Q4 2024 Plains All American Pipeline LP Earnings Call
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Speaker Change: Here, an automated message advice to 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.
Speaker Change: Thank you Tony 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: <unk> 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 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.
Willie Chiang: Adjusted EBITDA attributable planes 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.
Willie Chiang: Looking to 2025 years 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: On slide five we expect Permian crude production to grow 2% to 300000 barrels a day year end 2040 year in 'twenty five 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.
Willie Chiang: Utilization sufficient operating capacity.
Willie Chiang: 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.
Willie Chiang: Our Permian gathering JV continues to benefit from the embedded operational synergies and consistent producer activity on our over $4 7 million dedicated acres.
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 planes.
Willie Chiang: 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 Swanson: 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.
Al Swanson: Which extends and expands our integrated asset base in the Eagle Ford.
Al Swanson: As seen on slide seven and as previously announced we acquired the remaining 50% interest in midway pipeline.
Al Swanson: And a subsidiary of our Permian joint venture acquired the medallion, Delaware Basin crude gathering set gathering business.
Al Swanson: 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.
Al Swanson: 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.
Al Swanson: 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 Swanson: Annualized basis of distribution represents a 25 cent per unit increase from 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.
Al Swanson: For the fourth quarter, adjusted EBITDA of $729 million.
Al Swanson: Which includes crude oil segment benefits from higher volumes and pipeline tariff escalation.
Al Swanson: Our NGL segment benefited from higher than expected border flows leading to increased C III plus spec product sales.
Al Swanson: Slides eight and nine in today's presentation contains segment EBITDA walks, which provide details on our fourth quarter performance.
Al Swanson: All in all we executed well in 2024 and are well positioned as we enter 2025.
Al Swanson: 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 Swanson: 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, partially offsetting these tailwind previously discussed reset of certain long haul contract.
Al Swanson: Tariffs that step down in the second half of 2025.
Al Swanson: 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.
Al Swanson: I'd note that our <unk> III spec product sales volumes are approximately 70% hedged for the year in the low 70 cents per gallon level.
Al Swanson: We remain focused on making.
Al Swanson: 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 top JV, well connections and intra basin improvements integration of our recently completed acquisitions.
Al Swanson: <unk> and capital related to our Fort Saskatchewan Debottleneck project.
Al Swanson: 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 Swanson: Reduced by $580 million for the previously announced bolt on transactions that closed in January.
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.
Al Swanson: 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.
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 <unk>.
Al Swanson: $140 million noncash.
Al Swanson: Noncash impairment related to two U S NGL terminal assets.
Al Swanson: These are excluded from our adjusted results separately.
Al Swanson: 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.
Al Swanson: Claim against several of the insurers.
Al Swanson: With respect to our remaining $50 million claim against different insurance carriers.
Al Swanson: 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 Swanson: And if they are received well.
Speaker Change: 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 will thank.
Speaker Change: Thank you Al 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.
Speaker Change: 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 <unk>.
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 reach.
<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.
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 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.
Speaker Change: We are 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. Please.
Speaker Change: 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.
Speaker Change: 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.
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.
Speaker Change: To start maybe can.
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, Pete 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.
Willie Chiang: Looking for opportunities and we had a number of these that came together at the same time there was a lot of work for our team and we're able to execute on all of it.
We can't.
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.
Willie Chiang: 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 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.
Willie Chiang: The one common thing is we're not growing for growth's sake, and all of these have to go through the.
Willie Chiang: The lens of capital discipline, and strategic need and their ability to pull through the entire system getting more synergy. 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 gives us a good return for the unit holders.
Speaker Change: That's great if I could shift gears for a second question.
Speaker Change: 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 planes.
Well I think we only have an hour for this call. So maybe I'll try to keep it pretty general.
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.
The short answer is as you look at our guidance range.
Speaker Change: We think that guidance range.
Speaker Change: Usually encompasses.
Speaker Change: Is it probable probable outcomes of what the tariffs, maybe but as far as jumping to conclusions of what they might be and when they may take effect.
Speaker Change: 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 it's really a scenario planning exercise.
And what might happen in our in our system, but you should know that we're ready for it and again if the end if it comes our impact is going to be within the guidance range.
Great. Thank you. Thank you Keith.
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.
Speaker Change: Okay.
Speaker Change: Good morning team.
Speaker Change: 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.
Speaker Change: Look at 2025 guide what could drive you towards the upper end of that guide and possibly.
Speaker Change: As you did a good in 'twenty four.
Willie Chiang: Well Manav. This is Willie I'll start and maybe others can jump in.
Speaker Change: When we look at 2025.
Speaker Change: It is important to throw the macro views that I talked about on the administration.
Speaker Change: Clearly a big factor for us is volume growth and oil price.
Speaker Change: No more activity with certainly drive.
Speaker Change: Higher volumes and we have a two 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.
Speaker Change: <unk> been able to produce more volumes with lower a lower rigs 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.
Speaker Change: Perfect. My quick follow up here, if I didn't would you are highlighting the fact that it both Tokyo.
Speaker Change: But it's also giving an.
Speaker Change: Opportunity extending the footprint into the east so given your strategy of bolt on Kennedy.
Speaker Change: Maybe you could add to more would be to further enhance this east footprint now that you have got the whole.
Speaker Change: Ironwood 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.
The ability to compress the multiple over time by driving additional businesses and opportunities through that footprint.
Speaker Change: Perfect. Congratulations I think your strategy of going from defense to offense is really lifting. Thank you. Thanks Manav.
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.
Speaker Change: So I wanted to ask you previously guided flat EBITDA from 2024 to 2026 with 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.
Michael Blum: Considering over the next couple of years.
Michael Blum: Michael Willie again here thanks for the question.
Michael Blum: 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.
Michael Blum: 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.
Michael Blum: 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.
Michael Blum: Our expectations would be that 26 is going to be over 24, and so what they just even with the deals we just announced as far as this first tranche as we think about playing offense.
Michael Blum: And that obviously adds to the.
Michael Blum: So the base business, so going into 2006 I would say at this point in time 26 is going to be higher than 2024 <unk>.
Michael Blum: The next question, you'll likely ask is what's the pace and trajectory of that growth.
Michael Blum: And 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.
Michael Blum: 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.
Speaker Change: Okay, great. Thanks for that.
Michael Blum: Helpful.
Michael Blum: The other question I wanted to ask in December you talked about initiatives to streamline operations talked about could lead to higher margins expense savings I'm wondering if you could just provide an update on that.
Michael Blum: And whether any of that is baked into the guidance for 25.
Michael Blum: Yes, Michael.
The way, we would 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 in.
Michael Blum: 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 and streamlining numbers in our in our numbers this year, but most importantly.
Michael Blum: 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.
Michael Blum: We have a ERP project enterprise risk.
Michael Blum: Enterprise kind of consolidating our financial partners, 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.
Michael Blum: Thanks, Michael.
Speaker Change: And our next question will be coming from Jeremy Tonet Jpmorgan Securities LLC. Your line is open Jeremy.
Jeremy: 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: And clearly all these bolt ons.
Speaker Change: Right.
Speaker Change: Mike.
Speaker Change: Yes.
Speaker Change: But just curious I guess as you think about it.
Speaker Change: Mid Con maybe you can get a bunch of synergies.
One time step up or something.
Speaker Change: The Permian, where maybe there is like kind of more organic growth opportunities.
Speaker Change: Yes.
That factors into your process.
Speaker Change: No.
Speaker Change: More than 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 there could be the synergies for connecting but also organ.
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.
Speaker Change: 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've taken asset that had zero EBITDA and turn it into something that's a long term business and then create stickiness to your terminal and you take the.
Speaker Change: The recent transaction with CVR, which was a win win for them and US we brought them in in 2017, they needed some financings 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.
Speaker Change: <unk>.
At mutually variable rate so I think it's.
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 insurers there'll be that way for decades.
Jeremy This is Willie just to add something on to Jeremy's comments.
Speaker Change: 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 the Permian ultimately into Cushing Cushing into the mid continent. North. So you can see there is a broad system, that's very flexible that we think about.
Willie Chiang: Lots of different option values and it's good to have choices and options as we go forward.
Speaker Change: Got it Optionality makes sense and maybe just taking it.
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: Which basins you see growth in over time, I guess, just a longer look at the macro how do you guys feel about that sure if constructive.
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 headlines.
Speaker Change: 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: 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.
Speaker Change: He's in the Permian.
Speaker Change: Growth by different areas, and that's where you're seeing a lot of the investment from us as well.
Jeremy: Jeremy will again.
Jeremy: You notice again, but if you think about our footprint and Jeremy outlined that we expect a flat.
Jeremy: 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: 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 thats able to take.
Jeremy: Additional ngls out of out of gas to produce Ngls that are needed. So two growth areas Western Canadian sedimentary basin in the Permian basin, where in both of those Zip codes.
Jeremy: Got it makes sense. Thank you for that.
Jeremy: <unk>.
Jeremy: And one moment for our next question.
Jeremy: Next question will be coming from James.
Speaker Change: Brandon Bingham of Scotiabank. Your line is open Brandon.
Speaker Change: Hi, good morning, Thanks for taking the question.
Speaker Change: Just wondering maybe excuse me if we could.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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: The Trump administration, now or Chris right getting their secretary of energy.
Speaker Change: What are kind of some of the moving pieces there that are underpinning the EBITDA guide in the macro outlook.
Speaker Change: And I would say, it's very consistent if you stick to the Permian basin.
Speaker Change: Just lease gathering activity in Eagle Ford, where we have the ironwood very consistent to left from last year to this year consistent pace.
Speaker Change: They're 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: It gives us additional confidence in the forecast that Willie outlined at the beginning of the call.
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 then there this year that might be even dropping lower next year.
Speaker Change: Was there any slippage from 'twenty four 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: Hey, Brandon This is Chris Chandler I'd 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 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 25% 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.
Volume of course.
Speaker Change: 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.
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.
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.
Speaker Change: Investment capital net to <unk>.
Speaker Change: We remain committed to capital discipline and.
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 into one of the ones that have the best benefit for us.
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.
Speaker Change: Thanks, operator, good morning team.
Speaker Change: Want 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 Spiro this is Jeremy I'd say, it's very consistent long haul to corpus is contracted or 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've put into the guide.
Speaker Change: We will 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 fill so I'd say, it's fairly consistent but it's definitely constructed.
Great Alright, good to hear.
Speaker Change: One just moving onto the distribution.
Speaker Change: You guys. Once again chose an accelerated growth level and historically, you 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.
Speaker Change: 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.
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 I mean, 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 and 'twenty four and now the 25 cent increase in 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.
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.
Speaker Change: Great I'll leave it there have a good weekend guys.
Speaker Change: Very much yes.
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: Yes, hi, good morning, everybody and thanks for the clarity on the call. So I just wanted to start.
With.
Sunil Sibal: Volume guidance expectations and pardon me it how should we thinking on cadence on those volumes in 2025.
Sunil Sibal: And then yes.
Speaker Change: I know you guys mentioned, the Permian overall volume growth of 200 to 300000 barrels per day.
Sunil Sibal: How do we think of that growth.
Speaker Change: Your guide.
Speaker Change: If the basin comes out to be towards the higher Opex and should we think of upside in terms of your volume numbers in Permian.
Jeremy: Sunil this is Jeremy.
Jeremy: First your cadence on the production growth I'd say, it's consistent with last year. If you think about 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'll see this year. So I'd say, it's second half weighted but very similar.
Jeremy: I think in the context of does it impact our guide.
Jeremy: I would think about it as 300000 barrels on that 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: Buildup from all the producers we have in a top down and those both married pretty well, so I'd say that.
Jeremy: Youre not going to see material value variation.
Jeremy: 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: Like.
Jeremy: There have been some changes in the competitive landscape.
Jeremy: Bob.
Speaker Change: <unk> happening as we speak in the NGL Biz.
Speaker Change: In Canada, how should we think about <unk> positioning.
Speaker Change: And that.
Speaker Change: That area.
Speaker Change: So Neil I'd 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: Our unique assets that can't be replicated and we're very happy with our Canadian NGL footprint and our competitiveness.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks for that.
Speaker Change: Thanks Sunil.
Speaker Change: One moment for our next question.
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 of 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.
Speaker Change: Wondering if you could give any more color on the assumptions there.
How much I don't know 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.
Speaker Change: Sure. So wink to Webster is easy that's just 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 and some unique circumstances.
Speaker Change: Stances that happened last year.
Speaker Change: Yeah.
Speaker Change: Okay that makes sense and that's all for me. Thank you. Thanks.
Speaker Change: Thanks, Jean Ann.
Speaker Change: Yes.
Speaker Change: One moment our next question.
Speaker Change: Our next question will be coming from AJ O'donnell of Tpa <unk>. Your line is open.
Speaker Change: Good morning, everyone.
Speaker Change: 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 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.
Speaker Change: Sure with respect to basin remember its refinery pull pipeline and so you have a peak maintenance season right now.
Speaker Change: Typical for base and as Youll see lower first quarter volume unless theres, an upset and then youll see higher through the driving season. So I think youll see more full artificial things that can impact that tariffs that certainly impacts 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.
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% 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.
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 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 would explain the last couple of years.
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 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 I mean.
Neal Dingmann: Would the timing be on some of these potential opportunities is something relatively near term or are you thinking more next year.
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.
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 in this I mean again I think your stock's still seems sure seems to be a little discounted versus some of the Peter So I'm wondering how this would fit in.
This is al.
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: A material kind of changes 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.
Speaker Change: Got it thanks Bill.
Speaker Change: One moment for our next question.
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.
John Mackay: I know, we've kind of picked us up a little bit, but I wanted to ask one more just on the Permian Guide.
John Mackay: You are kind of framing Permian, it's 55% of accrued EBITDA this year.
John Mackay: 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.
John Mackay: And that 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 youre looking at for overall Permian kind of EBITDA growth year over year relative to that volume guide the way to think about that.
John Mackay: 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 guide for for that please.
John Mackay: Alright fair enough and then okay and it gives you a little bit.
John Mackay: 11 of the deck gives you a little bit of color behind it.
John Mackay: Great.
John Mackay: The cactus impact.
John Mackay: Some of the growth that it doesn't it doesn't split it out exactly.
John Mackay: Look at that.
John Mackay: Alright, that's fair and then just in the context of your view of kind of.
John Mackay: 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.
John Mackay: Something.
John Mackay: On that re contracting tailwind does that kind of this summer conversation is it do you need to come into next year, just trying to think of when we could kind of update there. Thanks.
Willie Chiang: 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.
Willie Chiang: We'll let you know if there's something to talk about otherwise we will continue to optimize the space and just because it's not contracted doesn't mean, we're not feeling it.
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: You've got the capacity and you've got economic capacity.
Willie Chiang: It's going to be hard to build a new long haul pipeline to the Gulf Coast. If you think about the commercial commitments that takes the permitting slash supply chain issues. So I think our view is.
Willie Chiang: 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.
And whether or not a new long haul line gets built is really going to be dependent upon.
Willie Chiang: A broader view can 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 are struggling and the overcapacity years in the past number of years. So I think we're in that whole different.
Willie Chiang: In our sector a time here as we as we get closer to the full state.
Speaker Change: Alright, that's 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.
Speaker Change: Barclays. Your line is open very soon.
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 DTI assumption within your 2025 guidance, Hey, Theresa its 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.
Speaker Change: Thank you.
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 senior as soon as we get out on the road.
Willie Chiang: Have a safe weekend.
Willie Chiang: And this concludes today's conference call. Thank you for participating you may now disconnect.
Willie Chiang: Okay.
Willie Chiang: [music].
Willie Chiang: Okay.
Willie Chiang: [music].
Willie Chiang: Yes.
Willie Chiang: Okay.
Willie Chiang: [music].
Willie Chiang: Yes.
Willie Chiang: Sure.
Willie Chiang: Yes.
Willie Chiang: [music].
Willie Chiang: Okay.
Willie Chiang: [music].
Willie Chiang: [music].
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 the session you will need to press star one on your telephone you will then hear and all.
Speaker Change: Automated 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.
Speaker Change: Now I'd like to hand, the conference over to your Speaker today Blake Fernandez. Please go ahead.
Blake Fernandez: Good morning, and welcome to Plains, All American fourth quarter 24 earnings call.
Blake Fernandez: Today's slide presentation is posted on the Investor Relations website under the news and events section at IR Dot claims dot com and.
Blake Fernandez: 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.
Blake Fernandez: Overview of 24 results in recent announcements are highlighted on slide three.
Blake Fernandez: <unk> 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 Willy. Thank.
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 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.
Speaker Change: Looking to 2025 and as highlighted on slide four we provided adjusted EBITDA guidance of two 8% to 95 billion approximately 3% growth year over year at the midpoint of our guidance range.
Speaker Change: On slide five we expect Permian crude production to grow 2% to 300000 barrels a day yearend 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 and.
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.
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: Our outside Permian business tends to get less attention externally, but it continues to perform well and generate significant excess cash flow for planes.
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.
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 medallion, Delaware Basin crude gathering set gathering business.
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.
Speaker Change: Lastly, we accelerated the return of 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 Swanson: 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 were.
Al Swanson: For the fourth quarter, adjusted EBITDA of $729 million.
Al Swanson: 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 C. III plus back product sales.
Al Swanson: 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 Swanson: 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 with year over year growth in our crude oil segment and slightly.
Al Swanson: 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 tailwind on the previously discussed reset of certain long haul contract tariff step down in the second half of 2025.
Al Swanson: 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.
Al Swanson: I would note that our <unk> III <unk> product sales volumes are approximately 70% hedged for the year in the low 70 cents per gallon level.
Al Swanson: We remain focused on making.
Al Swanson: 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 acquisitions.
Al Swanson: <unk> 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 one $1 $5 billion of adjusted free cash flow, excluding changes in assets and liabilities, which is <unk>.
Reduced by $580 million for the previously announced bolt on transactions that closed in January regarding our.
Al Swanson: 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, which we would.
Al Swanson: <unk> to refinance all or a portion of during the year.
Al Swanson: Before I turn the call back to Willie I wanted to provide detail on two charges that impacted our fourth quarter GAAP results.
Al Swanson: Our 2024 results include a $140 million noncash.
Al Swanson: Noncash impairment related to two U S NGL terminal assets.
Al Swanson: These are excluded from our adjusted results separately.
Al Swanson: 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.
Al Swanson: Claim against several of the insurers.
Al Swanson: With respect to our remaining $15 million claim against different insurance carriers.
Al Swanson: 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.
William: 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>.
William: <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.
William: 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.
William: 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>.
William: <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.
William: From a broader perspective, we're 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.
William: City 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.
Blake Fernandez: 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.
Our team will also be available to address any questions you may have.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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 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, Pete 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 came together at the same time and there was a lot of work for our team and we're able to execute on all of it.
Willie Chiang: We can't.
Are these things you can't take 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 and demand and in that process. We have a lot of people that we talk to and that opens up.
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 the.
Willie Chiang: 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 gives us a good return for the unit holders.
Willie Chiang: That's great if I could shift gears for a second question.
Willie Chiang: 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.
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: Short answer is as you look at our guidance range.
Speaker Change: We think that guidance range.
Speaker Change: Usually encompasses.
Speaker Change: On the probable probable outcomes of what the tariffs may be but as far as jumping to the conclusion of what they might be and when they may take effect.
Speaker Change: 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.
Speaker Change: 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, if the and if it comes our impact is going to be within the guidance range.
Keith Stanley: Great. Thank you. Thank you Keith.
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.
Manav Gupta: When 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 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.
Manav Gupta: When we look at 2025 I.
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 was certainly drive.
Manav Gupta: Higher volumes and we have a two 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 the over or under on momentum I would take the over into 2025 and loading of some of the key factors IC.
Speaker Change: Well I think my quick follow up here if I did.
Speaker Change: Would you have highlighted the fact that it bolt said.
Speaker Change: Footprint, but it's also giving it.
Speaker Change: Opportunity extending the footprint into the east so given your strategy of bolt on kidney.
Speaker Change: Maybe you could add two more will be further enhanced this east footprint now that you have got to hold.
Speaker Change: Ironwood midstream bolt on.
Speaker Change: Manav. This is Jeremy Thank you for the question.
Speaker Change: It's 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.
Speaker Change: And extending our value chain there.
Speaker Change: East side, it is a new area for us it.
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.
Speaker Change: And 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 as daily lifting. Thank you. Thanks Manav.
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.
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.
Michael Blum: Considering over the next couple of years.
Michael Blum: Michael Willie again here thanks for the question.
Michael Blum: 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.
Michael Blum: And the purpose of the guide at that point in time was taking a point in time outlook of the business that we haven't we wanted people to realize there was not a club that was coming.
Michael Blum: And that's why we talked about the flat 2426 on the crude sector on the crude segment now clearly as we build our business and continue to grow.
Michael Blum: Our expectations would be that 26 is going to be over 24, and so what they just even with the deals we just announced as far as this first tranche as we think about playing offense.
Michael Blum: And that obviously adds to the.
Michael Blum: So the base business, so going into 2006 I would say at this point in time 26 is going to be higher than 2024 <unk>.
Michael Blum: The next question, you're likely asking is what's the pace and trajectory of that growth.
Michael Blum: And 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 and any bolt ons that we might be able to do beyond that with just would add to it.
Michael Blum: 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.
Michael Blum: Helpful.
Speaker Change: The other question I wanted to ask in December you talked about initiatives to streamline operations talked about 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 25%.
Michael Blum: Yes, Michael.
Speaker Change: 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 in.
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 and 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.
Speaker Change: We have a ERP 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 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.
Speaker Change: Thank you.
Speaker Change: 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.
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: And clearly all these bolt ons.
Speaker Change: Please can drive very nice synergies just spike.
Speaker Change: Yes.
Speaker Change: But just curious I guess as you think about it.
Speaker Change: An asset in the mid Con and maybe you can get a bunch of synergies with kind of a one time step up or something.
Speaker Change: The Permian, where maybe there is like kind of more continuous organic growth opportunities.
Speaker Change: Yes.
Speaker Change: And that factors into your process.
Speaker Change: Opportunities in front of them.
Speaker Change: 101.
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 it could be the synergies for connecting but also organic.
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 customers.
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've taken 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.
Jeremy Tonet: The recent transaction with CVR, which was a win win for them and US we brought them in in 2017, they needed some financings for the projects that they're working on and the turnarounds, we get very long dedication 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 Tonet: Sure.
Jeremy Tonet: At mutually agreeable right. So I think it's.
Jeremy Tonet: 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 insurers there'll be that way for decades.
Jeremy Tonet: Jeremy This is Willie just add something on to Jeremy's comments.
Jeremy Tonet: Do you think about our system and you know well.
Jeremy Tonet: 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.
Jeremy Tonet: 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.
Jeremy Tonet: 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.
Jeremy Tonet: We think about.
Jeremy Tonet: 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 and maybe just taking it.
Jeremy Tonet: Step back if I could if we could if you could share your views I guess more on the macro side.
Jeremy Tonet: Crude oil prices, how you see unfolding and just kind of.
Jeremy Tonet: Which basins you see growth in over time, I guess, just a longer look at the macro how do you guys feel about that sure if constructive.
Jeremy Tonet: You've heard a lot of our peers calls about load distillate inventories.
Jeremy Tonet: Globally lower crude inventories.
Jeremy Tonet: <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 tariffs all of those things could lead to price increases filling the SBR. So theres.
Jeremy Tonet: A lot of things that are balancing and headlines.
Jeremy Tonet: 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.
Jeremy Tonet: And then from a which basins are growing.
Jeremy Tonet: 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 Midtown in an 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 Tonet: He's in the Permian.
Jeremy Tonet: Growth by different areas, and Thats, where youre seeing a lot of the investment from us as well.
Jeremy Tonet: Jeremy will again.
Jeremy Tonet: You noticed again, but if you think about our footprint and Jeremy outlined that we expect 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 Ngls that are needed. So two growth areas Western Canadian sedimentary basin in the Permian Basin, we're in both of those Zip codes.
Jeremy Tonet: Got it makes sense. Thank you for that.
Jeremy Tonet: <unk>.
Jeremy Tonet: And one moment our next question.
Jeremy Tonet: Next question will be coming from.
Brandon Bingham: Brandon Bingham of Scotiabank. Your line is open Brandon.
Brandon Bingham: Hi, good morning, Thanks for taking the question.
Brandon Bingham: 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.
Brandon Bingham: The Trump administration, now or Chris right getting their secretary of energy.
Brandon Bingham: What are kind of some of the moving pieces there that are underpinning the EBITDA guide in the macro outlook.
Brandon Bingham: And I would say, it's very consistent if you stick to the Permian basin, where our largest lease gathering activity in Eagle Ford.
Brandon Bingham: The ironwood very consistent to left from last year to this year consistent pace.
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: Gives us additional confidence in the forecast that Willie outlined at the beginning of the call.
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 because it was there any slippage from 24.
Speaker Change: Or 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: 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 25% 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.
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.
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 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 plains.
Speaker Change: We remain committed to capital discipline and.
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 into one of the ones that have the best benefit for us.
Brandon Bingham: Great to hear thanks.
Brandon Bingham: Thank you.
Brandon Bingham: And one moment for our next question.
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.
Speaker Change: Thanks Spiro. This is Jeremy I would say, it's very consistent long haul to corpus is contracted or 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've put into the guide.
Speaker Change: 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 fill so I'd say, it's fairly consistent but it's definitely constructed.
Speaker Change: Great Alright, good to hear.
Speaker Change: One just moving onto the distribution.
Speaker Change: You guys. Once again chose an accelerated growth level and historically, you 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.
Speaker Change: 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.
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 I mean, 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.
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.
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.
Speaker Change: Great I'll leave it there have a good weekend guys. Thanks very much.
Speaker Change: Well My next question.
Speaker Change: Our next question will come in will be coming from <unk> of Seaport Global Your line is open.
Speaker Change: Yes, hi, good morning, everybody and thanks for the clarity on the call. So I just wanted to start.
Speaker Change: With.
Speaker Change: Volume guidance, our expectations and pardon me it 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 <unk> comes out to be towards the higher Opex and should we think of upside in terms of your volume numbers in Permian.
Jeremy Tonet: Sunil this is Jeremy.
Jeremy Tonet: The first year cadence on the production growth I'd say, it's consistent with last year. If you think about 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'll 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.
Jeremy Tonet: I would think about it as 300000 barrels on that 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 <unk>.
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.
Jeremy Tonet: Based on that range two to 300000 it'll be within our guidance.
Jeremy Tonet: Okay. Thanks for that and then on the NGL business.
Jeremy Tonet: Like.
Jeremy Tonet: Yes, there have been some changes in the competitive landscape.
Jeremy Tonet: Bob.
Jeremy Tonet: <unk> happening as we speak in the NGL Biz.
Jeremy Tonet: In Canada, how should we think about <unk> positioning.
And that.
Jeremy Tonet: That area.
Jeremy Tonet: So Neil I'd 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: Our unique assets that can't be replicated and we're very happy with our Canadian NGL footprint and our competitiveness.
Jeremy Tonet: Okay. Thanks for that.
Neal Dingmann: Thanks Sunil.
Jeremy Tonet: One moment for our next question.
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: <unk> five <unk>.
Speaker Change: So overall Permian growth of 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 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: How much 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.
Speaker Change: Sure. So one question is easy that such a step up in contracts.
Speaker Change: Physical flow on the Texas pipelines due to some connecting carrier downtime led to some artificial downtime last year, but that will be full so Texas, 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 and some unique circumstances.
Speaker Change: Stances that happened last year.
Speaker Change: Yes.
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.
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: 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 low they are curious with you guys.
Speaker Change: To shift around earlier this year.
Speaker Change: You could see some of that growth be front weighted versus back half weighted how are you how are you doing.
Speaker Change: Got it.
Speaker Change: Sure with respect to basin remember 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. So I think youll see more full artificial things that could impact that tariffs that certainly impacts 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: Based on it will typically follow refining utilization, so think of it that way.
Speaker Change: Okay.
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%.
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.
Exposed volumes at higher rates.
Speaker Change: Sure Thats certainly the reason why we've typically hedged more in the front and the back because you've been 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.
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.
Speaker Change: Good morning, guys. Thanks for the time My first question just you had 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 would be what would the timing be on some of these potential opportunities is something relatively near term or are you thinking more next year.
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.
Speaker Change: 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.
Speaker Change: That makes sense and then just a second quick one on capital allocation I'm just wondering.
Speaker Change: On your targeted sustainable distribution growth and you talked about the bolt on potential.
Speaker Change: Where would opportunistic buybacks, but this I mean again I think youre stuck 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.
Al Swanson: Really no change in our view with regard to that any buybacks would be opportunistic.
Al Swanson: And really kind of think of market dislocation and with the trading of our stock we would need to see it.
Al Swanson: Materials kind of changes in that valuation.
Al Swanson: 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.
Speaker Change: Got it thanks Bill.
Speaker Change: One moment for our next question.
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.
John Mackay: I know, we've kind of picked up a little bit, but I wanted to ask one more just on the Permian Guide.
John Mackay: Youre kind of framing Permian, it's 55% of accrued EBITDA this year.
John Mackay: 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.
John Mackay: And that 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 youre looking at for overall Permian kind of EBITDA growth year over year relative to that volume guide the way to think about that.
John Mackay: 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.
John Mackay: Alright fair enough and then kind of gives you a little bit.
John Mackay: 11 in the deck gives you a little bit of color behind it.
John Mackay: Great.
John Mackay: The cactus impact.
John Mackay: Some of the growth that it doesn't it doesn't split it out exactly.
John Mackay: Look at that.
John Mackay: Alright, that's fair and then just in the context of your view of kind of.
John Mackay: 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>.
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.
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'll continue to optimize the space just because it's not contracted doesn't mean, we're not feeling it.
Willie Chiang: 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: You've got the capacity and you've got economic capacity.
Willie Chiang: It's going to be hard to build a new long haul pipelines to the Gulf coast.
Willie Chiang: Think about the commercial commitments that takes the permitting slash supply chain issues. So I think our view is.
Speaker Change: Yeah, 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 is really going to be dependent upon.
Speaker Change: Kind of a broader view of Kinder Permian go. The next step so I think we're going to be in a pretty good place in 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.
Speaker Change: Sector of time here as we as we get closer to the full state.
Speaker Change: Alright, that's great appreciate the thoughts thank you guys.
John Mackay: Thank you John.
Speaker Change: Thank you and our next question will be coming from Theresa Chen Barclays.
Speaker Change: Your line is open.
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 <unk> assumption within your 2020 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.
Speaker Change: Thank you.
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.
Willie Chiang: Have a safe weekend.
Willie Chiang: And this concludes today's conference call. Thank you for participating you may now disconnect.