understand some of the moving pieces embedded in the guide if there is anything related to the deals from January that's in there for this year there might be even dropping lower next year as it was there any slippage from 2000.
Speaker Change: For this year I know Q4, Capex came in a little light versus our expectations. Just any detail you guys could provide would be helpful.
Chris Chandler: Hey, Brandon, this is Chris Chandler. Be happy to answer your question. You actually hit on a number of our points, so we do appreciate that. We were able to defer some capital out of 2024 into 2025. We always try to optimize our capital spend and not spend it before it's needed. That's contributing to a higher spend in 2025 than 2024. We also touched on we've grown our acreage dedication in the Permian. Much like Jeremy just answered, that's driving some additional investment, which will drive additional volume, of course. As far as our larger projects in 2025, the two big ones outside the Permian are the Fort Sask expansion project, that's going to come online here in Q2 2025.
Speaker Change: Hey, Brandon This is Chris Chandler I'd be happy to answer your question you actually hit on a number of our point. So we do appreciate that we were able to defer some capital out of 24.
Speaker Change: In the 25, and we always try to optimize our capital spend and not spend it before it is needed. So that's contributing to a higher spend in 'twenty five and 24. We also touched on we've grown our acreage dedication in the Permian much like Jeremy just answered and that's driving some additional investment which will drive additional.
Speaker Change: Volume of course and then.
Speaker Change: As far as our larger projects in 'twenty five.
Speaker Change: The two big ones outside the Permian or the <unk> SaaS the expansion project.
Chris Chandler: We're making some investments in the Mid-Con, as Jeremy just mentioned, to be able to offload crude from the Uinta Basin. That's a nice new business platform for us in driving some of the CapEx spend as well. To summarize, we're still within our long-term $300 to $400 million of investment capital net to Plains. We remain committed to capital discipline and are still within that range.
Speaker Change: That's good.
Speaker Change: Come online here in the second quarter of 2025, and then we're making some investments in the midcon.
Jeremy Tonet: Jeremy just mentioned to be able to offload.
Speaker Change: Crude from the Uinta waxy basin.
Speaker Change: That's a nice new business platform for us in and driving some of the capex spend as well, but to summarize we're we're still within our long term $300 million to $400 million of invested capital net to <unk>.
Speaker Change: We remain committed to capital discipline and.
Jeremy Goebel: Brandon, all these projects go through our investment committee. We stress test all these on returns to make sure that we're only doing the ones that have the best benefit for us.
Speaker Change: And are still within that range.
Speaker Change: And Brandon all of these projects go through our investment committee. So we.
Speaker Change: Stress test all of these on returns to make sure that we're all doing the ones that have the best out of it for us.
Brandon Bingham: Awesome. Great to hear. Thanks.
Jeremy Goebel: Thank you.
Operator: One moment for our next question. Our next question will be coming from Spiro Dounis of Citi. Your line is open.
Speaker Change: Awesome great to hear thanks.
Speaker Change: Thank you.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Spiro <unk> of Citi. Your line is open.
Spiro Dounis: Thanks, operator. Morning, team. Wanted to touch on the long-haul open position first. Last time we chatted, you had a fairly open position heading into 2026. Just curious where that stands now given the tightening egress you guys pointed out in the slides, and maybe any plans to firm up that capacity?
Speaker Change: Thanks, operator, good morning team.
Speaker Change: Wanted to touch on the long haul open position first last time, we chatted you had a fairly open position heading into 2026, just curious where that stands now given the tightening egress you guys pointed out in the slides and maybe any plans to firm up that capacity.
Jeremy Goebel: Thanks, Spiro. This is Jeremy. I'd say it is very consistent. The long haul to Corpus is contracted. Our Houston positions are largely contracted with the exception of BridgeTex, but we make progress in continuing to extend those contracts or restructure those contracts. With respect to Basin, we are seeing incremental demand, which we have put into the guide. We will stick to shorter-term contracts until we see the tariffs to where we want them to be longer term and expect them to be as the Basin continues to build. I'd say it is fairly consistent, but it is definitely constructed.
Speaker Change: Thanks Spiro this is Jeremy I would say, it's very consistent.
Speaker Change: Hall to Corpus is contracted to our Houston physicians are largely contracted with the exception of Bridgetex, but we make progress in continuing to extend those contracts or restructure those contracts and then with respect to basin, we're seeing incremental demand, which we put into the guide and.
Speaker Change: I'll stick to shorter term contracts until we see the tariffs, where we want them to be longer term and expect them to be as the basin continues to fulfill so I'd say, it's fairly consistent but it's definitely constructed.
Spiro Dounis: Great. Good to hear. Second one, just moving on to the distribution. You guys once again chose an accelerated growth level. Historically, you sort of talked about growth expectations being surpassed as the main driver on why to accelerate that growth a little bit each year. Going forward, it does sound like bolt-ons are going to be perhaps maybe a really meaningful driver of growth. Just sort of curious, like all else equal, is it fair to say that each bolt-on increases your ability to push that next distribution increase above your baseline amount?
Speaker Change: Great Alright, good to hear second one just moving on to the distribution.
Speaker Change: You guys. Once again chose an accelerated growth level and historically, you've sort of talked about growth expectations being surpassed as the main driver on why it accelerates that growth a little bit each year, but going forward. It does sound like bolt ons are going to be.
Perhaps maybe a really meaningful driver of growth and so just sort of curious like all else equal is it fair to say that each bolt on increases your ability to push that next distribution increase above your baseline amount.
Jeremy Goebel: Conceptually, the answer is yes. Obviously, as you think about our business, we've got the base business growth, and then we've got bolt-ons. We factor all of that as we go forward. We've been very pleased to be able to return more back to the unitholders. November 2022, we came out with this framework targeting the $0.15, and we've been able to do $0.20 increases in 2023 and 2024, and now the $0.25 increase in 2025. I think the framework works, and when we do better, more money goes back to the unitholders. There's a lot of moving parts, but generally speaking, you're absolutely right. We have a little bit of coverage buffer over this period of time to allow us to continue to grow, even if the bolt-ons and growth may not have been there.
Speaker Change: Conceptually the answer is yes, obviously as you think about our business. We've got the base business growth and then we've got bolt ons. So we factor all of that as we go forward.
Speaker Change: And we've been very pleased to be able to return more back to the unit holders on November 20, <unk> of November 'twenty. Two we came out with this framework targeting the 15 and we've been able to do two increases in 'twenty, three and 'twenty four and now the 25 cent increase and 25.
Speaker Change: So I think the framework works and when we do better more money goes back to the unit holders, but theres a lot of moving parts, but generally speaking you're absolutely right, we have a little bit of coverage buffer.
Speaker Change: Over this period of time to allow us to continue to grow.
Jeremy Goebel: As we go forward and shrink some of that buffer, it's going to be more dependent upon our base business and the timeliness of some of those bolt-ons.
Speaker Change: Even if the the bolt ons in growth may not have been there, but as we go forward and shrink some of that buffer it's going to be more dependent upon our base business and the timeliness of some of those bolt ons.
Spiro Dounis: Great. I'll leave it there. Have a good weekend, guys.
Jeremy Goebel: Thanks very much.
Operator: Yep. One moment for our next question. Our next question will be coming from Sunil Sibal of Seaport Global. Your line is open.
Speaker Change: Great I'll leave it there have a good weekend guys. Thanks very much.
Speaker Change: My next question.
Speaker Change: Our next question will come in will be coming from Sunil Sibal of Seaport Global Your line is open.
Sunil Sibal: Yeah. Hi, good morning, everybody, and thanks for the clarity on the call. I just wanted to start with your volume guidance or expectations in Permian. How should we be thinking on cadence on those volumes in 2025? You guys mentioned the Permian overall volume growth of 200 to 300,000 barrels per day. How do we think of that growth versus your guide if the basin comes out to be towards the higher end of that range? Should we think of upside in terms of your volume numbers in Permian?
Sunil Sibal: Yes, hi, good morning, everybody and thanks for the clarity on the call. So I just wanted to start.
Sunil Sibal: With your volume guidance or expectations in Permian, how should we thinking on cadence on those volumes in 2025.
Speaker Change: And then.
Speaker Change: I know you guys mentioned the pardon me in overall volume growth of 200 to 300000 barrels per day.
Speaker Change: How do we think of that growth.
Speaker Change: Your guide.
Speaker Change: If the basin comes out there will be towards the higher ethane should we think of upside in terms of your volume numbers in Permian.
Jeremy Goebel: Sunil Sibal, this is Jeremy Goebel. First, your cadence on the production growth, I'd say it's consistent with last year. If you think about last year, weather in the beginning of the year led to flattish through the first part of the year, then growth July through November was strong, and then you start to flatten out towards the end of the year. Same thing we'll see this year. I'd say it's second half-weighted, but very similar. I think in the context of does it impact our guide, the way I think about it is 300,000 barrels a day in the context of a 6.5 million barrel a day plus basin, that's really small on a relative basis. I think the range certainly encompasses the 200,000 to 300,000 barrels a day.
Jeremy Tonet: Neil This is Jeremy.
Jeremy Tonet: Firstly your cadence on the production growth I'd say, it's consistent with last year. If you think from last year, whether in the beginning of the year led to flattish through the first part of the year and growth July through November was strong and then you start to flatten out towards the end of the year same thing we will see this year. So I'd say, it's second half weighted but very similar.
Jeremy Tonet: I think in the context of does it impact our guide the way I'd think about it as 300000 barrels a day in the context of the six points 5 million barrel a day plus basin, that's really small on a relative basis. So I think the range certainly encompasses the two to 300000 barrels a day and we look at it as a.
Jeremy Goebel: We look at it as a build-up from all the producers we have and a top-down, and those both marry pretty well. I'd say that you're not going to see material variation based on that range, 200,000 to 300,000. It'll be within our guide.
Jeremy Tonet: Buildup from other producers, we have in a top down and those both married pretty well, so I'd say that.
Jeremy Tonet: Youre not going to see material value variation.
Sunil Sibal: Okay. Thanks for that. On the NGL business, seems like there have been some changes in the competitive landscape and are happening as we speak in the NGL business in Canada. How should we think about Plains' positioning in that area?
Jeremy Tonet: Based on that range two to 300000 it'll be within our guidance.
Speaker Change: Okay. Thanks for that and then on the NGL business.
<unk> like.
Speaker Change: There have been some changes in the competitive landscape.
Speaker Change: Bob.
Speaker Change: Happening as we speak in the NGL.
Speaker Change: In Canada.
Speaker Change: Should we think about the planes positioning.
Jeremy Goebel: Sunil, I'd say a lot of the positioning that you've seen in the Gulf Coast and even Kinetik's announcement today, that's not going to have a significant impact in the positioning from ours. We have very unique assets that can't be replicated, and we're very happy with our Canadian NGL footprint and our competitiveness.
Speaker Change: In that.
Speaker Change: In that area.
Speaker Change: So Neil I would say a lot of the positioning that <unk> seen in the Gulf coast and even the <unk> announcement today, that's not going to have a significant impact in the positioning from ours we have.
Speaker Change: Very unique assets that can't be replicated and we're very happy with our Canadian NGL footprint and our competitiveness.
Sunil Sibal: Okay. Thanks for that.
Jeremy Goebel: Thanks, Sunil.
Operator: One moment for our next question. Our next question will be coming from Jean Ann Salisbury of Bank of America. Your line is open.
Speaker Change: Okay. Thanks for that.
Sunil Sibal: Thanks Sunil.
Speaker Change: One moment for our next question.
Jean Ann Salisbury: Hi. Good morning. I have a question about the guidance for long haul, on slide 5. You show overall Permian growth of around 300,000, but then that Plains long haul will grow by 170, so kind of getting over half of that growth. It's a little more market share than I would've expected you to gain this year, given Gray Oak expansion and Seminole returning to crude service. I was wondering if you could give any more color on the assumptions there, about how much pull to Cushing there will be, or if it's driven by the bolt-ons or contract adds or just anything underlying that.
Speaker Change: Our next question will be coming from Jean Ann Salisbury of Bank of America. Your line is open.
Speaker Change: Hi, Good morning, I had a question about the guidance for the long haul.
Speaker Change: Slide five.
Speaker Change: So you show overall Permian growth to have around 300000.
Speaker Change: But then that same long haul will grow by 170, so kind of getting over half of that growth.
Speaker Change: It's a little more market share than I would've expected you to gain this year and getting great expansion and returning to crude service and I'm wondering if you could give any more color on the assumptions there.
Speaker Change: Got it.
Speaker Change: How much total to Cushing, there will be or if it's driven by the bolt ons are contract adds there just anything underlying that.
Jeremy Goebel: Sure. Wink to Webster was easy. That's just a step-up in contracts. Physical flow on the Cactus Pipelines due to some connecting carrier downtime led to some artificial downtime last year, but that will be full. Cactus I and Cactus II, where they had some physical lag last year, won't have that this year. The pull to Basin's pretty unique on our system. I think it's function of timing and some unique circumstances that happened last year.
Speaker Change: Sure. So <unk> easy that's a step up in contracts.
Speaker Change: Physical flow on the cactus pipelines due to some connecting carrier downtime led to some artificial downtime last year, but that will be full so cactus one in Texas to where they had some physical lag last year won't have that this year and then the pull to basins pretty unique on our system. So I think it function of timing in some unique start.
Jean Ann Salisbury: Okay. That makes sense. That's all for me. Thank you.
Speaker Change: From stances that happened last year.
Jeremy Goebel: Thanks, Jean Ann.
Operator: Yeah. One moment. Our next question will be coming from A.J. O'Donnell of TPH. Your line is open.
Speaker Change: Okay that makes sense and that's all for me. Thank you.
Speaker Change: Thanks, Jean Ann.
Speaker Change: Yes.
Speaker Change: Our next question.
A.J. O'Donnell: Morning, everyone. Maybe just going back to some of the comments on Basin that Willie talked about in his prepared remarks. Just given where Cushing inventories are and how low they are, curious if you guys To shift around earlier this year where you could see some of that growth be front-weighted versus back half-weighted, how you've indicated.
Speaker Change: Our next question will be coming from a J O'donnell of Tpa <unk>. Your line is open.
Speaker Change: Good morning, everyone.
Speaker Change: Maybe just going back to some of the comments on basin, where we've talked about in his prepared remarks.
Speaker Change: Kevin.
Speaker Change: Cushing inventories are and how how low they are curious with you guys.
Speaker Change: Two shipped around earlier this year.
Speaker Change: You could see some of that growth be front weighted versus back half weighted how you how have you been indicated.
Jeremy Goebel: Sure. With respect to Basin, remember it's a refinery pull pipeline, and so you have peak maintenance season right now. Typical for Basin is you'll see lower Q1 volumes unless there's an upset, and then you'll see higher through the driving season. I think you'll see more full artificial things that could impact that. Tariffs could certainly impact the pull to domestic refiners to substitute for Canadian barrels. I would say by and large, volume growth, once the Gulf Coast gets filled, you're going to see more push at Basin just from a pricing standpoint. Basin will typically follow refining utilization, so think of it that way.
Speaker Change: Sure with respect to basin remember its refinery pull pipeline and so you have peak maintenance season right now.
Speaker Change: Typical for base and as Youll see lower first quarter volumes unless theres, an upset and then youll see higher through the driving seat. So I think youll see more full artificial things that could impact that tariffs could certainly impact the poll.
Speaker Change: Domestic refiners as substitute for Canadian barrels, but I would say by and large volume growth once the Gulf coast gets filled youre going to see more pushup basin, just from a pricing standpoint, but.
Speaker Change: Baked in it will typically follow refining utilization, so think of it that way.
A.J. O'Donnell: Okay. Just 1 more from me, on the NGL segment. Looks like hedges kind of improved. They stepped up a little bit from 60% to 70% and are at $0.70 a gallon. I'm just curious about if you could talk where you're seeing current rates in the market and maybe your ability to hedge the exposed volumes at higher rates.
Speaker Change: Okay.
Speaker Change: And then just one more for me.
Speaker Change: On the NGL segment.
Speaker Change: It looks like its hedges kind of improve they stepped up a little bit from 60% to 70% and are at 70 cents a gallon I'm just curious.
Speaker Change: If you could talk where youre seeing current rates in the market and maybe your ability to hedge.
Jeremy Goebel: Sure. That's certainly the reason why we typically hedge more in the front than the back, because you've been in really steep backwardation. 2026 would be in the low to mid-$60s. Prompt would be closer to $0.80. For us, that's why you've seen more hedging in the front than the back, and this year is no different than we've explained the last couple of years.
Speaker Change: Exposed volumes at higher rates.
Speaker Change: Sure Thats certainly the reason why we typically hedge some more in the front and the back because you've been in a really steep backwardation. So 2026 would be in the low to mid sixties prompt would be closer to 80.
Speaker Change: And so for US that's why you've seen more hedging in the front and the back of this year is no different than what we've explained in the last couple of years.
A.J. O'Donnell: Okay. That's all for me. Thank you, guys.
Jeremy Goebel: Thanks, A.J.
Operator: Our next question will be coming from Neal Dingmann of Truist Securities. Your line is open, Neal.
Speaker Change: Okay. That's all for me. Thank you guys.
Speaker Change: Thanks, a J.
Speaker Change: And our next question will be coming from Neal Dingmann of true Securities. Your line is open Neal.
Neal Dingmann: Morning, guys. Thanks for the time. My first question, just you've mentioned this already, Willie, in Ironwood. You all have talked about some of the potential Eastern Eagle Ford opportunities around this, I'm just wondering what would the timing be on some of these potential opportunities? Is this something relatively near term, or are you thinking more next year?
Speaker Change: Morning, guys. Thanks for the time My first question just you have mentioned this already willing to ironwood.
Speaker Change: You all talked about some of the potential eastern Eagle Ford opportunities around this I'm just wondering what what I mean.
Speaker Change: What would the timing be on some of these potential opportunities is something relatively near term or are you thinking more next year.
Jeremy Goebel: The way I look at it is we've just closed 31 January. Thrilled to have it. We're canvassing all the customers and looking at opportunities on the integration. I think it'd be more of next year. The multiples the teams talked about and returns have been more predicated on what the current cash flows are, not what we can do with the asset. We're excited about the opportunity set.
Speaker Change: The way I look at it is we've just closed January 30, <unk> thrilled to have it.
Speaker Change: Canvassing, all the customers and looking at opportunities on the integration. So I think it would be more of next year. So the multiples. The team has talked about it and returns have been more predicated on what the current cash flows are not what we can do with the asset. So we're excited about the opportunity set.
Neal Dingmann: That makes sense. Just a second quick one on capital allocation. I am just wondering, beyond your targeted sustainable distribution growth and you talked about the bolt-on potential, where would opportunistic buybacks fit into this? Again, I think your shares seem to be a little discounted versus some of the peers. I wondered how this would fit in.
Speaker Change: That makes sense and then just a second quick one on capital allocation I'm just wondering.
Speaker Change: Beyond your targeted sustainable distribution growth and you talked about the bolt on potential.
Speaker Change: Wood opportunistic buybacks fit into this I mean again I think your stock's still seems sure Tim see little discounted versus some of the Peter So I'm wondering how this would fit in.
Al Swanson: This is Al. We've had really no change in our view with regard to that. Any buybacks would be opportunistic, and really kind of think of market dislocation and with the trading of our stock, we would need to see a material kind of change in that valuation. Our preference is to continue to return cash to shareholders or unit holders through distributions, like you've seen with this $0.25 increase for 2025.
Speaker Change: This is al.
Speaker Change: Really no change in our view with regard to that any buybacks would be opportunistic.
Speaker Change: And really kind of think of market dislocation and with the trading of our stock we would need to see it.
Speaker Change: A material kind of change in that valuation.
Speaker Change: Our preference is to continue to return cash to shareholders or unitholders through through distributions like you've seen with this 25 increase for 2025.
Neal Dingmann: Got it. Thanks, Al.
Operator: One moment for our next question. Our next question will be coming from John Mackay of Goldman Sachs & Co. Your line is open.
Speaker Change: Got it thanks al.
Speaker Change: One moment for our next question.
John Mackay: Hey, guys. Good morning. I know we've kind of picked this to death a little bit, but I want to ask one more just on the Permian guide. You're kind of framing Permian as 55% of crude EBITDA this year. We obviously have the Cactus step down later in the year. I was just wondering if you could kind of pick apart the implied Permian EBITDA for the year, balancing what's coming off for Cactus I versus what you see kind of underlying EBITDA growth is offsetting that.
Speaker Change: Our next question will be coming from John Mackay of Goldman Sachs <unk> Company. Your line is open.
Speaker Change: Hey, guys good morning.
Speaker Change: I know, we've kind of picked us up a little bit, but I wanted to ask one more just on the Permian Guide.
Speaker Change: You are kind of framing Permian is 55% of accrued EBITDA this year.
Speaker Change: Obviously with the cactus step down later in the year I was just wondering if you could pick apart the implied Permian EBITDA for the year balancing what's coming off for cactus, one versus what you see kind of underlying EBITDA growth is offsetting that.
Jeremy Goebel: Not sure I understand the question. Are you asking for a specific Permian EBITDA guide?
Jean Ann Salisbury: I guess if we're trying to isolate the Cactus impact, just what you're looking at for overall Permian kind of EBITDA growth year over year relative to that volume guide?
Speaker Change: And that sure I understand the question are you asking for a specific Permian EBITDA guide.
Speaker Change: I guess, if we're trying to isolate the cactus impact just what youre looking at for overall Permian kind of EBITDA growth year over year relative to that volume guide the way to think about that.
Jeremy Goebel: The way to think about that is, Tariff volumes and physical volumes can be different. A lot of cases we were paid for volumes that didn't move. For Cactus II, some of that will be incremental just as the pipe fills. Cactus I will largely just be a step up in rate for some of the spots. I don't think we're giving a specific guide for that piece.
Tariff volumes in physical volumes can be different and so a lot of cases, we were paid for volumes that didn't move into for cactus to some of that will be incremental just as the pipe fills cactus one will largely just be a step up in rate for some of the spot I don't think we're giving a specific guide for that please.
Willie Chiang: Our slide-
Willie Chiang: All right. Fair enough. Okay.
Willie Chiang: Kind of gives you a little bit. The slide 11 in the deck gives you a little bit of kind of color behind it as far as the Cactus impact and some of the growth. It doesn't split it out exactly. I'd take a look at that.
Speaker Change: Alright fair enough and then okay and it gives you a little bit.
Speaker Change: 11 in the deck gives you a little bit of color behind it.
Speaker Change: Great.
Speaker Change: The cactus impact.
John Mackay: All right. That's fair. Just in the context of your view of kind of capacity out of the basin getting tighter next year, this goes back to, I think, Spiro's question, but when would you guys expect to be able to come out with something on that recontracting tailwind? Is that a kind of this summer conversation? Do you need to get into next year? Just trying to think of when we could get an update there. Thanks.
Speaker Change: Some of the growth that it doesn't it doesn't split it out exactly.
Speaker Change: Look at that.
Speaker Change: Alright, that's fair and then just in the context of your view of kind of.
Speaker Change: Capacity out of the basin getting tighter next year.
Speaker Change: And this goes back to I think spiros question, but when would you guys expect to be able to come out with.
Speaker Change: Something.
Speaker Change: On that re contracting tailwind is that a kind of this summer conversation is it do you need to get into next year, just trying to think of when we could kind of update there. Thanks.
Jeremy Goebel: I think it's just going to be gradual over time. This is also part of the continuous improvement mindset that Willie outlined. This is something we don't have to rush on. Current differentials wouldn't support it. We would sign shorter-term contracts. We'll let you know if there's something to talk about. Otherwise, we'll continue to optimize the space. Just because it's not contracted doesn't mean we're not filling it or finding ways to do shorter-term deals and generate revenue from it. I'd look at it as we are absolutely trying to generate as much margin and revenue as we can, and we'll optimize the value of that space. I wouldn't expect any grand unveil of recontracting for that asset.
Speaker Change: I think it's just going to be gradual over time. This is also part of the continuous improvement mindset that Willie outlined this is something we don't have to rush on current differentials wouldn't support it. So we've been signing shorter term contracts. So.
Speaker Change: We'll let you know if there's something to talk about otherwise we will continue to optimize the space just because it's not contracted doesn't mean, we're not feeling it.
Speaker Change: Finding ways to do shorter term deals and generate revenue from it. So I'd look at it is we are absolutely trying to generate as much margin and revenue as we can and we will optimize the value of that space, but I wouldn't expect any grand unveil of re contracting for that asset and John This is Willie the way I think about it from a macro standpoint.
Willie Chiang: John, this is Willie. The way I think about it from a macro standpoint, you've got the capacity and you've got economic capacity. It's going to be hard to build a new long-haul pipeline to the Gulf Coast. If you think about the commercial commitments it takes, the permitting/supply chain issues. I think our view is, and you have to balance it with what you think ultimately Permian growth is going to be. My guess is we're going to get to this point where it is going to get tighter capacity, and we're probably going to live in that space for a while. Whether or not a new long-haul line gets built, it's really going to be dependent upon kind of a broader view of can the Permian go the next step.
Speaker Change: You've got the capacity and you've got economic capacity.
Speaker Change: It's going to be hard to build a new long haul pipelines to the Gulf Coast and if you think about the commercial commitments that takes the permitting slash supply chain issues. So I think our view is.
Speaker Change: And then you have to balance it with what you think ultimately Permian growth is going to be so my guess is we're going to get to this point, where it is going to get tighter capacity and we're probably going to live in that space for a while.
Speaker Change: And whether or not a new long haul line gets built it's really going to be dependent upon.
Willie Chiang: I think we're going to be in a pretty good place the next number of years. We certainly have struggled in the overcapacity years in the past number of years. I think we're in that whole different sector of time here as we get closer to the pull state.
Speaker Change: Kind of a broader view of the Permian go. The next step so I think we're going to be in a pretty good place. The next number of years, we certainly have struggled and the overcapacity years in the past number of years. So I think we are in that whole different segment.
John Mackay: All right. That's great. Appreciate the thought. Thank you, guys.
Speaker Change: Sector of time here as we as we get closer to the full state.
Willie Chiang: Thank you, John.
Operator: Thank you. Our next question will be coming from Theresa Chen of Barclays. Your line is open, Theresa.
Speaker Change: Alright, Thats great I appreciate the thoughts thank you guys.
Speaker Change: Thank you John.
Speaker Change: Thank you and our next question will be coming from Theresa Chen of.
Theresa Chen: Would you mind reminding us what your PLA volumetric exposure is at this point, just as we try to frame up the sensitivity to the $75 WTI assumption within your 2025 guidance?
Speaker Change: Barclays. Your line is open Teresa.
Speaker Change: What's your mind reminding us what Youre PLE volumetric exposure is at this point just as we try to frame up the sensitivity to the 75 dollar to meti assumption within your 2025 guidance, Hey, Theresa its Blake the last update we have given is 4 million barrels a year so call. It a $10 move equates to roughly $40 million of EBITDA.
Blake Fernandez: Hey, Theresa, it's Blake Fernandez. The last update we've given is 4 million barrels a year. Call it a $10 move equates to roughly $40 million of EBITDA.
Theresa Chen: Thank you.
Operator: I would now like to turn the conference back to Willie Chiang for closing remarks.
Thank you.
Willie Chiang: Well, listen, thanks all of you for dialing in and for your continued interest in Plains. We'll look forward to seeing you soon as we get out on the road. Have a safe weekend.
Speaker Change: And I would now like to turn the conference back to Willie Chiang for closing remarks.
Speaker Change: Well listen thanks to all of you for dialing in and for your continued interest in plains.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Good day, and thank you for standing by. Welcome to the PAA and PAGP Q4 2024 Earnings Call. 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Blake Fernandez. Please go ahead.
Speaker Change: Forward to senior as soon as we get out on the road.
Have a safe weekend.
Speaker Change: And this concludes today's conference call. Thank you for participating you may now disconnect.
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Speaker Change: Good day, and thank you for standing by welcome to the P. A a N P. E. G. P fourth quarter 2024 earnings call. 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 this session you will need to press star one on your telephone you will then hear an audit.
Speaker Change: Made it message advising me your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference call is being recorded I would now like to hand, the conference over to your speaker today Blake Fernandez. Please go ahead.
Blake Fernandez: Thank you, Tanya. Good morning, and welcome to Plains All American Q4 2024 Earnings Call. Today's slide presentation is posted on the investor relations website under the News & Events section at ir.plains.com. An audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide 2. An overview of 2024 results and recent announcements are highlighted on slide 3. A condensed consolidating balance sheet for PAGP and other reference materials are in the appendix. Today's call will be hosted by Willie Chiang, Chairman and CEO, and Al Swanson, Executive Vice President and CFO, along with other members of our management team. With that, I'll turn the call over to Willie.
Speaker Change: Thank you Tania and good morning, and welcome to Plains, All American fourth quarter 24 earnings call.
Speaker Change: Today's slide presentation is posted on the Investor Relations website under the news and events section at IR Dot claims dot com.
Speaker Change: An audio replay will also be available following today's call important disclosures regarding forward looking statements and non-GAAP financial measures are provided on slide two.
Speaker Change: Overview of 24 results in recent announcements are highlighted on slide three our condensed consolidated balance sheet for PAGP and other reference materials are in the appendix.
Speaker Change: Today's call will be hosted by Willie Chiang Chairman and CEO and Al Swanson Executive Vice President and CFO, along with other members of our management team with that I will turn the call over to Willie.
Willie Chiang: Thank you, Blake. Good morning, everyone, thank you for joining us. Let me start with a few comments about our results and our outlook on 2025, I'll provide an update on our recent announcements. Let's start with the results. We just demonstrated another strong quarter of execution. We exceeded our expectations for Q4 and for the full year, reporting adjusted EBITDA attributable to Plains of $729 million and $2.78 billion respectively, with full year results just above the high end of our guidance range exceeding our initial 2024 guidance by approximately $105 million or 4%. Looking to 2025, as highlighted on slide 4, we've provided adjusted EBITDA guidance of $2.8 billion to $2.95 billion or approximately 3% growth year over year at the midpoint of our guidance range.
Speaker Change: Thank you Blake good morning, everyone and thank you for joining US let me start with a few comments about our results and our outlook on 2025, and then I'll provide an update on our recent announcements let's start with the results. We just demonstrated another strong quarter of execution, we exceeded our expectations for the fourth quarter and for the full year reporting.
Speaker Change: Adjusted EBITDA attributable to <unk> of $729 million and $2 78 billion, respectively with full year results just above the high end of our guidance range and exceeding our initial 2024 guidance by approximately $105 million or 4% looking.
Speaker Change: Look into 2025% and as highlighted on slide four we provided adjusted EBITDA guidance of $2 eight $2 95 billion approximately 3% growth year over year at the midpoint of our guidance range.
Willie Chiang: As shown on slide 5, we expect Permian crude production to grow 200,000 to 300,000 barrels a day year-end 2024 to year-end 2025, with overall basin volumes growing to approximately 6.7 million barrels a day by the end of 2025. We believe this sets up for a very constructive long-haul market over the next several years as volumes grow towards our full utilization for efficient operating capacity. In regard to our Permian long-haul assets for 2025, we expect continued high utilization on our Corpus Christi bound assets, increased volumes on Basin Pipeline, and a modest MBC increase on Wink to Webster. Our Permian gathering JV continues to benefit from the embedded operational synergies and consistent producer activity on our over 4.7 million dedicated acres.
Speaker Change: On slide five we expect Permian crude production to grow 2% to 300000 barrels a day year end 2040 year end 'twenty fine with overall basin volumes growing to approximately $6 7 million barrels a day by the end of 2025. We believe this sets up for a very constructive long haul market over the next several years as volumes grow towards our full year.
Speaker Change: Utilization sufficient operating capacity.
Speaker Change: In regard to our Permian long haul assets for 2025, we expect continued high utilization on our Corpus Christi bound assets increased volumes on based on pipeline and a modest NBC increased on wink to Webster, our Permian gathering JV continues to benefit from the embedded operational synergies and consistent producer.
Willie Chiang: Our outside Permian business tends to get less attention externally, but it continues to perform well and generate significant excess cash flow for Plains. We have selectively acquired complementary assets along this footprint over the past couple of years, including the recently acquired Midway Pipeline and Ironwood Gathering System, and we continue to explore and develop additional bolt-on opportunities. Before turning the call over to Al for more detail on our guidance and results, I want to provide an update on our recent announcements. Turning to slide 6, we've completed the acquisition of Ironwood Midstream Energy on 31 January, which extends and expands our integrated asset base in the Eagle Ford. As seen on slide 7, and as previously announced, we acquired the remaining 50% interest in Midway Pipeline, and a subsidiary of our Permian joint venture acquired the Medallion Delaware Basin CRU gathering business.
Speaker Change: <unk> on our over $4 7 million dedicated acres.
Speaker Change: Our outside Permian business tends to get less attention externally, but it continues to perform well and generate significant excess cash flow for claims.
Speaker Change: We are selectively acquired complementary assets along the footprint over the past couple of years, including the recently acquired midway pipeline and Ironwood gathering system, and we continue to explore and develop additional bolt on opportunities.
Speaker Change: Before turning the call over to al for more detail on our guidance and results I want to provide an update on our recent announcements turning to slide six we've completed the acquisition of Ironwood Midstream energy on January 31.
Speaker Change: Which extends and expands our integrated asset base in the Eagle Ford.
Speaker Change: As seen on slide seven and as previously announced we acquired the remaining 50% interest in midway pipeline.
Speaker Change: And a subsidiary of our Permian joint venture acquired the medallion, Delaware Basin crude gathering set gathering business.
Willie Chiang: These transactions exemplify Plains' efficient growth strategy, which is focused on expanding our integrated asset base, streamlining operations, all while generating attractive returns for unitholders. On 31 January, we closed the purchase of approximately 12.7 million units, or 18% of our outstanding Series A preferred units at par value of $26.25, which is reflective of our continued effort to not only optimize our asset base, but also our capital structure. We accelerated the return of capital framework and announced a 20% increase in the quarterly distribution payable on 14 February for both PAA common units and PAGP Class A shares. On an annualized basis, the distribution represents a $0.25 per unit increase from the distribution we paid in November 2024, bringing the annual distribution to $1.52 per unit, representing a yield of approximately 7.5% based on the current equity price for PAA.
Speaker Change: These transactions exemplify planes efficient growth strategy, which is focused on expanding our integrated asset base streamlining operations, all while generating attractive returns for unitholders.
Speaker Change: Additionally on January 31, we closed the purchase of approximately $12 7 million units or 18% of our outstanding series a preferred units at par value of $26 25, which is reflective of our continued effort to not only optimize our asset base, but also our capital structure Lastly.
Speaker Change: Lastly, we accelerated the return on capital framework and announced a 20% increase in the quarterly distribution payable on February 14th for both PAA common units and PAGP class a shares.
Speaker Change: Annualized basis of distribution represents a 25 cent per unit increase in the distribution. We paid in November 2020 for bringing the annual distributions to $1 52 per unit, representing a yield of approximately seven 5% based on the current equity price for PAA with that I'll turn the call over to al. Thanks, Lilly we rip.
Willie Chiang: With that, I'll turn the call over to Al.
Al Swanson: Thanks, Willie. We reported Q4 adjusted EBITDA of $729 million, which includes crude oil segment benefits from higher volumes and pipeline tariff escalation. Our NGL segment benefited from higher than expected border flows, leading to increased C3+ spec product sales. Slides 8 and 9 in today's presentation contain segment EBITDA walks, which provide details on our Q4 performance. All in all, we executed well in 2024 and are well-positioned as we enter 2025. A summary of 2025 guidance and key assumptions are on slide 10. Looking at 2025 guidance compared to 2024 results, as illustrated by the EBITDA walk on slide 11, we expect adjusted EBITDA of $2.8 to $2.95 billion, with year-over-year growth in our crude oil segment and slightly lower NGL segment contributions. Growth in our crude oil segment is primarily driven by contributions from bolt-on acquisitions, volume growth, and pipeline tariff escalation.
Speaker Change: For the fourth quarter, adjusted EBITDA of $729 million.
Speaker Change: Which includes crude oil segment benefits from higher volumes and pipeline tariff escalation, our NGL segment benefited from higher than expected border flows leading to increased fee.
Speaker Change: <unk> product sales.
Speaker Change: Slides eight and nine in today's presentation contains segment EBITDA walks, which provide details on our fourth quarter performance. All in all we executed well in 2024 and are well positioned as we enter 2025.
Speaker Change: A summary of 2025 guidance and key assumptions are on slide 10, looking at 2025 guidance compared to 2024 result, and as illustrated by the EBITDA walk on Slide 11, we expect adjusted EBITDA of $2 eight to $2 $95 billion.
Speaker Change: With year over year growth in our crude oil segment and slightly lower NGL segment contributions.
Speaker Change: Growth in our crude oil segment is primarily driven by contributions from bolt on acquisitions volume growth and pipeline tariff escalation, partially offsetting these tailwind on the previously discussed reset of certain long haul contract tariff.
Al Swanson: Partially offsetting these tailwinds on the previously discussed reset of certain long-haul contract tariffs that step down in H2 2025. While our NGL segment adjusted EBITDA is expected to be slightly lower year over year, the business is shifting to approximately 45% fee-based in 2025. I would note that our C3+ spec product sales volumes are approximately 70% hedged for the year in the low $0.70 per gallon level. We remain focused on making disciplined capital investments, and expect to invest approximately $400 million of growth capital and approximately $240 million of maintenance capital in 2025, net to PAA. This includes growth capital for the POP JV well connections and intrabasin improvements, integration of our recently completed acquisitions, and capital related to our Fort Saskatchewan debottleneck project.
Speaker Change: <unk> down in the second half of 2025.
Speaker Change: While our NGL segment adjusted EBITDA is expected to be slightly lower year over year. The business is shifting to approximately 45% fee based in 2025 I would note that our <unk> III spec product sales volumes are approximately 70% hedged for the year in the low 70 cents per gallon level.
Speaker Change: We remain focused on making.
Speaker Change: Disciplined capital investments and expect to invest approximately $400 million of growth capital and approximately $240 million of maintenance capital in 2025 net to PAA. This includes growth capital for the <unk> JV, well connections and intra basin improvements integration of our recently completed an.
Al Swanson: As illustrated on slide 12, in addition to capital discipline, we remain committed to significant returns of capital and maintaining financial flexibility. For 2025, we expect to generate approximately $1.15 billion of adjusted free cash flow, excluding changes in assets and liabilities, which is reduced by $580 million for the previously announced bolt-on transactions that closed in January. Regarding our balance sheet, we recently raised $1 billion of senior unsecured notes at a rate of 5.95%, maturing in 2035. Proceeds were used to fund the recently announced transactions. Regarding our senior note maturity profile, we have $1 billion maturing in October 2025, which we would expect to refinance all or a portion of during the year. Before I turn the call back to Willie, I wanted to provide detail on two charges that impacted our Q4 GAAP results.
Speaker Change: Acquisitions and capital related to our Fort Saskatchewan Debottleneck projects.
Speaker Change: Illustrated on Slide 12. In addition to capital discipline, we remain committed to significant returns of capital and maintaining financial flexibility for 2025, we expect to generate approximately one $1 $5 billion of adjusted free cash flow, excluding changes in assets and liabilities, which is.
Speaker Change: The reduced by $580 million for the previously announced bolt on transactions that closed in January <unk>.
Speaker Change: Regarding our balance sheet, we raised.
Speaker Change: Recently raised $1 billion of senior unsecured notes at a rate of 595% maturing in 2035 proceeds were used to fund the recently announced transactions regarding our senior note maturity profile, we have $1 billion maturing in October 2025, which we would expect to refinance all or a portion.
During the year.
Speaker Change: Before I turn the call back to Willie I wanted to provide detail on two charges that impacted our fourth quarter GAAP results. Our 2024 results include a $140 million noncash.
Al Swanson: Our 2024 results include a $140 million non-cash impairment related to 2 US NGL terminal assets. These are excluded from our adjusted results. Separately, regarding our claim for reimbursement from insurance carriers of $225 million that arose out of a 2022 class action settlement relating to our 2015 Line 901 incident, an arbitration panel ruled that we are not entitled to reimbursement of our $175 million claim against several of the insurers. With respect to our remaining $50 million claim against different insurance carriers, we now regard collection of those claims as being less than probable. GAAP therefore requires that we write off the entire $225 million receivable and recognize any future collections as and if they are received. While disappointing, we still expect to operate at or below the low end of our leverage target ratio of 3.25 to 3.75 times in 2025.
Speaker Change: Noncash impairment related to two U S NGL terminal assets.
Speaker Change: These are excluded from our adjusted results separately.
Speaker Change: Separately regarding our claim for reimbursement from insurance carriers of $225 million that arose out of a 2022 class action settlement relating to our 2015 line 901 incident, an arbitration panel ruled that we are not entitled to reimbursement of our $175 million.
Speaker Change: Claim against several of the insurers.
Speaker Change: With respect to our remaining $15 million claim against different insurance carriers.
Speaker Change: We now regard collection of those claims as being less than probable and GAAP. Therefore requires that we write off the entire $225 million receivable and recognize any future collections.
Speaker Change: And if they are received while disappointing we still expect to operate at or below the low end of our leverage target ratio of 325 to 375 times in 2025 with that I'll turn the call back to William Thank you Al 2024 was another solid year of execution for <unk>.
Al Swanson: With that, I'll turn the call back to Willie.
Willie Chiang: Thank you, Al. 2024 was another solid year of execution for Plains. We remain confident as we enter 2025 with strong operational momentum and are well-positioned to play offense and continue to deliver value to our unitholders. As we show on slide 11, we've made meaningful progress on our financial objectives. We've positioned ourselves to be the investment of choice. In summary, first, our balance sheet strength provides significant financial capacity and flexibility. Secondly, we continue to demonstrate capital discipline and the ability to execute on our efficient growth initiatives, including growing the business both organically and inorganically through accretive and synergistic bolt-on acquisitions. Finally, as demonstrated with our recent distribution increase announcement, we remain very focused on increasing return of capital to our unitholders through our multi-year capital allocation framework while still preserving financial flexibility.
Speaker Change: <unk> and we remain confident as we enter 2025 with strong operational momentum and are well positioned to play offense and continue to deliver value to our unit holders.
Speaker Change: As we show on Slide 11, we've made meaningful progress on our financial objectives, and we positioned ourselves to be the investment of choice in summary.
Speaker Change: First our balance sheet strength provides significant financial capacity and flexibility secondly, we continue to demonstrate capital discipline and the ability to execute on our efficient growth initiatives, including growing the business, both organically and inorganically to accretive and synergistic bolt on acquisitions and finally as demonstrated with our <unk>.
Speaker Change: <unk> distribution increase announcement, we remained very focused on increasing return of capital to our unit holders through a multi year capital allocation framework, while still preserving financial flexibility.
Willie Chiang: From a broader perspective, we're optimistic about a new administration that values energy security and energy independence, one that also supports consumer choice and a level playing field for all sources of energy, including hydrocarbons. We believe the world will continue to need North American energy to maintain today's quality of living standards and to help elevate those that are less fortunate. Plains is well-positioned to support domestic energy growth with critical infrastructure to connect supply to demand centers across North America. With that, I'll turn the call back over to Blake, who will lead us into Q&A.
Speaker Change: From a broader perspective, we are optimistic about a new administration that values energy security and energy independence and one that also supports cost consumer choice and a level playing field for all sources of energy, including hydrocarbons. We believe the world will continue to need North American energy to maintain today's qual.
Speaker Change: The living standards and to help elevate those that are less fortunate plains is well positioned to support domestic energy growth with critical infrastructure to connect supply to demand centers across North America with desktop with that I'll turn the call back over to Blake, who will lead us into Q&A. Thanks, Willie as we enter the Q&A session.
Al Swanson: Thanks, Willie. As we enter the Q&A session, please limit yourself to one question and one follow-up. For those with additional questions, please feel free to return to the queue. This will allow us to address as many questions as practical in our available time this morning. The IR team will also be available to address any questions you may have. Tanya, I believe we're ready to go to Q&A session.
Speaker Change: Please limit yourself to one question and one follow up for those with additional questions. Please feel free to return to the queue. This will allow us to address as many questions as practical in our available time this morning.
Speaker Change: Our team will also be available to address any questions you may have.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question will come from Keith Stanley of Wolfe Research. Your line is open, Keith.
Tony: Tony I believe we're ready to go to Q&A session.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Tony: Yes.
Speaker Change: And our first question will come from Keith Stanley of Wolfe Research. Your line is open Keith.
Keith Stanley: Hi. Good morning. Thank you. To start, maybe can you give a little background on how some of these tuck-ins came together in January, if it was a long process or it came together pretty quickly? Then give a sense on if there's other meaningful opportunities you're working on currently or that you think are likely you'll be able to execute on this year?
Keith Stanley: Hi, good morning, Thank you.
Speaker Change: To start maybe.
Speaker Change: Can you give a little background on how some of these tuck ins came together in January if it was a long process or it came together pretty quickly and then give a sense on if theres other meaningful opportunities you are working on currently or that you think are likely youll be able to execute on this year.
Willie Chiang: Thanks, Keith. This is Willie. We entered 2025 with a lot of momentum, and obviously these deals don't happen overnight. Our organization, as you know, is constantly looking for opportunities, and we had a number of these that came together at the same time. It was a lot of work for our team. We were able to execute on all of it. As with these things, you can't pick the timing. We were pleased to be able to come in strong in the year. I think that just reinforces the comment that we've really moved from defense to offense. As far as more activity, we've been pretty public about that. We think there are more opportunities, and when you think about Plains' footprint and our integrated asset base, we're an infrastructure company.
Willie Chiang: Thanks, Hey, this is Willie.
Willie Chiang: We entered 2025 with a lot of momentum and obviously these deals don't happen overnight. So our organization as you know is constantly looking for opportunities and we had a number of these that that came together at the same time. It was a lot of work for our team and we're able to execute on all of it.
Willie Chiang: We can.
Willie Chiang: These things you can't pick the timing. So it was we were pleased to be able to come in strong in the year and I think that just reinforces the comment that we've really moved from defense to offense.
Willie Chiang: As far as more activity, we've been pretty public about that we think there are more opportunities and when you think about planes as footprint and our integrated asset base. We're an infrastructure company. So we connect supply to demand and in that process. We have a lot of people that we talk to and that opens up opportunity.
Willie Chiang: We connect supply to demand. In that process, we have a lot of people that we talk to. That opens up opportunities for us to create some of these options for opportunities to bolt on into our system, a lot of opportunities for synergies. As we go forward, we're nurturing a number of these. The one common thing is we're not growing for growth's sake. All of these have to go through the lens of capital discipline and strategic need, our ability to pull through the entire system getting more synergies. I think you can expect more of these to come. Again, it's going to be hard to predict timing. Most importantly, we're only going to bring the projects forward that give us a good return for the unitholders.
Willie Chiang: <unk> for us to create some of these options for opportunities to bolt on into our system a lot of opportunities for synergies and so as we go forward. We're nurturing a number of these.
Willie Chiang: The one common thing is we're not growing for growth's sake, and all of these have to go through.
Willie Chiang: Through the lens of capital discipline, and strategic need and their ability to pull through the entire system getting more synergies. So I think you can expect more of these to come but again, it's going to be hard to make timing and most importantly, we're only going to bring the project forward that that gives us a good return for the unit holders.
Keith Stanley: That's great. If I could shift gears for a second question. I wanted to ask on tariffs. We got the one-month pause here, but if we eventually do get tariffs on Canada, can you walk through some of the dynamics of how that could play out for both your NGL and crude business and potential impacts for Plains?
Speaker Change: That's great if I could shift gears for a second question.
Speaker Change: Wanted to ask on tariffs.
The one month pause here, but.
Speaker Change: If we eventually do get tariffs on Canada can you walk through some of the dynamics of how that could play out for both your NGL and crude business and potential impacts for planes.
Willie Chiang: Well, Keith, I think we only have 1 hour for this call, so maybe I'll try to keep it pretty general. There are, as everyone on the call knows, there's literally 1 million scenarios that could play out, and we've been working on this for a number of months, going through the scenario planning for what could come for us. The short answer is, as you look at our guidance range, we think that guidance range easily encompasses the probable outcomes of what the tariffs may be. As far as jumping to the conclusions of what they might be and when they may take effect, I think it's just best to know that we've been spending time on it, and we've tried to mitigate a lot of these proactively.
Speaker Change: Well I think we only have an hour for this call. So maybe I'll try to keep it pretty general.
Speaker Change: There are as everyone on the call know this there is literally a $1 million million scenario that could play out and we've been working on this for a number of months going through the scenario planning for what could come up for us.
Speaker Change: The short answer is as you look at our guidance range.
Speaker Change: That guidance range.
Speaker Change: Easily encompasses.
Speaker Change: And the probable probable outcomes of what the tariffs may be but as far as jumping to conclusions of what they might be and when they may take effect I think it's just best to know that we've been spending time on it and we've tried to mitigate a lot of these proactively and until the tariffs come out on what they might be or if they come out at all.
Willie Chiang: Until the tariffs come out on what they might be or if they come out at all, it's really a scenario planning exercise of what might happen in our system. You should know that we're ready for it, and again, if it comes, our impact is going to be within the guidance range.
Speaker Change: It's really a scenario planning exercise.
Speaker Change: Of what might happen in our in our system, but you should know that we're ready for it and again at the end if it comes our impact is going to be within the guidance range.
Jeremy Goebel: Great. Thank you.
Willie Chiang: Thank you, Keith.
Operator: One moment for our next question. Our next question will be coming from Manav Gupta of UBS. Your line is open.
Speaker Change: Great. Thank you. Thank you Keith.
Speaker Change: One moment for our next question.
Speaker Change: Our next question will be coming from Manav Gupta of UBS. Your line is open.
Manav Gupta: Good morning, team. When you provided the initial 2024 guide versus where it came, the number was much stronger. I'm just trying to understand, again, if the macro is supportive, when we look at 2025 guide, what could drive you towards the upper end of that guide and possibly over it as you did in 2024?
Speaker Change: Okay.
Manav Gupta: Good morning team.
Manav Gupta: When you provided the initial 2024 guide places that it became the number was much stronger and I am just trying to understand again, if the macro is supportive when we look at 2025 guide what could drive you towards the upper end of that guide and possibly all of it as you did in 2024.
Willie Chiang: Well, Manav, this is Willie. I'll start, and maybe others can jump in. When we look at 2025, I think it's important to throw the macro views that I talked about on the administration. Clearly, a big factor for us is volume growth and oil price. More activity would certainly drive higher volumes. We have a 200,000 to 300,000 barrel a day guidance for our growth in the Permian. As we go forward and you listen to some of the calls of some of the producers out there's a lot of activity that's going on. It's been consistent. It's also been more productive. They've been able to produce more volumes with lower rigs and completion activities. If I were to take the over or under on momentum, I would take the over into 2025.
Willie Chiang: Well Manav. This is Willie I'll start and maybe others can jump in.
Manav Gupta: When we look at 2025.
Manav Gupta: I think it's important to throw the macro views that I talked about on the administration clearly a big factor for us is volume growth and oil price.
Manav Gupta: So more activity with certainly drive.
Manav Gupta: Higher volumes and we have a 2% to 300000 barrel a day guidance for our growth in the Permian, but as we go forward and you listen to some of the calls of some of the producers out there theres a lot of activity that's going on it's been consistent. It's also been more productive than they have been able to produce more volumes with lower a lower rigs.
Manav Gupta: And completion rigs completion activities. So if I were to take the over or under on momentum I would take the over into 2025 and listen to some of the key factors IC.
Willie Chiang: Those are some of the key factors I see.
Manav Gupta: Perfect. My quick follow-up here is on Ironwood. You're highlighting the fact that it bolsters your western footprint, but it's also giving you a little bit of opportunity, extending the footprint into the east. Given your strategy of bolt-on, can we think that maybe you could do more deals to further enhance this east footprint now that you have got a hold through this Ironwood midstream bolt-on?
Manav Gupta: Perfect My quick follow up.
Speaker Change: I Didnt would you have highlighted the fact that it both Tokyo bedside footprint, but it's also giving an.
Speaker Change: Opportunity extending the footprint into the east so given your strategy of bolt on kidney.
Speaker Change: Think that maybe you could add to more would be to further enhance this footprint now that you have got a whole cordless ironwood midstream bolt on.
Jeremy Goebel: Manav, this is Jeremy. Thank you for the question. The easiest way to think about it is, we had a strong footprint in Eagle Ford, the western assets of Ironwood overlay our existing system and create a number of synergies between capital and extending our value chain there. On the east side, it is a new area for us. It was basically an asset base run by a private equity company. We're trying to integrate it into our broader footprint and run it like a full integrated midstream business like we do. Over time what happened, this year's guide is more about integrating, getting under our foot, and getting those investments in place to allow it to be integrated. I think you'd see, just like we've proven with other acquisitions, the ability to compress the multiple over time by driving additional businesses and opportunities through that footprint.
Speaker Change: Manav. This is Jeremy Thank you for the question.
Speaker Change: The easiest way to think about it is we had a strong foot print in Eagle Ford the western assets of Ironwood overlay, our existing system and create a number of synergies between capital and extending our value chain there.
Speaker Change: East side, it is a new area for us.
Speaker Change: It was basically an asset base run by a private equity company, we're trying to integrate it into our broader footprint and run it like a full integrated midstream business like we do so over time what happened. This year's guide is more about integrating getting under our footing in getting those investments in place to allow us to be integrated I think you'd see if like we've proven with other acquisition.
Speaker Change: The ability to compress the multiple over time by driving additional businesses and opportunities through that footprint.
Manav Gupta: Perfect. Congratulations. I think your strategy of going from defense to offense is really working. Thank you.
Willie Chiang: Thanks, Manav.
Manav Gupta: Okay. Congratulations I think its strategy of gleaned from defense to offense as daily looking thank you. Thanks Manav.
Operator: One moment for our next question. Our next question will be coming from Michael Blum of Wells Fargo. Your line is open, Michael.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Michael Blum of Wells Fargo. Your line is open Michael.
Michael Blum: Hey, good morning, everyone. I wanted to ask you. Previously, you guided a flat EBITDA from 2024 to 2026. You said growth projects will offset Cactus recontracting. Here you're up a little bit in 2025. Just wanted to get a sense of, do you now expect EBITDA is going to increase gradually from here on out, or are there other puts and takes that we should be considering over the next couple of years?
Michael Blum: Hey, good morning, everyone.
Michael Blum: So I wanted to ask you previously guided flat EBITDA from 2024 to 2026 of growth projects will offset cactus re contracting here youre up a little bit in 25. So just wanted to get a sense of do you now expect EBITDA is going to increase gradually from here on out or are there other puts and takes we should be.
Willie Chiang: Michael, Willie again here. Thanks for the question. I really want to get away from this 2024 to 2026 flat guidance. I'll give you context again on why we talked about it back then. We had long-term contracts that were rolling off. These were very good contracts that rolled off back to market rates, which we expected. The purpose of the guide at that point in time was taking a point-in-time outlook of the business as we had it. We wanted people to realize there was not a cliff that was coming. That's why we talked about the flat 2024 to 2026 on the crude segment. Now, clearly, as we build our business and continue to grow, our expectations would be that 2026 is going to be over 2024.
Michael Blum: Considering over the next couple of years.
Speaker Change: Michael Willie again here thanks for the question.
Speaker Change: I really want to get away from this 24 to 26 flat guidance I'll give you context again on why we talked about it back then we had long term contracts that were rolling off these were very good contracts that roll off back to market rates, which we expected.
Speaker Change: And the purpose of the guide at that point in time was taking a point in time outlook of the business that we had that we wanted people to realize there was not a club that was coming.
Speaker Change: And that's why we talked about the flat 24 to 26 on the crude sector on the crude segment now clearly as we build our business and continue to grow.
Willie Chiang: Just even with the deals we just announced, as far as this first tranche, as we think about playing offense, that obviously adds to the base business. Going into 2026, I would say at this point in time, 2026 is going to be higher than 2024. The next question you'll likely ask is what's the pace and trajectory of that growth? I would tell you we're going to continue to grow our base business. We've got a lot of integration and footprint to be able to capture synergies. We've got streamlining efforts that are ongoing with this whole efficient growth strategy that we've embarked upon. Any bolt-ons that we might be able to do beyond that would add to it.
Speaker Change: Our expectations would be that 26 is going to be over 24, and so with the just even with the deals we just announced as far as this first tranche as we think about playing offense.
Speaker Change: And that obviously adds to the to.
Speaker Change: So the base business, so going into 'twenty six I would say at this point in time 26 is going to be higher than 2020 for.
Speaker Change: The next question you will likely ask is what's the pace and trajectory of that growth.
Speaker Change: I'd tell you were going to continue to grow our base business.
Speaker Change: Got a lot of integration and footprint to be able to capture synergies. We've got streamlining efforts that are ongoing with us whole efficient growth strategy that we've embarked upon.
Willie Chiang: That's a little bit of lumpiness in growth, but clearly our plan and our mission is to increase enterprise value for the unitholders, and going forward, we're just going to continue to execute against this strategy.
Speaker Change: And any bolt ons that we might be able to do beyond that with just would add to it and so that's a little bit of lumpiness in growth, but clearly our plan and our mission is to increase enterprise value for the unit holders and going forward. We're just going to continue to execute against this strategy.
Michael Blum: Okay, great. Thanks for that, Willie. That's helpful. The other question I wanted to ask, in December, you talked about initiatives to streamline operations. You talked about it could lead to higher margins, expense savings. I'm wondering if you could just provide an update on that, any details, and whether any of that is baked into the guidance for 2025. Thanks.
Speaker Change: Okay, great. Thanks for that that's helpful.
Speaker Change: The other question I wanted to ask in December you talked about initiatives to streamline operations talked about it could lead to higher margins expense savings.
Speaker Change: If you could just provide an update on that any details and whether any of that is baked into the guidance for 25%.
Willie Chiang: Yeah, Michael. The way I would think about the cost and streamlining effort is it's a continuous process. This is not something we're going to come out and proclaim a program on how much cost we can cut out of the organization or how we can streamline our business. It's what we do.
Speaker Change: <unk>.
Michael Blum: Yes, Michael.
Michael: The way I would think about the cost argument cost streamlining effort. It's a continuous process. So this is not something we're going to come out and and proclaim that program on how much cost we can cut out of the organization. How we can streamline our business. It's what we do so there are some.
Willie Chiang: There are some efficiency streamlining numbers in our numbers this year. Most importantly, as we build our business with these synergies on some of the things that we bring into the system as far as bolt-ons, and we have an ERP project, enterprise kind of consolidating our financial programs, we think that's going to give us an opportunity to drive some more synergies and get some opportunities to further streamline. It's really something that's baked into what we do every day, and I think what you'll do is you'll see continuous progress as we go through the year and even into next year.
Michael: Efficiency is streamlining numbers in our in our numbers this year, but most importantly.
Michael: As we kind of build our business with the synergies on some of the things that we bring into the system as far as bolt ons and we have a ERP project enterprise risk.
Michael: Enterprise.
Michael: Consolidating our financial progress, we think thats going to give us an opportunity to drive some more synergies and operational synergies and get some opportunities to further streamline so its really something thats baked into what we do every day and I think what you'll do is you'll see continuous progress as we go through the year and even into next year.
Michael Blum: Thank you.
Willie Chiang: Yeah. Thanks, Michael.
Operator: Our next question will be coming from Jeremy Tonet of J.P. Morgan Securities LLC. Your line is open, Jeremy.
Michael: Thank you.
Michael: Thanks, Michael.
Speaker Change: And our next question will be coming from Jeremy Tonet Jpmorgan Securities LLC. Your line is open Jeremy.
Jeremy Tonet: Hi. Good morning.
Jeremy Goebel: Good morning, Jeremy.
Jeremy Tonet: Thanks for all the color today. Just wanted to expand a bit more on the M&A strategy. Clearly all these bolt-on plans can drive very nice synergies just by connecting existing systems. Just curious, I guess, as you think about an asset in the MidCon and maybe you can get a bunch of synergies, so that's kind of a one-time step up versus something in the other Permian, where maybe there's kind of more continuous organic growth opportunities and how that factors maybe into your process and also just the opportunities that are in front of you. Do you see more of one than the other?
Jeremy Tonet: Hi, good morning.
Michael: Good morning, Jeremy.
Michael: Thanks for all the color today, just wanted to expand a bit more on the M&A.
Michael: Got it.
Michael: And clearly all of these bolt on.
Michael: Right very nice synergies just like.
Michael: Yes.
Michael: But just curious I guess as you think about it.
Michael: And asset mid Con, maybe you can get a bunch of synergies with kind of a one time step up or something.
Michael: Near the Permian, where maybe there is like kind of more continuous organic growth opportunities.
Michael: Yes.
That factors into your process.
Jeremy Goebel: Jeremy, I'm not sure we heard all that, but the question was really how we think about bolt-ons and M&A across our footprint. Is that right?
Michael: Right.
Michael: More than one.
Jeremy Tonet: Jeremy I'm not sure we heard all of that but the question was really how we think about bolt ons and M&A across our footprint is that right. Yes, sorry about that just like in the mid con might be more mature onetime step up in synergies versus in the Permian, where there could be the synergies for connecting but also organic.
Jeremy Tonet: Yeah. Sorry about that. Just like in the MidCon might be more mature, one-time step up in synergies versus in the Permian where there could be the synergies for connecting, but also organic growth on top of it.
Jeremy Goebel: Sure. A couple examples from last year, the Stroud acquisition earlier in the year. That's creating a new platform and long-term contracted business. We're bringing wax in. It creates throughput and blending into our terminal system through Cushing. It extends customers' reach within our facilities and their contracts in adjacent facilities that has blending. That's a new platform and a step up. That has synergies to the asset itself, which you take an asset that has 0 EBITDA and turn it into something that's a long-term business, and then create stickiness to your terminal. You take the recent transaction with CVR, which was a win-win for them and us. We brought them in in 2017. They needed some financing for the projects that they're working on and the turnarounds.
Jeremy Tonet: Growth on top of it sure a couple of examples from last year. The Stroud acquisition earlier in the year, that's creating a new platform in long term contracted business, we're bringing wax in it creates throughput and blending into our terminal system through Cushing and external.
Jeremy Tonet: Customers reach within our facilities and their contracts and adjacent facilities that blending so that's a new platform and the step up and so that has synergy to the asset itself, which you take an asset that has zero EBITDA and turn it into something that's a long term business and then create stickiness to your terminal and you take.
Jeremy Tonet: The recent transaction with CVR, which was a win win for them and US we brought them in 2017, they needed some financing for the projects that they're working on and the turnarounds, we get very long dedications through our terminal and through the pipeline and significant commitments to that pipeline to allow us to have a very long term relationship with them.
Jeremy Goebel: We get very long dedications through our terminal and through the pipeline and significant commitments to that pipeline to allow us to have a very long-term relationship with them at mutually agreeable rates. Willie talked about it, that MidCon is a great long-term asset and our outside Permian assets for free cash flow generation, and this just ensures they'll be that way for decades.
Jeremy Tonet: <unk>.
Jeremy Tonet: At mutually variable rate so I think it's.
Willie Chiang: Willie talked about at that mid con as a great long term asset and our outside Permian assets for free cash flow generation and this shifts insurance there'll be that way for decades.
Willie Chiang: Jeremy, this is Willie. Just to add something onto Jeremy's comments. If you think about our system and you know well, it's very dynamic. It gives us a lot of opportunity to do different things. Earlier we had the question around what might happen around Canadian crude tariffs or, for example, crude tariffs. If you just look at our footprint, you could see if volumes didn't find their way to the US, which is not what our outlook is, but we do have a big system that can swing and bring volumes from the Permian ultimately into Cushing into the Mid-Continent north. You can see there's a broad system that's very flexible, that we think about lots of different option values, and it's good to have choices and options as we go forward.
Willie Chiang: Jeremy This is Willie just add something on to Jeremy's comments.
Willie Chiang: If you think about our system and you know well.
Willie Chiang: It is very dynamic it gives us a lot of opportunity to do different things and earlier, we had the question around what might happen around Canadian crude.
Willie Chiang: <unk> tariffs are for example, crude tariffs and if you just look at our footprint you can see if volumes didn't find their way to the U S, which is not what our outlook is.
Willie Chiang: We do have a big system that can swing and bring volumes from from the Permian ultimately into Cushing pushing into the mid continent. North. So you can see there is a broad system, that's very flexible that we think about.
Jeremy Tonet: Got it. Optionality. Makes sense. Maybe just taking a step back, if I could, if you could share your views, I guess, more on the macro side: crude oil prices, how you see unfolding, which basins you see growth in over time, I guess, just a longer-range look at the macro, how you guys feel about that.
Willie Chiang: Lots of different option values and it's good to have choices and options as we go forward.
Willie Chiang: Got it Optionality makes sense and maybe just taking it.
Willie Chiang: Step back if I could if we could if you could share your views I guess more on the macro side.
Willie Chiang: Crude oil prices, how you see unfolding and just kind of.
Willie Chiang: Which basins you see growth in over time, I guess, just a longer look at the macro how you guys feel about that sure if constructive.
Jeremy Goebel: Sure. It's constructive. You've heard a lot of our peers calls about low distillate inventories, globally lower crude inventories. You've got the supply and demand fundamentals which were in this neighborhood, but you've got a lot of policy that's driving crude prices right now. A lot of that could be more sanctions on Iran, more sanctions on Venezuela, tariffs. All of those things could lead to price increases, filling the SPR. There's a lot of things that are balancing, as the headlines are leading to driving price and people are a little bit confused as to which way it's going, but we think the backdrop is constructive from a physical standpoint, from a demand standpoint. Policy's only enhancing that. From a which basins are growing, there's pockets in the Rockies that are growing. There's Canada that's growing. The Permian's growing.
Willie Chiang: You've heard a lot of our peers calls about load distillate inventories.
Willie Chiang: Globally lower crude inventories.
Willie Chiang: <unk> got the supply and demand fundamentals, which were in this neighborhood, but you've done a lot of policy thats driving crude prices right now and a lot of that could be more sanctions on Iran. More sanctions on Venezuela.
Willie Chiang: All of those things could lead to price increases filling the SBR. So theres a lot of things that are balancing.
Willie Chiang: The headlines are leading to driving price and people are a little bit confused as to which way its going but we think the backdrop is constructive from a physical standpoint from a demand standpoint, and then policies only enhancing that.
Willie Chiang: And then from a which basins are growing there is pockets in the Rockies that are growing there is Canada. That's growing the Permian is growing and then we're even seeing new developments in the Eagle Ford area and the mid continent area that are drawing capital. So we see pockets of growth around the existing assets.
Jeremy Goebel: We're even seeing new developments in the Eagle Ford area and the Mid-Continent area that are drawing capital. We see pockets of growth around existing assets, and then we see more broad, longer term. We see Canada, the Rockies, and the Permian as growth by different areas. That's where you're seeing a lot of the investment from us as well.
Willie Chiang: And then we see more broad longer term, we see Canada the Rockies in the Permian.
Willie Chiang: Jeremy, Willie again. You know this again. If you think about our footprint, Jeremy outlined that we expect flat growth outside the basins of the Permian and in Canada. We're in great ZIP codes. The Permian is the growth engine for the US. One could argue it's probably broader for the world even. Western Canada, let's not forget that we've got a footprint there that's able to take.
Willie Chiang: Growth by different areas, and Thats, where youre seeing a lot of the investment from from us as well.
Willie Chiang: Willie again.
Jeremy Tonet: You noticed again, but if you think about our footprint and Jeremy outlined that we expect.
Jeremy Tonet: Flat growth in outside of the basin of the Permian and in Canada, but we're importing <unk> ZIP codes. The Permian is the growth engine for the U S.
Jeremy Tonet: One could argue it's probably broader for the world, even and then Western Canada, let's not forget that we've got a footprint there that's able to take additional ngls out of out of gas to produce ngl's that are needed. So two growth areas Western Canadian sedimentary basin in the Permian Basin.
Jeremy Goebel: Additional NGLs out of gas to produce NGLs that are needed. Two growth areas, Western Canadian Sedimentary Basin, and the Permian Basin. We're in both of those ZIP codes.
Jeremy Tonet: Got it. Makes sense. Thank you for that.
Jeremy Goebel: Thank you.
Jeremy Tonet: Both of those Zip codes.
Operator: One moment for our next question. Our next question will be coming from Brandon Bingham of Scotiabank. Your line is open, Brandon.
Jeremy Tonet: Sure.
Jeremy Tonet: Got it makes sense. Thank you for that.
Jeremy Tonet: Thank you.
Speaker Change: And one moment our next question.
Jeremy Tonet: Our next question will be coming from.
Brandon Bingham: Hi. Good morning. Thanks for taking the question. I was just wondering maybe if we could go back to the EBITDA guide. If you could just maybe talk about what the underlying till POP count looks like that's going into that guide, or customers generally increasing the well counts year-over-year decreasing? Is it flat? Just how does that compare versus where it came in for 2024? I know you said, and it's obvious guys are doing more with less now. I was just curious if the tone of those conversations with your customers is maybe incrementally more positive with the Trump administration now or Chris Wright getting in there as Secretary of Energy. Just what are some of the moving pieces there that are underpinning the EBITDA guide and the macro outlook?
Brandon Bingham: Brandon Bingham.
Brandon Bingham: <unk> Bank your line is open Brandon.
Brandon Bingham: Yes.
Brandon Bingham: Hi, good morning, Thanks for taking the question.
Brandon Bingham: I was just wondering maybe excuse me if we could.
Brandon Bingham: Kind of go back to the EBITDA Guide if you could just maybe talk about what the underlying till pop count looks like that's going into that guide or customers.
Brandon Bingham: Generally increasing the well counts year over year decreasing as it flat just how does how does that compare versus where it came in for 2024 I know you said.
Brandon Bingham: And it's obvious guys are doing more with less now, but I was just curious if the tone of those conversations with your customers maybe incrementally more positive with.
Speaker Change: Trump administration, now or Chris or I get in there as secretary of energy.
Jeremy Goebel: Hi, Brandon. I would say it's very consistent if you stick to the Permian Basin, where our largest lease gathering activity, and then the Eagle Ford work where we have the Ironwood. Very consistent from last year to this year. Consistent pace. There's not a bunch of chasing 1 and 2 well locations, which is very much more efficient for us and them. I'd say it's steady state to last year to this year. Very similar new connections, very similar behind pipe connections. Gives us additional confidence in the forecast that Willie outlined at the beginning of the call.
Speaker Change: What are kind of some of the moving pieces there that are underpinning the EBITDA guide in the macro outlook, Hi, Brandon I would say, it's very consistent if you stick to the Permian basin, where our largest lease gathering activity in Eagle Ford, where we have.
Speaker Change: The ironwood very consistent to left from last year to this year consistent pace there.
Speaker Change: They are not a bunch of chasing one and two well locations, which is very much more efficient for us and so I'd say, it's steady state until last year. This year very similar new connections very similar behind pipe connections.
Willie Chiang: It gives us additional confidence in the forecast that Willie outlined at the beginning of the call.
Brandon Bingham: Awesome. Great. Maybe if we could just turn to the CapEx guide for this year. Could you just help us understand some of the moving pieces embedded in the guide, if there's anything related to the deals from January that's in there for this year that might be even dropping lower next year? Was there any slippage from 2024 into this year? I know Q4 CapEx came in a little light versus our expectations. Just any detail you guys could provide would be helpful.
Willie Chiang: Awesome, Great and then maybe if we could just turn to the Capex guidance for this year could you just help us understand some of the moving pieces embedded in the guide if there is anything related to the deals from January that then there this year that might be even dropping lower next year because it was there any slippage from 2000 <unk>.
Speaker Change: For this year I know Q4, Capex came in a little light versus our expectations. Just any detail you guys could provide would be helpful.
Chris Chandler: Hey, Brandon, this is Chris Chandler. I'd be happy to answer your question. You actually hit on a number of our points. We do appreciate that. We were able to defer some capital out of 2024 into 2025. We always try to optimize our capital spend and not spend it before it's needed. That's contributing to a higher spend in 2025 than 2024. We also touched on we've grown our acreage dedication in the Permian much like Jeremy just answered. That's driving some additional investment which will drive additional volume, of course. As far as our larger projects in 2025, the two big ones outside the Permian are the Fort Sask expansion project. That's going to come online here in Q2 of 2025.
Speaker Change: Hey, Brandon This is Chris Chandler I'd be happy to answer your question you actually hit on a number of our point. So we do appreciate that we were able to defer some capital out of 24.
Speaker Change: In the 25, and we always try to optimize our capital spend and not spend it before it's needed. So that's contributing to a higher spend in 'twenty five and 24. We also touched on we've grown our acreage dedication in the Permian much like Jeremy just answered and that's driving some additional investment which will drive additional.
Speaker Change: Volume of course and then.
Speaker Change: As far as our larger projects in 'twenty five.
Speaker Change: The two big ones outside the Permian or the <unk> SaaS the expansion project.
Chris Chandler: We're making some investments in the MidCon as Jeremy just mentioned, to be able to offload crude from the Uinta Wax Basin. That's a nice new business platform for us and driving some of the CapEx spend as well. To summarize, we're still within our long term $300 to 400 million of investment capital net to Plains. We remain committed to capital discipline and are still within that range.
Speaker Change: That's good.
Speaker Change: Come online here in the second quarter of 2025, and then we're making some investments in the midcon as Jeremy just mentioned to be able to offload.
Speaker Change: Crude from the Uinta waxy basin.
Speaker Change: That's a nice new business platform for us in and driving some of the capex spend as well, but to summarize we're we're still within our long term $300 million to $400 million of investment capital net to <unk>.
Speaker Change: We remain committed to capital discipline and.
Jeremy Goebel: Brandon, all these projects go through our investment committee. We stress test all these on returns to make sure that we're only doing the ones that have the best benefit for us.
Speaker Change: And are still within that range.
Brandon Bingham: And Brandon all these projects go through our investment committee so we.
Brandon Bingham: Stress test all of these on returns to make sure that we're all in on the ones that have the best benefit for us.
Brandon Bingham: Awesome. Great to hear. Thanks.
Jeremy Goebel: Thank you.
Operator: One moment for our next question. Our next question will be coming from Spiro Dounis of Citi. Your line is open.
Brandon Bingham: Awesome great to hear thanks.
Brandon Bingham: Thank you.
Brandon Bingham: And one moment for our next question.
Spiro Dounis: Thanks, operator. Morning, team. Wanted to touch on the long haul open position first. Last time we chatted, you had a fairly open position heading into 2026. Just curious where that stands now, given the tightening egress you guys pointed out in the slides and maybe any plans to firm up that capacity?
Speaker Change: Our next question will be coming from Spiro <unk> of Citi. Your line is open.
Speaker Change: Thanks, operator, good morning team.
Speaker Change: To touch on the long haul open position first last time, we chatted you had a fairly open position heading into 2026, just curious where that stands now given the tightening egress you guys pointed out in the slides and maybe any plans to firm up that capacity.
Jeremy Goebel: Thanks, Spiro. This is Jeremy. I'd say it's very consistent. The long haul to Corpus is contracted. Our Houston positions are largely contracted with the exception of BridgeTex, but we make progress in continuing to extend those contracts or restructure those contracts. With respect to basin, we're seeing incremental demand, which we put into the guide. We'll stick to shorter term contracts until we see the tariffs to where we want them to be longer term and expect them to be as the basin continues to fill. I'd say it's fairly consistent, but it's definitely contracted.
Jeremy Tonet: Thanks Spiro. This is Jeremy I would say, it's very consistent long haul to corpus is contracted to our Houston positions are largely contracted with the exception of bridgetex, but we make progress in continuing to extend those contracts or restructure those contracts and then with respect to basin, we're seeing incremental demand, which we put into the guide.
Jeremy Tonet: We'll stick to shorter term contracts until we see the tariffs to where we want them to be longer term and expect them to be as the basin continues to fill so I'd say, it's fairly consistent but it's definitely constructed.
Spiro Dounis: Great to hear. Second one, just moving on to the distribution. You guys once again shows an accelerated growth level. Historically, you sort of talked about growth expectations being surpassed as the main driver on why to accelerate that growth a little bit each year. Going forward, it does sound like bolt-ons are going to be perhaps maybe a really meaningful driver of growth. Just sort of curious, like all else equal, is it fair to say that each bolt-on increases your ability to push that next distribution increase above your baseline amount?
Speaker Change: Great Alright, good to hear.
Jeremy Tonet: One is moving onto the distribution.
Jeremy Tonet: You guys. Once again chose an accelerated growth level, historically, you've sort of talked about growth expectations being surpassed as the main driver on why it accelerates that growth a little bit each year, but going forward. It does sound like bolt ons are going to be.
Jeremy Tonet: Perhaps maybe a really meaningful driver of growth and so sort of curious like all else equal is it fair to say that each bolt on increases your ability to push that next distribution increase above your baseline amount.
Jeremy Goebel: Conceptually, the answer is yes. Obviously, as you think about our business, we've got the base business growth and then we've got bolt-ons. We factor all of that as we go forward. We've been very pleased to be able to return more back to the unitholders. November 2022, we came out with this framework targeting the $0.15, and we've been able to do $0.20 increases in 2023 and 2024, and now the $0.25 increase in 2025. I think the framework works. When we do better, more money goes back to the unitholders. There's a lot of moving parts, but generally speaking, you're absolutely right. We have a little bit of coverage buffer over this period of time to allow us to continue to grow, even if the bolt-ons and growth may not have been there.
Jeremy Tonet: Conceptually the answer is yes, obviously as you think about our business. We've got the base business growth and then we've got bolt ons. So we factor all of that as we go forward.
Jeremy Tonet: And we've been very pleased to be able to return more back to the unit holders on November 22nd of November 'twenty. Two we came out with this framework targeting the 15 and we've been able to do 20 increases in 'twenty three 'twenty four and now the 25 cent increase in 25.
Jeremy Tonet: So I think the framework works and when we do better more money goes back to the unit holders, but theres a lot of moving parts, but generally speaking you're absolutely right, we have a little bit of coverage buffer.
Jeremy Goebel: As we go forward and shrink some of that buffer, it's going to be more dependent upon our base business and the timeliness of some of those bolt-ons.
Jeremy Tonet: Over this period of time to allow us to continue to grow.
Jeremy Tonet: Even if need to bolt ons and growth may not have been there, but as we go forward and shrink some of that buffer it's going to be more dependent upon our base business and the timeliness of some of those bolt ons.
Spiro Dounis: Great. I'll leave it there. Have a good weekend, guys.
Jeremy Goebel: Thanks very much.
Operator: Yep. One moment for our next question. Our next question will be coming from Sunil Sibal of Seaport Global. Your line is open.
Jeremy Tonet: Great I'll leave it there have a good weekend guys.
Jeremy Tonet: Very much yes.
Jeremy Tonet: Well My next question.
Speaker Change: Our next question will come in will be coming from Sunil Sibal of Seaport Global Your line is open.
Sunil Sibal: Yeah. Hi, good morning, everybody, and thanks for the clarity on the call. I just wanted to start with your volume guidance or expectations in Permian. How should we be thinking on cadence on those volumes in 2025? You guys mentioned the Permian overall volume growth of 200,000 to 300,000 barrels per day. How do we think of that growth versus your guide if the basin comes out to be towards the higher end of that range? Should we think of upside in terms of your volume numbers in Permian?
Sunil Sibal: Yes, hi, good morning, everybody and thanks for the clarity on the call. So I just wanted to start.
Sunil Sibal: With your volume guidance, our expectations and pardon me it how should we thinking on cadence on those volumes in 2025.
Sunil Sibal: And then.
Sunil Sibal: I know you guys mentioned the pardon me in overall volume growth of 200 to 300000 barrels per day.
Sunil Sibal: How do we think about growth.
Sunil Sibal: Your guide.
Sunil Sibal: If the <unk> comes out to be towards the higher ethane should we think of upside in terms of your volume numbers in Permian.
Jeremy Goebel: Sunil Sibal, this is Jeremy. First, your cadence on the production growth, I'd say it's consistent with last year. If you think about last year, weather in the beginning of the year led to flattish through the first part of the year, then growth July through November was strong, and then you start to flatten out towards the end of the year. Same thing we'll see this year. I'd say it's H2-weighted, but very similar. I think in the context of does it impact our guide, the way I think about it is 300,000 barrels in that day in the context of a 6.5 million barrel a day plus basin, that's really small on a relative basis. I think the range certainly encompasses the 200,000 to 300,000 barrels a day.
Jeremy Tonet: Sunil this is Jeremy.
Jeremy Tonet: First year cadence on the production growth I'd say, it's consistent with last year. If you think from last year, whether in the beginning of the year led to flattish through the first part of the year and growth July through November was strong and then you start to flatten out towards the end of the year same thing we will see this year. So I'd say, it's second half weighted but very similar.
Jeremy Tonet: I think in the context of does it impact our guide the way I'd think about it as 300000 barrels in that data in the context of the six points 5 million barrel a day plus basin, it's really small on a relative basis. So I think the range certainly encompasses the two to 300000 barrels a day and we look at it as a.
Jeremy Goebel: We look at it as a buildup from all the producers we have and a top-down, and those both marry pretty well. I'd say that you're not going to see material variation based on that range, 2 to 300,000. It'll be within our guide.
Jeremy Tonet: Buildup from all the producers we have in a top down and those both married pretty well, so I'd say that.
Jeremy Tonet: Youre not going to see material value variation.
Sunil Sibal: Okay. Thanks for that. On the NGL business, seems like there have been some changes in the competitive landscape and are happening as we speak in the NGL business in Canada. How should we think about Plains' positioning in that area?
Jeremy Tonet: Based on that range two to 300000 it'll be within our guidance.
Speaker Change: Okay. Thanks for that and then on the NGL business.
Jeremy Tonet: <unk> like.
Jeremy Tonet: There have been some changes in the competitive landscape.
Jeremy Tonet: Well.
Happening as we speak in the NGL Biz.
Jeremy Tonet: Business in Canada.
Jeremy Goebel: Sunil, I'd say a lot of the positioning that you've seen in the Gulf Coast, and even Kinetik's announcement today, that's not going to have a significant impact in the positioning from ours. We have very unique assets that can't be replicated, and we're very happy with our Canadian NGL footprint and our competitiveness.
Jeremy Tonet: Should we think about <unk> positioning.
Jeremy Tonet: And that and that.
That area.
So Neil I would say a lot of the positioning that <unk> seen in the Gulf coast and even the <unk> announcement today, that's not going to have a significant impact in the positioning from ours we have.
Jeremy Tonet: A unique asset that can't be replicated and we're very happy with our Canadian NGL footprint and our competitiveness.
Sunil Sibal: Okay. Thanks for that.
Jeremy Goebel: Thanks, Sunil.
Operator: Our next question will be coming from Jean Ann Salisbury of Bank of America.
Speaker Change: Okay. Thanks for that.
Sunil Sibal: Thanks Sunil.
Speaker Change: One moment for our next question.
Jean Ann Salisbury: Hi. Good morning. I have a question about the guidance for long haul on slide 5. You show overall Permian growth of around 300,000, but then that Plains' long haul will grow by 170, so kind of getting over half of that growth. It's a little more market share than I would have expected you to gain this year, given Gray Oak expansion and Seminole returning to crude service. I was wondering if you could give any more color on the assumptions there, about how much pull to Cushing there will be, or if it's driven by the bolt-ons or contract adds, or just anything underlying that.
Speaker Change: Our next question will be coming from Jean Ann Salisbury of Bank of America. Your line is open.
Speaker Change: Hi, Good morning, I had a question about the guidance for the long haul on slide five.
Speaker Change: So overall Permian growth to have around 300000.
Speaker Change: But then that same long haul will grow by 170, so kind of getting over half of that growth.
Speaker Change: It's a little more market share than I would've expected. It again this year and get an extension and returning to crude service and I'm wondering if you could give any more color on the assumptions there.
Speaker Change: About how.
Speaker Change: How much total to Cushing, there will be or if it's driven by the bolt ons are contract adds there just anything underlying that sure. So wink to Webster is easy that's a step up in contracts.
Jeremy Goebel: Sure. Wink to Webster is easy. That's just a step-up in contracts. Physical flow on the Cactus Pipelines due to some connecting carrier downtime led to some artificial downtime last year, but that will be full. Cactus I and Cactus II, where they had some physical lag last year, won't have that this year. The pull to basin's pretty unique on our system. I think it's function of timing and some unique circumstances that happened last year.
Speaker Change: Physical flow on the cactus pipelines due to some connecting carrier downtime led to some artificial downtime last year, but that will be full so cactus one in Texas to where they had some physical lag last year won't have that this year and then the full to basins pretty unique on our system. So I think a function of timing and some <unk>.
Jean Ann Salisbury: Okay. That makes sense. That's all for me. Thank you.
Speaker Change: Circumstances that happened last year.
Jeremy Goebel: Thanks, Jean Ann.
Speaker Change: Yes.
Operator: Yeah. One moment for our next question. Our next question will be coming from A.J. O'Donnell of TPH. Your line is open.
Speaker Change: Okay that makes sense that's all for me. Thank you. Thanks.
Speaker Change: Thanks, Jean Ann.
Speaker Change: Yes.
Speaker Change: One moment our next question.
A.J. O'Donnell: Morning, everyone. Maybe just going back to some of the comments on basin that Willie talked about in his prepared remarks. Just given where Cushing inventories are and how low they are, curious if you guys to shift around earlier this year, where you could see some of that growth be front-weighted versus back-half weighted how you've indicated?
Speaker Change: Our next question will be coming from a J O'donnell of Tpa <unk>. Your line is open.
Speaker Change: Good morning, everyone.
Speaker Change: Maybe just going back to some of the comments on basin, where we've talked about in his prepared remarks.
Speaker Change: Just given where.
Cushing inventories are and how low they are curious if you guys.
Speaker Change: To shift around earlier this year.
Speaker Change: Where you could see some of that growth be.
Jeremy Goebel: Sure. With respect to Basin Pipeline, remember, it's a refinery pull pipeline. You have a peak maintenance season right now. Typical for Basin Pipeline is you'll see lower Q1 volumes unless there's an upset. You'll see higher through the driving season. I think you'll see more pull. Artificial things that could impact that. Tariffs could certainly impact the pull to domestic refiners to substitute for Canadian barrels. I would say by and large, volume growth, once the Gulf Coast gets filled, you're going to see more push at Basin Pipeline just from a pricing standpoint. Basin Pipeline will typically follow refining utilization, think of it that way.
Speaker Change: Weighted versus back half weighted how you how you've indicated.
Speaker Change: Sure with respect to basin number its refinery full pipeline and so you have peak maintenance season right now.
Speaker Change: Typical for base and as Youll see lower first quarter volumes unless theres, an upset and then youll see higher through the driving season.
Speaker Change: Youll see more full artificial things that could impact that tariffs could certainly impact the poll.
Speaker Change: Refiners as substitute FERC Canadian barrels but.
Speaker Change: I would say by and large volume growth once the Gulf coast gets filled youre going to see more pushup basin, just from a pricing standpoint, but.
Speaker Change: And it will typically follow refining utilization, so think of it that way.
A.J. O'Donnell: Okay. Just one more from me on the NGL segment. Looks like hedges kind of improved. They stepped up a little bit from 60% to 70% and are at $0.70 a gallon. I'm just curious if you could talk where you're seeing current rates in the market and maybe your ability to hedge the exposed volumes at higher rates.
Speaker Change: Okay.
Speaker Change: And then just one more for me.
Speaker Change: On the NGL segment.
Speaker Change: Looks like the hedges kind of improve they stepped up a little bit from 60% to 70% and are at.
Speaker Change: 70 cents, a gallon or just curious.
Speaker Change: If you could talk where youre seeing current rates in the market and maybe your ability to hedge.
Jeremy Goebel: Sure. That's certainly the reason why we've typically hedged more in the front than the back, because you've been in really steep backwardation. 2026 would be in the low to mid $60s. Prompt would be closer to $0.80. For us, that's why you've seen more hedging in the front than the back, and this year is no different than we've explained the last couple of years.
Speaker Change: Exposed volumes at higher rates.
Speaker Change: Sure Thats certainly the reason why we typically hedged more in the front and the back because you've been in really steep backwardation. So 2026 would be in the low to mid sixties prompt would be closer to 80.
Speaker Change: And so for us Thats why <unk> seen more hedging in the front and the back of this year is no different than what you've explained in last couple of years.
A.J. O'Donnell: Okay. That's all for me. Thank you, guys.
Jeremy Goebel: Thanks, A.J.
Operator: Our next question will be coming from Neal Dingmann of Truist Securities. Your line is open, Neal.
Speaker Change: Okay. That's all for me. Thank you guys.
Speaker Change: Thanks, a J.
Neal Dingmann: Hi. Morning, guys. Thanks for the time. My first question, just you've mentioned this already, Willie, in Ironwood. You all have talked about some of the potential Eastern Eagle Ford opportunities around this. I'm just wondering what would the timing be on some of these potential opportunities? Is this something relatively near-term, or are you thinking more next year?
Speaker Change: And our next question will be coming from Neal Dingmann of true Securities. Your line is open Neal.
Neal Dingmann: Good morning, guys. Thanks for the time My first question just you have mentioned this already willing ironwood.
Neal Dingmann: You also talked about some of the potential eastern Eagle Ford opportunities around this I'm just wondering what what would the timing be on some of these potential opportunities is something relatively near term or are you thinking more next year.
Jeremy Goebel: The way I look at it is we've just closed 31 January. Thrilled to have it. We're canvassing all the customers and looking at opportunities on the integration. I think it'd be more of next year. The multiples the teams talked about have been, and returns have been more predicated on what the current cash flows are, not what we can do with the asset. We're excited about the opportunity set.
Neal Dingmann: The way I look at it is we've just closed January 30, <unk> thrilled to have it.
Neal Dingmann: Canvassing, all the customers and looking at opportunities on the integration. So I think it would be more of next year. So the multiples. The team has talked about it and returns have been more predicated on what the current cash flows are not what we can do with the asset. So we're excited about the opportunity set.
Neal Dingmann: That makes sense. Then just a second quick one on capital allocation. I am just wondering, beyond your targeted sustainable distribution growth and you talked about the bolt-on potential, where would opportunistic buybacks fit into this? Again, I think your stock still seems, shares seem to be a little discounted versus some of the peers, so I wondered how this would fit in.
Speaker Change: That makes sense and then just a second quick one on capital allocation I'm just wondering.
Speaker Change: Beyond your targeted sustainable distribution growth and you talked about the bolt on potential.
Speaker Change: Wood opportunistic buybacks, but and this I mean again I think youre stuck still seems sure Tim C. A little discounted versus some of the Peter So I'm wondering how this would fit in.
Al Swanson: This is Al. We've had really no change in our view with regard to that. Any buybacks would be opportunistic, and really kind of think of market dislocation and with the trading of our stock, we would need to see a material kind of change in that valuation. Our preference is to continue to return cash to shareholders or unit holders through distributions, like you've seen with this $0.25 increase for 2025.
Speaker Change: This is al.
Speaker Change: It had really no change in our view with regard to that any buybacks would be opportunistic.
Speaker Change: And really kind of think of market dislocation and with the trading of our stock we would need to see it.
Speaker Change: Our materials kind of change in that valuation.
Speaker Change: Our preference is to continue to return cash to shareholders our unit holders through through distributions like you've seen with this 25 increase for 2025.
Neal Dingmann: Got it. Thanks, Al.
Operator: One moment for our next question. Our next question will be coming from John Mackay of Goldman Sachs & Co. Your line is open.
Speaker Change: Got it thanks al.
Speaker Change: One moment for our next question.
John Mackay: Hey, guys. Good morning. I know we've kind of picked this to death a little bit, but I want to ask one more just on the Permian guide. You're kind of framing Permian as 55% of crude EBITDA this year. We obviously have the Cactus step down later in the year. I was just wondering if you could kind of pick apart the implied Permian EBITDA for the year, balancing what's coming off for Cactus I versus what you see kind of underlying EBITDA growth is offsetting that.
Speaker Change: Our next question will be coming from John Mackay of Goldman Sachs <unk> Company. Your line is open.
John Mackay: Hey, guys good morning.
Speaker Change: I know, we've kind of picked us up a little bit, but I wanted to ask one more just on the Permian Guide.
Speaker Change: You are kind of framing Permian is 55% of accrued EBITDA this year.
Speaker Change: We obviously have the cactus step down later in the year I was just wondering if you could pick apart the implied Permian EBITDA for the year balancing what's coming off for cactus, one versus what you see kind of underlying EBITDA growth is offsetting that.
Jeremy Goebel: Not sure I understand the question. Are you asking for a specific Permian EBITDA guide?
John Mackay: I guess if we're trying to isolate the Cactus impact, just what you're looking at for overall Permian kind of EBITDA growth year over year relative to that volume guide?
Speaker Change: And that sure I understand the question are you asking for a specific Permian EBITDA guide.
Speaker Change: I guess, if we're trying to isolate the cactus impact just what youre looking at for overall Permian kind of EBITDA growth year over year relative to that volume guide the way you're thinking about that.
Jeremy Goebel: The way to think about that is tariff volumes and physical volumes can be different, and so a lot of cases we were paid for volumes that didn't move. For Cactus II, some of that will be incremental just as the pipe fills. Cactus I will largely just be a step up in rate for some of the spots. I don't think we're giving a specific guide for that piece.
Speaker Change: Tariff volumes in physical volumes can be different and so a lot of cases, we were paid for volumes that didnt move in so for cactus to some of that will be incremental just as the pipe fills cactus one will largely just be a step up in rate for some of the spot I don't think we're giving a specific guidance or for that please.
John Mackay: All right. Fair enough. Okay.
Al Swanson: The slide 11 in the deck gives you a little bit of kind of color behind it as far as the Cactus impact and some of the growth. It doesn't split it out exactly. I'd take a look at that.
Speaker Change: Alright fair enough and then kind of gives you a little bit.
Speaker Change: <unk> 11 in the deck gives you a little bit of color behind it.
Speaker Change: Great.
Speaker Change: The cactus impact.
John Mackay: All right. That's fair. Just in the context of your view of kind of capacity out of the basin getting tighter next year, this goes back to, I think, Spiro's question. When would you guys expect to be able to come out with something on that recontracting tailwind? Is that a kind of this summer conversation? Is it do you need to get into next year? Just trying to think of when we could get an update there. Thanks.
Speaker Change: Some of the growth that it doesn't it doesn't split it out exactly.
Speaker Change: With that.
Speaker Change: Alright, that's fair and then just in the context of your view of kind of.
Speaker Change: Capacity out of the basin getting tighter next year.
Speaker Change: And this goes back to I think spiros question, but when would you guys expect to be able to come out with the <unk>.
Speaker Change: Something.
Speaker Change: That re contracting tailwind is that a kind of this summer conversation is it do you need to get into next year, just trying to think of when we could kind of update there. Thanks.
Jeremy Goebel: I think it's just going to be gradual over time. This is also part of the continuous improvement mindset that Willie outlined. This is something we don't have to rush on. Current differentials wouldn't support it, so we would sign shorter term contracts. We'll let you know if there's something to talk about. Otherwise, we'll continue to optimize the space. Just because it's not contracted doesn't mean we're not filling it or finding ways to do shorter term deals and generate revenue from it. I'd look at it as we are absolutely trying to generate as much margin and revenue as we can, and we'll optimize the value of that space. I wouldn't expect any grand unveil of recontracting for that asset.
Speaker Change: I think it's just going to be gradual over time. This is also part of the continuous improvement mindset that Willie outlined this is something we don't have to rush on current differentials wouldn't support it. So we've been signing shorter term contracts. So.
We'll let you know if there's something to talk about otherwise we will continue to optimize the space just because it's not contracted doesn't mean, we're not feeling it.
Speaker Change: Finding ways to do shorter term deals and generate revenue from it. So I'd look at it is we are absolutely trying to generate as much margin and revenue as we can and will optimize the value of that space, but I wouldn't expect any grand unveil of re contracting for that asset and John This is Willie the way I think about it from a macro standpoint.
Willie Chiang: John, this is Willie. The way I think about it from a macro standpoint, you've got the capacity and you've got economic capacity. It's going to be hard to build a new long-haul pipeline to the Gulf Coast. If you think about the commercial commitments it takes, the permitting/supply chain issues. I think our view is, you have to balance it with what you think ultimately Permian growth is going to be. My guess is we're going to get to this point where it is going to get tighter capacity, and we're probably going to live in that space for a while. Whether or not a new long-haul line gets built, it's really going to be dependent upon kind of a broader view of can the Permian go the next step.
Speaker Change: You've got the capacity and you've got economic capacity.
Speaker Change: It's going to be hard to build a new long haul pipelines to the Gulf Coast and if you think about the commercial commitments that takes the permitting slash supply chain issues. So I think our view is.
Speaker Change: And you have to balance that with what you think ultimately Permian growth is going to be so my guess is we're going to get to this point, where it is going to get tighter capacity and we're probably going to live in that space for a while.
Speaker Change: And whether or not a new long haul line gets built is really going to be dependent upon.
Willie Chiang: I think we're going to be in a pretty good place the next number of years. We certainly have struggled in the overcapacity years in the past number of years. I think we're in that whole different sector of time here as we get closer to the pull state.
Speaker Change: Kind of a broader view of the Permian go. The next step so I think we're going to be in a pretty good place. The next number of years, we certainly have struggled and the overcapacity years in the past number of years. So I think we are in that whole different segment.
John Mackay: All right. That's great. I appreciate the thought. Thank you, guys.
Speaker Change: Sector of time here as we as we get closer to the full state.
Willie Chiang: Thank you, John.
Operator: Thank you. Our next question will be coming from Theresa Chen of Barclays. Your line is open, Theresa.
Speaker Change: Alright, that's great appreciate the thoughts thank you guys.
Speaker Change: Thank you John.
Speaker Change #100: Thank you and our next question will be coming from Theresa Chen.
Theresa Chen: Was your-
Theresa Chen: Reminding us what your PLA volumetric exposure is at this point, just as we try to frame up the sensitivity to the $75 WTI assumption within your 2025 guidance.
Speaker Change #100: Barclays. Your line is open.
Theresa Chen: Would you mind reminding us what Youre PLE volumetric exposure is at this point just as we try to frame up the sensitivity to the $75 Meti assumption within your 2025 guidance.
Blake Fernandez: Hey, Theresa, it's Blake. The last update we've given is 4 million barrels a year, so call it a $10 move equates to roughly $40 million of EBITDA.
Theresa Chen: It's Blake the last update we have given is 4 million barrels a year so call. It a $10 move equates to roughly $40 million of EBITDA.
Theresa Chen: Thank you.
Operator: I would now like to turn the conference back to Willie Chiang for closing remarks.
Theresa Chen: Thank you.
Willie Chiang: Well, listen, thanks to all of you for dialing in and for your continued interest in Plains. We'll look forward to seeing you soon as we get out on the road. Have a safe weekend.
Willie Chiang: And I would now like to turn the conference back to Willie Chiang for closing remarks.
Willie Chiang: Well listen thanks to all of you for dialing in and for your continued interest in Plains will look forward to seeing as soon as we get out on the road.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Willie Chiang: Have a safe weekend.
And this concludes today's conference call. Thank you for participating you may now disconnect.