Q1 2025 Enterprise Products Partners LP Earnings Call
[music].
Thank you for standing by and welcome to the enterprise products Partners L. P first quarter, 2020 five earnings conference call.
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After the speaker presentation, there will be a question and answer session.
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I would now like to hand, the call over to Larry straight Vice President of Investor Relations. Please go ahead.
Larry: Good morning, and welcome to the Enterprise products Partners Conference call to discuss first quarter 2025, earning our speakers today will be co chief executive officers of Enterprise's General partner, Jim Keegan Randy Fowler other members of our senior management team are also in attendance for the call today.
Larry: During this call we will make forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 1034 based on beliefs of the company as well as assumptions made by and information currently available to Enterprise's management team.
Speaker Change: Management believes that the expectations reflected in such forward looking statements are reasonable it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward looking statements made during this call and with that I will turn it over to Jim. Thank you Levi.
Speaker Change: We've got a special guest with us today.
Speaker Change: Sam Holly.
Speaker Change: As in the wholesale propane.
Speaker Change: He was with us.
Speaker Change: And I wanted to we wanted to publicly acknowledge his contributions to the company.
Speaker Change: <unk> been in the industry over 30 years with enterprise over 20 years, and I can say I've never known anyone.
Speaker Change: With more passion for our company.
Speaker Change: Business in force people.
Speaker Change: He will be missed my friend.
Speaker Change: With that I want to cover a few highlights in the first quarter and summarizing things we look forward to it.
Speaker Change: And adjusted EBITDA of $2 4 billion 2 billion D C at the $2 billion.
Speaker Change: D C F. One seven times coverage.
Speaker Change: $842 million.
Speaker Change: Everything.
Speaker Change: We have two financial records.
Speaker Change: Operational records.
Speaker Change: In total we moved 13 2 million barrels of oil equivalent a day.
Speaker Change: And 2 million barrels a day of liquid hydrocarbon exports.
Speaker Change: Relative to our PVH facilities or PTH, one facility was down for 6% to three days during the first quarter of 2025 for unplanned maintenance.
Speaker Change: Last week, both our PVH plants are online and no major downtime as planned.
Speaker Change: At either plant for the remainder of the year.
Speaker Change: It's both PVH plants had been up and running during the first quarter.
Speaker Change: We would have easily exceeded $2 5 billion.
Speaker Change: Billion.
Speaker Change: We continue to benefit from growing production in the Permian.
Speaker Change: Domestic and international energy demand pool across our systems for the remainder of 2025, we look forward to bringing on two gas processing plants.
Speaker Change: The third quarter in the Permian one each in the Delaware and Midland Basin.
Speaker Change: The <unk> NGL pipeline in the fourth quarter.
Speaker Change: <unk> 14 at our Mont Belvieu complex in the third quarter.
Speaker Change: First phase of <unk>.
Speaker Change: GL exports on the natures river in the fourth quarter.
Speaker Change: Enhancements of our ethane and ethylene terminal at Morgan's point.
Speaker Change: Also in the fourth quarter.
Speaker Change: I'm sure Tony or Natalie would discuss our Permian outlook in more detail during <unk>.
Speaker Change: But there is a large backlog of wells expected to be connected to our gathering and processing systems.
Speaker Change: <unk> now and the end of the year.
Speaker Change: Our downstream NGL value chain.
Speaker Change: The other side of the equation exports of members in the U S hydrocarbons get this much attention worldwide.
Speaker Change: For now it appears China is going to exclude ethane and ethylene from the Arabs.
Speaker Change: Petrochemical business currently.
Speaker Change: Currently LPG has not been excluded from the Chinese tariffs.
Speaker Change: But admittedly the situation is fluid.
Speaker Change: Regardless of the market is already gone to work rerouting barrels between the world's biggest LG LPG suppliers, the U S and the middle East and the biggest importing countries being China and India.
Speaker Change: It's important to note that even before the tariff Pauls nominations at our docks for my indicated that our customers' behavior was virtually unchanged from prior months.
Speaker Change: The bottom line is the world needs U S oil natural gas and natural gas liquids to provide for their people and to grow their economies relative to all the chaos the beauty of free markets as price always works price creates supply.
Speaker Change: Price creates demand in the right places and for the most part in a timely manner.
Speaker Change: I can't help myself, but to end.
Speaker Change: Today, we'll comment on Washington.
Speaker Change: <unk> the obvious a lot is going on that is causing nothing short of payoffs around the world.
Speaker Change: She is not excluded.
Speaker Change: No one can tell how all the pieces land. So I think we must fall back from what we think we know.
Speaker Change: President Trump was extremely pro oil and gas in his first term.
Speaker Change: And ran and won a second term on a pro oil and gas platform.
Speaker Change: <unk> that we must unleash and expand our domestic energy production and exports. There is also no doubt.
Speaker Change: Hump administration understands the importance of U S hydrocarbons or economy global markets and our balance of trade.
Speaker Change: Amid all this uncertainty out of the court.
Speaker Change: We believe when the dust settles in game of this administration's policies laws and regulations and is intended.
Speaker Change: To promote U S energy and not just for the next four years, but for decades.
Speaker Change: Price is one of the largest exporter of hydrocarbons and is significantly increasing our capacity to gather process transport upgrade.
Speaker Change: Tribute export hydrocarbons, we feel great about our assets and the investments, we're making and what they mean to our future with that I'll turn it to Randy Okay. Thank you, Jim and good morning to everyone.
Randy Fowler: It off with the income statement.
Randy Fowler: Net income attributable to common unit holders for the first quarter of 2025 was one $4 billion or 64 cents per common unit on a fully diluted basis, which compares to <unk> 66 per common unit for the first quarter of 2024.
Randy Fowler: Adjusted cash flow from operations, which is cash flow from operating activities before changes in working capital was $3 1 billion for both the first quarters of 2025 and 2024.
Randy Fowler: We declared a distribution of $53.05 per common unit for the first quarter of 2025. This is a three 9% increase over the distribution declared for the first quarter of 2024. This.
Randy Fowler: This distribution will be paid on May 14 to common unitholders of record as of the close of business on April 30.
Randy Fowler: In the first quarter the partnership purchased approximately $1 8 million common units off the open market for $60 million total repurchases for the 12 months ending March 31, 2025, or $239 million or approximately 8 million bpd common.
Randy Fowler: And it's bringing total purchases under our buyback program to approximately $1 2 billion.
Randy Fowler: In addition to buybacks our distribution reinvestment plan and employee unit purchase plan purchased a combined 6 million common units on the open market for $181 million. During the last 12 months. This includes $1 1 million common units from the open market for $35 million.
Randy Fowler: During the first quarter 2025 for.
Randy Fowler: For the 12 months ending March 31, 2025 enterprise pay down approximately $4 6 billion and distributions to our limited partners.
Randy Fowler: <unk> with 239 million of common unit repurchases over that same period enterprises total capital returned was $4 $9 billion, resulting in a payout ratio of adjusted cash flow from operations of 56% since our IPO in 19.
Randy Fowler: We have returned $58 billion to unit holders in the form of distributions and buybacks.
Randy Fowler: Total capital investments in the first quarter of 2025 were $1 1 billion, which included $964 million of growth capital for growth capital projects and $103 million.
Randy Fowler: Sustaining capital expenditures.
Randy Fowler: Our expected range of growth capital expenditures for 2025, and 2026 remains unchanged for 2025. This is.
Randy Fowler: Four to $4 5 billion.
Randy Fowler: And for 2026, it's 2.0 to two 5 billion. We continue to expect 2025 sustaining capital expenditures to be approximately $525 million, which includes a planned turnaround at our octane enhancement plant later this year.
Randy Fowler: Our total debt principal outstanding was approximately $31 9 billion as of March 31, 2025, assuming the final maturity date of our hybrids. The weighted average life of our debt portfolio was approximately 18 years.
Randy Fowler: Weighted average cost of debt was four 7% down approximately 96% of our debt was fixed rate.
Randy Fowler: Our consolidated liquidity at the end of the quarter was approximately $3 $6 billion, including availability under our credit facilities and unrestricted cash on hand.
Randy Fowler: Our adjusted EBITDA for the quarter was $2 $4 billion and for the last 12 months was $9 9 billion as of March 31, 2025, our consolidated leverage ratio was three one times on a net basis after adjusting for.
Randy Fowler: For the partial equity treatment of our hybrid debt and reduced by the partnerships unrestricted cash on hand or.
Randy Fowler: Our leverage target remains.
Randy Fowler: 3.0 times, plus or minus two five times with that literally we can open it up for questions. Thank you Randy operator, please open the call for questions.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone.
Randy Fowler: Yourself from the queue you May press Star one one again please.
Speaker Change: Please limit yourself to one question and one follow up or two questions to allow everyone the opportunity to participate.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question.
Speaker Change: Comes from the line of Jean Ann Salisbury of Bank of America. Please go ahead Jean Ann.
Speaker Change: Hey, good morning.
Speaker Change: LPG export or can you tell us you touched on this in your comments, but can you tell us what youre seeing real time today is all U S. LPG currently being rerouted away from China and as my follow up more broadly can you talk about how you see the competitive landscape for LPG exports here in light of the tariffs and significant capacity being built.
Speaker Change: And others. Thank you.
Speaker Change: Hi, Jamie this is Doug so on the first part of your question.
Speaker Change: We are currently seeing the trade flows what the balance we have not seen a disruption on any of our exports on ethane or LPG rehab.
Speaker Change: We have limited direct exposure on LPG and ethane to China, We don't have a single contract with a Chinese entity.
Speaker Change: Our Counterparties are typically international companies, you know how to navigate international volatility now what our customers export to China is approximately 32% on LPG and 40% to 50% on ethane.
Speaker Change: Second part of your question about the competitive landscape.
Speaker Change: <unk> for our brownfield expansion of the Houston ship channel is around $400 million.
And we get 300000 barrels a day of capacity for that investment so compared to the other announced projects and their respective capital. Our expansion is the most capital efficient on a per unit basis of export capacity.
Speaker Change: Expect a significant capital advantage to translate into the most competitive terminal fees in the market for our customers.
Speaker Change: Yeah.
Speaker Change: Great that's helpful.
Speaker Change: I'll leave it there.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: It comes from the line of Spyros units of Citi. Please go ahead spiral.
Speaker Change: Thanks, operator, good morning team.
Speaker Change: Just wanted to go back to some of the projects you had sort of lifted off coming online later this year I think in total something like $6 billion of projects starting up in 2025, which just sort of basic midstream multiple gets you about 800 million of incremental EBITDA. So curious how much of that would you say sort of hardwired.
Speaker Change: Doesn't really rely on a lot of incremental growth from here and how should we think about that EBIT ramp and cadence it sounds like more of a 'twenty six item, but curious how to think about that.
Speaker Change: I'm, having a hard time understanding it.
Speaker Change: Okay.
So you've got $6 billion of projects and that's about 800 million of EBITDA.
Speaker Change: Put a pretty standard multiple on it I guess I'm just curious how youre thinking about the ramp up in the cadence of that $800 million of EBITDA coming online is that all 26 item as it can take years to kind of come to fruition.
Speaker Change: What's the ramp on your ground processing plants Natalie.
Speaker Change: Our processing plants when they come online here in the next couple of months will be.
Speaker Change: Close to four <unk>.
Speaker Change: Midland.
Speaker Change: And let's call it 60%, 75% full in the Delaware, So pretty fast for us.
Speaker Change: Exactly where will you be on your 514.
Speaker Change: I don't think we've ever shown we haven't bought a effect not full.
Speaker Change: Okay.
Speaker Change: Doug or just in exports.
Speaker Change: I mean on the exports.
Speaker Change: 85%, 90% contracted on LPG.
Speaker Change: I think I mentioned that last earnings call and we're now towards the upper band of that so as those projects come online they are contracted.
Speaker Change: We have I think it's it's fairly 12 projects that we list.
Speaker Change: Eight of those projects are supply projects in.
Speaker Change: The remainder are our market projects.
And we're pretty confident that they're going to be fairly full when they come out.
Speaker Change: Great good to hear Jim. Thanks for that second question, maybe over to you. Tony Obviously, you put out good fundamental update a little less than a month ago. Obviously, a lot has happened since then in and around that time. So just curious maybe how youre thinking about some of the assumptions that went into that initial forecast if anything sort of changed in the last month or so I realize it.
Speaker Change: So to some degree early days here and to the extent, you're seeing any sort of producer reaction based on some OPEC supply returning to the market.
Spiro: Yeah Spiro.
Spiro: Let's first talk about what we show what our numbers show happened in 2024, I think that's a good place to start.
Spiro: For the Permian Basin, and I'll focus on the Permian Basin, we show that Black oil production grew about 325000 barrels in 2024.
Spiro: Rich gas Bob can have these ngls about 300000 barrels.
Spiro: We run our base case that we've recently published on $65 <unk> and $3 50 natural gas at Henry hub.
Spiro: Today.
Spiro: That oil prices. We go forward over the next three to five years since you know.
Spiro: Closer to 60 than it does 65.
Spiro: In general, we and others believe that 55 to 60 pushed the Permian more or less in a maintenance mode.
Spiro: And closer to $50 takes the Permian probably below maintenance.
Spiro: It's likely the largest in sanish impact will be on the smaller players those running less than three rigs out of 300 rigs running in the Permian about 75, but those are operated by small operators that have three or less rigs running.
Spiro: That's probably the most immediate impact Youll see you are hearing some of the producers at this point.
Spiro: I guess I'll speak to it here in a second talk about dropping I'm on a call onesies and Twosies, but no no big step function and what they're.
Spiro: Planning to do I.
Spiro: I think the most important point to make and we've been trying to make it for at least the last three years because crude declines are steeper than natural gas we've run a theoretical flat cash for Permian between now and for Permian Black oil between now and 2027.
Spiro: And to stay right, where it is and in that case, a rich natural gas should grow between one three and one five Bcf a day between now and 'twenty seven call that a couple of hundred thousand barrels a day of natural gas liquids.
What the fundamental show Nathalie tell us what your producers are telling you.
Spiro: I'll just add.
Spiro: It relates to enterprise on the gathering and processing.
Spiro: Business by designs with our producers for some of the largest and most sophisticated investigation players in the basin and then a large percentage of our biggest producers ex integrated majors are either entirely or primarily focused on the Permian just to put that into perspective, we conducted over 1000 wells.
Spiro: In 'twenty, four and we're expecting a similar number of well connect some line of sight that we have in.
Spiro: In 2025, but its very second half oriented.
Speaker Change: Got it that's great color I'll leave it there thank you team.
Spiro: Yeah.
Spiro: Thank you Spiro.
Spiro: Our next question comes from the line of.
Theresa Chen: Theresa Chen Barclays. Your line is open Teresa.
Teresa Chen: Thank you.
Teresa Chen: Wanted to touch on that the pet Chem and refined product segment and with the return to utilization of our fleet utilization for PTH. What is your outlook for the segment for the remainder of the year and then maybe if you could touch on some of the smaller components as well, including the conversion.
Teresa Chen: If you're the 20% of your propylene production to fee based how much volumetric exposure. If you have there as well as the octane spread for.
Teresa Chen: MTBE take U S a.
Teresa Chen: Gasoline and what is your outlook on there as well please.
Chris Dan: So this is Chris Dan that was a lot I'll try to hit all of it.
Chris Dan: On on PTH is both of them today.
Chris Dan: Today are running are running very well.
Chris Dan: Even even PTH two although it is not.
Chris Dan: It's not meeting.
Chris Dan: Our full expectations, we are meeting our contractual obligations on that so that's a big step from where we were.
Chris Dan: Even even the last call.
Chris Dan: And our expectation is that we continue to run those plants at the same rates we're running today.
Chris Dan: <unk> is running above nameplate by the way.
Chris Dan: It did have a very.
Speaker Change: So we're very rough first quarter as you saw in the release.
Chris Dan: But but but.
Chris Dan: Yes.
Chris Dan: The issues that we had with mechanical not not not anything else and we think that that will resolve those.
Chris Dan: Then.
Chris Dan: On the on the RGB PGP that was in.
Chris Dan: Something that we've been working on for a little bit.
Chris Dan: Most of our refinery suppliers, what had less exposure to RGA and more on the PGP side. So we felt that was a win win we got what we thought was a very fair a fixed fee going forward. So that's going to reduce our volatility on the on the splitter margins.
Chris Dan: And then let's.
Chris Dan: Let's see I'm sure I've covered all your questions I think the last one was around.
Speaker Change: Hock Tan spreads.
Yes.
Chris Dan: So.
Chris Dan: And we've talked about in the past, how we we hedge the normal to our bond spreads. So we've done that this year.
Chris Dan: We have about 75% of our of our Spa.
Chris Dan: Fred hedged.
Chris Dan: And then the overall MTBE, there's been a little bit weaker so far this year and typically we see in the last half of the year kind of in the summer fall timeframe as gas is driving season.
Chris Dan: Picks up we see that widen a bit so that's kind of what our expectation is looking forward of course, there is no forward curve to look out for that product.
Speaker Change: Thank you, Chris I'll leave it there.
Chris Dan: Thank you.
Speaker Change: Our next question comes from the line of Jeremy Tonet of.
Speaker Change: J P. Morgan your line is open Jeremy.
Jeremy Tonet: Hi, good morning.
Speaker Change: Good morning, Jeremy.
Jeremy Tonet: Hi, I just wanted to touch on the topic of buybacks, if I could and how recent market price volatility might have impacted your view on the near term there and thoughts I guess moving forward in 'twenty six as Capex tapers off a bit there if there might be room for cap buybacks to step up a little bit next.
Speaker Change: Sure.
Speaker Change: Yes, Jeremy I appreciate it.
Speaker Change: Question.
Speaker Change: Yes, I think we covered it on the fourth quarter call.
Speaker Change: And really we're in the same place today.
Speaker Change: If we come in and look over the last 12 months.
Speaker Change: Our excess distributable cash flow.
Speaker Change: It's about $3 $3 billion.
Speaker Change: And the way I would think about excess distributable cash flow. So you've already taken care of the distribution and then then then the next is to go ahead and cover growth Capex and then after that then you then you have what you have left us.
Speaker Change: <unk> for buybacks and for debt pay down and what we what we had highlighted on the last call. If you have come in and you look at mid single digits.
Speaker Change: Growth in cash flow per unit once you get out to 2026, its probably putting you're somewhere around three 6 billion.
Speaker Change: Our area for excess DCF.
Speaker Change: With with growth Capex in a range of two to $2 5 billion that leaves you maybe $1 billion.
Speaker Change: A billion five available for debt pay down in <unk>.
Speaker Change: So again 2026 should be.
Speaker Change: Hum.
Speaker Change: A big change in mix.
Speaker Change: Excess distributable cash flow.
Speaker Change: Got it thank you for that.
Speaker Change: And if I could maybe just as it relates to the management team.
Speaker Change: It seemed departure recently and so when might we hear more I guess on the CFO role or any other change.
Speaker Change: Changes in management.
Speaker Change: Oh.
Speaker Change: Jim.
Speaker Change: Hello, Good ramp as we said we think in terms of decades not quarters, we got a bench.
Speaker Change: It is unbelievable.
Speaker Change: Young to middle aged talent.
Speaker Change: And I'm not worried at all.
Speaker Change: What our succession plans are.
Speaker Change: And that's about all we're going to share.
Speaker Change: Got it fair enough. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of John Mackay of Goldman Sachs. Please go ahead John.
Speaker Change: Hey, good morning. Thank you for the time I wanted to go back to.
Speaker Change: The NGL exports and some of that kind of global global dynamics understand the comments on tariffs ultimately maybe at least for right now not being a major issue. Just curious are you seeing any sort of slowdown though in terms of a.
Broader macro impact, meaning we could see kind of lower demand.
Speaker Change: Asia for some of these products and therefore see some knock on effects or is everything going pretty well there so far.
Speaker Change: I'm going to hand, it off to Ted This is Jim and I'll start.
Speaker Change: We've recently signed contracts with the southeast Asian companies.
Speaker Change: And they are not small.
Speaker Change: And.
Speaker Change: I have not seen any changes in behavior at our docs do you want to pick it up.
Speaker Change: You sold out on your ethane exports on your export.
Speaker Change: Fully contract on our ethane exports in Nevada, LPG and like I mentioned earlier, 85% to 90% on our LPG, but if you look at it doesn't change the fundamental fact that there is a demand slowdown internationally. All that means is that propane has to continue to price lower to compete with math because ultimately the barrel has to clear.
Speaker Change: We can still a lot of propane out of the country in the U S. But we cannot do it indefinitely, so price will solve that.
Speaker Change: Place naphtha or other other products.
Speaker Change: Okay. That's clear thank you and maybe just.
Tony: Picking up on a couple of threads from earlier, Tony your market forecast.
Speaker Change: Kind of.
Speaker Change: Reflective of the some of the changes you made last couple of years higher.
Speaker Change: As you know.
Speaker Change: Stronger NGL outlook, even if oil is a little flatter.
Speaker Change: Is this changing your view at all on how you're thinking about the 26 Capex budget.
Speaker Change: With that in the context of maybe a.
Speaker Change: Macro slowdown a little bit is there a rest of the upside or downside to that two to $2 5 billion of Capex, you're framing up for next year.
Speaker Change: Yes, John.
Speaker Change: Jump in here because really when we look at 2026 and look at two to $2 5 billion of growth Capex.
Speaker Change: The bulk of that Capex is related to this seven $6 billion worth of assets under construction.
Speaker Change: So if I come in and if you say so.
Speaker Change: Our range expectation is two to two and a half and let's just say two and a half that's probably $600 million to $700 million worth of identified growth projects.
Speaker Change: That still might be in development, but but nothing has been <unk>. So.
Speaker Change: If you even take that away that comes in and tells you. We probably have 181 9 billion in growth Capex.
Speaker Change: Next year, just to come in and finish construction of the projects that have already.
Speaker Change: Does that deal.
Speaker Change: Yeah, that's clear I appreciate it thank you.
Speaker Change: With me.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Michael Blum of Wells Fargo. Please go ahead Michael.
Michael Blum: Thanks, Good morning, everyone.
Michael Blum: I wanted to sort of follow up on that Capex question, and a little maybe a little more.
Michael Blum: Detailed.
Michael Blum:
Michael Blum: If tariff policy does slow global demand on a more consistent basis and this isn't a temporary situation.
Michael Blum: Would you consider slowing some of your NGL expansion projects or are those just kind of fully contracted committed customer and so theyre going to move forward, regardless of what happens on tariffs.
Michael Blum: You're talking about what we have under construction now.
Michael Blum: Under construction and plans.
Michael Blum: Yeah.
Michael Blum: I think we're pretty well contracted I can't see a slowing down of what we've got under construction.
Tony: And Michael I think one of the ways, we think about it Tony Tony put out.
Tony: Commented earlier that even if you saw crude production go flat.
Speaker Change: We will have call. It one five Bcf a day of natural gas production growth out of the Permian, which represents maybe 200000 barrels a day of NGL growth coming out of the Permian. So.
Speaker Change: Again, the projects that we have under construction really the bulk of them will be finished by the end of the year with some carryover.
Speaker Change: With some carryover on important niches.
Speaker Change: But a lot of it will be finished by the end of the year.
Speaker Change: So it's hard to see any slowdown from that standpoint, and I think one of the things to also keep in mind is and I think Tony had it in past Investor day presentations that when you come in and you look at crude oil demand growth and ethylene and propylene demand growth.
Speaker Change: There are about I think crude might be non times GDP growth.
Speaker Change: <unk> growth is like one two propylene, maybe one three GDP growth and the economist that I've seen as far as trying to come in and forecast the impact of tariffs on global Judy Z growth.
Speaker Change: Estimates I've seen anywhere from a half a percent to 8%, but you still have growth. So.
Speaker Change: It's hard to see.
Speaker Change: Hard to say.
Speaker Change: We're not going to see demand growth for the product.
Speaker Change: In.
Speaker Change: 25, 26 does that help.
Speaker Change: It does.
Speaker Change: Thank you it does I appreciate that.
Speaker Change: Alright, that's all I have today. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Brandon Bingham of Scotiabank. Please go ahead Brandon.
Brandon Bingham: Hi, good morning, Thanks for taking the question here would just like to maybe talk about the inorganic side of Capex in.
Brandon Bingham: Just in light of kind of where everything is trading now public and private if you see maybe in a growing opportunity to capitalize on some of these depressed prices or if maybe.
Brandon Bingham: There is kind of just.
Brandon Bingham: A standoff between.
Brandon Bingham: Our bid ask spread situation, where sellers are more unwilling to transact at this level just any high level thoughts you have around how that might factor into the strategy moving forward.
Speaker Change: Brandon This is Jim <unk>.
Brandon Bingham: If it doesn't we have.
Speaker Change: And we're probably not going to be interesting.
Speaker Change: If you look at our system everything we've acquired or built.
Speaker Change: That's what we already have.
Randy Fowler: Plus Randy always says price matters.
Speaker Change: Okay Fair enough and then maybe just a quick one.
Speaker Change: Looking at the slides it looks like some of the movements on a quarter over quarter basis and segment margin were related to marketing. If you could just maybe provide some incremental detail around the moving pieces there.
Speaker Change: Yeah on NGL marketing.
Speaker Change: Specifically in the first quarter, we had an additional LPG contracts step up.
Speaker Change: Lower rates and the spot rates, we achieved last year. So we had two to three cargos a month, we're selling for example in the fourth quarter around 20 cents a gallon in that spot margin has compressed in addition to additional term contract stepping up.
Speaker Change: On the flip side of that we had a pretty good quarter.
Speaker Change: Quarter natural gas marketing business.
Speaker Change: We did on our natural gas marketing segment.
Speaker Change: We had two really two bites of the Apple at winter volatility in January and February which.
Speaker Change: Help us out and we're also seeing higher.
Speaker Change: The east spreads Whitehall.
Speaker Change: So that was beneficial.
Speaker Change: Yeah.
Speaker Change: Awesome. Thanks, guys.
Thank you.
Speaker Change: Our next question comes from the line of Manav Gupta of UBS. Please go ahead manav.
Manav Gupta: Good morning.
Manav Gupta: Wanted to ask you can you give an update on the progress you are making at the mental invest in <unk> to get those projects online.
Manav Gupta: Yes. This is Graham both of those projects are.
Manav Gupta: Coming online construction is going very well we're in early commissioning on the first Minto West project.
Manav Gupta: Those projects, probably coming in a little bit ahead of schedule.
Manav Gupta: Perfect.
Manav Gupta: You have $7 6 billion of major capital projects under construction 6 billion are expected to come online in this year. So help us understand how are the talks going to replenish that backlog. So once these projects still come online how can you grow the backlog from here.
Manav Gupta: What was the question.
Manav Gupta: Yeah.
Manav Gupta: <unk>.
Manav Gupta: Stepping out to 2020.
Manav Gupta: Six that's where our expectation is growth capex is $2 million to $5 million and we've said that if you would the unidentified wedge and that is only about six or $700 million.
Manav Gupta: Two plants, yes, so yeah as Jim Jim said.
Two natural gas processing plants.
Manav Gupta: <unk>.
Manav Gupta: And again.
Some of this is going to be dictated the need for the plants, obviously is going to be dictated by the pace of producers and producer activity.
Speaker Change: But just even again throwing out what Tony did earlier, even with if crude were to stay flat crude production out of the Permian more to stay flat for two years, you've got increase of 1.5 Bcf a day of natural gas that's five processing plants at 300 million cubic feet a throat.
Manav Gupta: No.
Manav Gupta: I think some of the some of the pace of growth will be dictated by our producer customers.
Manav Gupta:
Manav Gupta: Here in the near term.
Manav Gupta: Thank you guys.
Manav Gupta: Thank you our next.
Manav Gupta: Question.
Manav Gupta: Comes from the line of Keith Stanley of Wolfe.
Speaker Change: Search. Please go ahead Keith.
Speaker Change: Hi, Good morning wanted to ask the Capex question from from another angle.
Are there any things on the drawing board that could potentially cause 2026 growth capex to be materially higher than two to $2 5 billion or is that very unlikely at this point.
Speaker Change: Andy I'm going to say, it's very unlikely.
Speaker Change: Okay.
Speaker Change: One other thing I would throw out there.
Speaker Change: And I think we are.
Speaker Change: We're talking we're talking about level of Capex.
Speaker Change: Relative to where Capex has been in 2024, and 2025 and really these peak levels of growth Capex for us and really you've got to go back to 2018 in 2019, when we were at that level of growth Capex, when we were bringing on.
Speaker Change: New plants and really are not really new plants, because those are more bite size, but when we were building more crude oil pipelines into yelp pipelines from Permian to Houston and to a degree what's happening here exactly we've got two projects that I can think of that probably.
Speaker Change: Our almost 50% of that $7 6 billion.
Speaker Change: Instruction. So again, we are at very elevated levels, then and then when I think about some of those projects the operational leverage that we have around that.
Speaker Change: We can add a lot of capacity for instance in Bahia, we can add a good bit of capacity for us.
Speaker Change: Call. It 400000 barrels a day of capacity for probably $300 million of the operational leverage that we have on expansions as a result of what we spent over the last couple of years really comes in and makes our growth Capex in 2006, and what we envision in 27 really to be able to come back down to more <unk>.
Speaker Change: <unk> run rate of two to two and a half and how many.
Natalie how many processing plants were built in the Permian in the last three or four years.
Speaker Change: More than muscle count.
Speaker Change: We got out there 2000 trained well were on number 11 in the Delaware and number eight.
Speaker Change:
Randy Fowler: So a lot of what we're doing is supply projects and I think to Randy's point.
Speaker Change: Okay, what Doug said earlier.
Speaker Change: We're going to get 300000 barrels a day for $400 million on our export facility I think that's a classic example of what our future looks like.
Speaker Change: Asset base.
Speaker Change: That's very helpful color didn't realize that 400000, a day on behalf of $300 million.
Speaker Change: Second question.
Speaker Change: On the crude segment Q1 was lower you called out lower deficiency fees.
Speaker Change: What asset is that on an as the Q1 results more reflective of our run rate from here or not.
Jay: Yes, Keith this is Jay.
Jay: As we think about the Q our results this quarter on crude we had a couple of impacts one was predominantly on lower sales volumes and a piece of that is also on sales margins. So just concentrating on the volume component this quarter versus first quarter of last year keeping them.
Jay: And that we had volumes on our Midland to Echo two pipeline that was still flowing into Midland before we turn it over to Ngls made a little bit on <unk>, but to your question about how we think about that moving forward. We're already into April we're seeing good results both on the volume and margin side.
Jay: I would my.
Jay: My view here at least in April stanzas, we're pushing past that.
Speaker Change: Ah you're pipe out of Midland.
Jay: Pipes out of Midland are full today.
Jay: Looking forward to getting similar back into crude service here later this year.
Jay: Will it people and it will be cool.
Thank you.
Speaker Change: Thank you I would now like to turn the conference back to living strength for closing remarks.
Jay: Thank you to our participants for joining us today that concludes our remarks have a good day.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
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