Q2 2025 Kinder Morgan Inc Earnings Call

It is now my pleasure to turn the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan. Sir, you may begin.

Thank you, Michelle. Before we begin, as usual, I'd like to remind you that KMI's earnings released today and this call include forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934, as well as certain non-GAAP financial measures. Before making any investment decision, we strongly encourage you to read our full disclosures on forward-looking statements and use of non-GAAP financial measures set forth at the end of our earnings release, as well as review our latest filings with the SEC for important material assumptions, expectations, and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements.

State your name and prompted. Today's conference is being recorded if you have any objections, you may disconnect at this time, it is now my pleasure to turn the call over to Mr. Rich Kinder executive, chairman of Kinder Morgan sir. You may begin. Thank you, Michelle. Before we begin as usual, I'd like to remind you that kmi's, earnings release today and this call include forward-looking statements within the meeting of the private Securities, litigation Reform, Act of 1995, and the Securities, Exchange Act of 1934, as well as certain non-gaap Financial measures.

In previous quarterly calls, I've emphasized the positive attributes of the natural gas story, concentrating primarily on the rapidly growing demand in America. But as we all know, the gas market is international in nature, and a great deal of the growth potential for U.S. production is driven by that worldwide increase in demand. So I thought today I would spend a bit of time sharing some thoughts on what's driving that overseas growth. Chief Economist of a major oil company recently estimated that global gas demand is expected to increase by 25% over the next 25 years, and I don't believe that that projection is unreasonable and it affirms my belief that natural gas will inevitably remain a key source of energy for the long term around the globe.

We're making any investment decision. We strongly encourage you to read our full disclosures on Paul. We're looking statements and use of non-gaap financial measures set forth. At the end of our earnings release, as well as review, our latest filings with the SEC for important material, assumptions, expectations and risk factors. That may cause actual results to differ materially from those anticipated and described in such forward-looking statements.

In previous quarterly calls, I've emphasized the positive attributes of the natural gas Storey concentrating. Primarily on the rapidly growing demand in America.

But as we all know, the gas markers International in nature and a great deal of the growth potential for us production is driven by that worldwide increase in demand.

So I thought, today I would spend a bit of time sharing some thoughts on what's driving that overseas growth.

Chief Economist of a Major Oil Company. Recently, estimated

Factors underpinning that growth are pretty easy to understand. Demographers project continued substantial growth in worldwide population over that time period, in the range of 2 billion additions by 2050. The great bulk of that increase will occur in the emerging markets of Asia and Africa, where the need for energy is particularly acute, as large portions of the population move into the middle class, which drives additional energy consumption. Because there is a lack of local production and an inability to access gas by land-based delivery in most of those nations, it will be LNG which will satisfy the bulk of this additional demand, and I think it will grow faster than the overall demand for natural gas.

Global gas demand is expected to increase by 25% over the next 25 years and I don't believe that that projection is unreasonable and it affirms my belief that natural gas will inevitably remain a key source of energy for the long term around the globe.

Factors underpinning that growth are pretty easy to understand. Demographers project continued substantial growth in worldwide population over that time period in the range of 2 billion editions by 2050.

the great bulk of that increase will occur in the Emerging Markets of Asia and Africa, where the need for energy is particularly acute as large portions of the population move into the middle class, which drives additional energy consumption,

Now, what's the impact of all this international growth on the U.S. energy segment? I believe that American exports of LNG will play a critical role in supplying this international LNG demand. The U.S. has been the top global producer of natural gas for 15 consecutive years and the world's top exporter of LNG since 2023. I believe the U.S. role becomes even more important in light of recent developments in the Middle East. Customers on the receiving end want security of supply without undue worries about disruptions caused by military actions, and this benefits the position of U.S. supply.

Because there's a lack of local production and an inability to access gas by land-based delivery. In most of those Nations, it will be LNG which will satisfy the bulk of this additional demand. And I think it will grow faster than the overall demand for natural gas.

Now, what's the impact of all this International growth on the US Energy segment? I believe that American exports of LNG will play a critical role in supplying, this International LNG demand.

The US has been the top of global producer of natural gas for 15 consecutive years and the world's top exporter of LNG since 2023.

I believe the US role becomes even more important in light of recent developments in the Middle East.

This makes us confident that a major portion of the LNG required will move through America's rapidly growing liquefaction terminals. Consistent with this view is the recent estimate of S&P Global Commodity Insights that LNG feed gas demand in America will increase by 3.5 BCF a day this summer compared to the summer of 2024, and that it will more than double by 2030. That should be a real positive for Kinder Morgan, inasmuch as we move about 40% of all the feed gas for those facilities. When you add the international LNG growth to the robust need for gas to satisfy U.S.

Customers on the receiving end. Once security of Supply without undue worries, about disruptions caused by military actions, and this benefits the position of us Supply

This makes us confident that a major portion of the LG required will move through America's rapidly growing liquefaction terminals.

Consistent with this view is the recent estimate of S&P global commodity insights that LNG feed gas demand in America will increase by 3.5 BCF a day this summer compared to the summer of 2024 and that it will more than double by 2030.

domestic power and industrial demand, examples of which are reflected in the new expansions that Kim and the team will be discussing on this call, it signals to me that the positive natural gas story has legs and will last for decades to come.

With that, I'll turn it over to Kim and the team. Okay.

Thanks, Ruth. Our financial results for the quarter show strong growth over the second quarter of 24, with adjusted EBITDA increasing by 6% and adjusted EPS increasing by 12%. For the year, we currently expect to exceed our original budget, which already reflected very nice growth, by at least the contribution from the Outrigger acquisition.

That should be a real positive for Kendall Morgan in as much as we move about. 40% of all the feed, gas for those facilities. When you add the LG, the international LG growth to the robust, need for gas to satisfy us, domestic power and Industrial demand examples of which are reflected in the new expansions that came and the team will be discussing on this. Call the signals to me that the positive natural gas store has legs. And will last for decades to come that, I'll turn it over to Kim and the team. Okay?

Growth over the second quarter of 24 with adjusted ebit da increasing, by 6% and adjusted EPS increasing by 12%.

It's an amazing time to be in the natural gas industry. This is certainly the best opportunity set I've seen during my 24 years in this industry. The underlying market fundamentals are strong with U.S. natural gas demand expected to grow by 20% between now and 2030 by Woodmax estimate. The federal permitting environment has improved. The U.S. Army Corps of Engineers is issuing permits very quickly. We've seen some recent AFERC action, which is helpful, including a 50% increase in the prior notice limit and a one-year waiver of the five-month waiting period between the time before you can start construction, between the time the permit is issued and you can start construction.

For the year, we currently expect to exceed our original budget, which already reflected very nice growth by, at least the contribution from the Outrigger acquisition.

Infinity set. I've seen during my 24 years in this industry, the underlying Market fundamentals are strong with us natural gas demand, expected to grow by 20% between now and 2030 by woodmaxx estimates.

The federal permitting environment has improved. The US Army Corps of Engineers is issuing permits very quickly. We've seen some recent at ferc action which is helpful including a 50% increase in the prior notice limit. In a 1 year, waiver of the 5-month waiting period between the time, uh, before you can start construction.

So the Supreme Court ruling on NEPA should help narrow the scope of the NEPA reviews and make nuisance lawsuits more difficult. The recent budget reconciliation bill delivers nice tax benefits, including incentives for investment and expanded interest deductions. As a result, we expect significant cash tax benefits in 2026 and 2027 and do not expect KMI to be a material cash taxpayer until 2028.

Between the time, the permit is issued and uh, and you can start construction. So the Supreme Court ruling on NEPA should help narrow the scope of the need for reviews and make nuisance lawsuits more difficult, the recent budget, reconciliation, Bill delivers, nice tax benefits, including incentives for Investments and expanded interest deductions

The one fly in the ointment is tariffs. However, at this point, we still do not believe that the tariffs will have a significant impact on project economics. For our large projects, MSX, South System 4, Trident, GCX, and Bridge, that together comprise almost two-thirds of our backlog, we currently estimate that the impact of tariffs to be roughly 1% of project costs, which has not changed from our estimate last quarter. Our project backlog increased from $8.8 billion to $9.3 billion during the quarter. We added $1.3 billion in new projects and placed approximately $750 million of projects in service.

As a result, we expect significant cash tax benefits in 2026 and 2027 and do not expect KMI to be a material. Cash, taxpayer until 2028,

The 1 fly in, the ointment is tariffs. However, at this point we still not do not believe that the tariffs will have a significant impact on Project economics.

For our large projects, MSX Health System, 4, Trident, gcx, and bridge that together comprise almost 2/3 of our backlog. We currently estimate that the impact of tariffs to be roughly. 1% of project costs, which is not changed from our estimate last quarter.

The projects we added included Trident Phase II and the Louisiana Line Texas Access Project, which include moving natural gas from Katy, Texas, into the Louisiana LNG market. We also added two NGPL projects to serve power plants. All these projects are underpinned by long-term contracts and have attractive returns. We also approved approximately $500 million of CapEx for Kinderhawk, which is supported by life-of-lease contracts to accommodate a significant volume ramp-up by our customers. Currently, approximately 50% of the projects in our backlog will serve power demand. The multiple on the backlog is around 5.6 times, slightly improved from Q1, as the projects we placed in service were at a lower, that we placed in the backlog, were at a lower multiple than the projects we placed in service.

Our project backlog increased from 8.8 to 9.3 billion during the quarter. We added 1.3 in new projects and placed approximately 750 million of projects and service.

The projects we added included Trident Phase 2 and the Louisiana line, Texas Access Project which include moving natural gas from Katy Texas into the Louisiana LNG Market.

We also added 2 ngpl projects to serve power plants.

All these projects are underpinned by long-term contracts and have attractive returns.

We also approved approximately 500 million of capex for Kinder Hawk, which is supported by life of lease contracts to accommodate a significant volume ramp up by our customers.

Overall, despite $6 billion in project additions to our backlog in the past year, we continue to see very nice future investment opportunities.

Currently approximately 50% of the projects in our backlog, will serve power demand. The multiple on the backlog is around 5.6 times slightly improved from q1 as the projects, we placed in service um were at a lower that we placed in the backlog. We're at a lower multiple than the projects. We placed in service

As Tom Martin said to me the other day, we aren't in the first inning anymore, but we aren't anywhere near the seventh inning stretch. Our strategy remains unchanged. We own and operate stable fee-based assets, which are core to the energy infrastructure. We use our significant cash flow generated by these assets to invest in attractive return projects, and we return money to our shareholders, all while maintaining a solid balance sheet.

Speaker Change: overall despite 6 billion dollars in Project additions to our backlog in the past year we continue to see very nice future investment opportunities, as Tom Martin said the media the other day

Tom Martin: We aren't in the first inning anymore but we aren't anywhere near the seventh inning stretch.

With that, I'll turn it over to Tom. Thanks, Kim. Starting with the natural gas business unit, transport volumes were up 3% in the quarter versus the second quarter of 2024, primarily due to LNG deliveries on Tennessee gas pipeline, as well as new contracts and LNG deliveries on our Texas intrastates. Natural gas gathering volumes were down 6% in the quarter versus second quarter of 2024 across most of our GNP assets, the biggest impact being in our Haynesville system. Sequentially, total gathering volumes are down 1%. Our producer customers are still ramping back up after lower gas prices in the second half of 2024.

Tom Martin: Our strategy remains unchanged, we own and operate stable, fee-based assets, which are core to the energy infrastructure. We use our significant cash flow generated by these assets to invest in attractive, return projects, and we return money to our shareholders. All while maintaining a solid balance sheet with that, I'll turn it over to Tom.

Tom Martin: Thanks Ken.

Starting with the natural gas business unit transport volumes were up, 3% in the quarter versus the second quarter of 2024 primarily due to LG deliveries on Tennessee gas pipeline.

Uh, as well as new contracts and LG deliveries on our Texas intrastate system.

Tom Martin: Natural gas Gathering volumes were down 6% and the quarter versus second quarter 24.

Tom Martin: Across most of our G&P uh, G&P assets. The biggest impact being in our hanesville system.

For the full year, we expect our gathering volumes to average 3% above 2024, but 3% below our 25 budget. We anticipate gathering volumes will grow over the balance of the year, given the higher price environment than in 2024, and the need for increased production to meet LNG demand growth that is ramping up throughout the remainder of the year.

Sequentially total Gathering volumes were down 1% or 1. Produce our producer customers are still ramping back up after lower gas prices in the second half of 2024 for the full year. We expect our gathering volumes to average, 3% above 2024 but 3% below our 25 budget.

Looking forward, we continue to see significant incremental project opportunities across our natural gas pipeline network to expand our transportation and storage capabilities in support of the growing natural gas market. In our products pipeline segment, refined products volumes are up 2%, and crude and condensate volumes are also up 2% in the quarter compared to the second quarter of 2024. The full year 2025 refined products volumes are forecasted to be approximately 2% higher than in 2024 and flat to our budget. In our terminals business segment, our liquids lease capacity remains high at 94%. Market conditions continue to remain supportive of strong rates and high utilization at our key hubs at Houston Ship Channel and the New York Harbor.

We anticipate Gathering volumes will grow over the balance of the Year, given the higher price environment than in 2024 and the need for increased production to meet LNG, demand growth. That is ramping up throughout the remainder of the year.

Tom Martin: Network.

To expand our transportation and storage capabilities and support of the growing natural gas market.

And our products pipeline segment. Refined products volumes are up 2%, including condensate volumes are also up 2% in the quarter, compared to the second quarter of 2024.

For the full year, 2025 refined products volumes are forecasted to be approximately 2% higher than a 2024 and flat to our budget.

Our Jones Act tanker fleet is fully leased today and through the remainder of 2025. Assuming likely options are exercised, the fleet is 100% leased through 2026. and 97% lease through 2027. We have opportunistically chartered a significant percentage of the fleet at higher market rates and have extended the average length of our firm contract commitments to four years. The CO2 segment experienced slightly lower oil production volumes at 3%, higher NGL volumes at 13% and lower CO2 volumes at 8% in the quarter versus second quarter of 2024.

Tom Martin: In our terminals business segment. Our liquids lease capacity remains high at 94% market conditions, continue to remain supportive of strong rates and high utilization at our key, hubs at Houston Ship Channel and the New York Harbor.

Tom Martin: our Jones act tanker Fleet is fully leased today and through the remainder of 2025,

Tom Martin: assuming likely options are exercised. The fleet is 100% least through 2026.

And 97% lease through 2027.

We have opportunistically chartered, a significant percentage of the fleet at higher Market rates. And if an extended the average length of our firm contract commitments, uh, to 4 years,

For the full year, oil volumes are forecasted to be 4% below 2024 and 1% below our 2025 budget.

Tom Martin: The CO2 segment experienced slightly lower oil production blames at 3%, higher in GL volumes at 13% at lower CO2, volumes at 8% in the quarter versus second quarter of 2024.

With that, I'll turn it over to David. Okay, so we're declaring a dividend for the quarter of 29.25 cents per share, which is $1.17 per share annualized at 2% up from our 2024 dividend. For the quarter, we generated net income attributable to KMI of $715 million, which is 24% above the second quarter of 2024. Generate DPS of $0.32 up $0.06 from last year. Some of that benefit was due to favorable mark-to-market on unsettled hedges which we treated certain items, but on an adjusted net income basis which excludes certain items, we generated $619 million and adjusted EPF at 28 cents, up 13 and 12 percent from last year respectively.

For the full year, oil volumes are forecasted to be 4% below 2024, and 1% below our 2025 budget.

Tom Martin: With that. I'll turn it over to David. All right, thanks Tom.

Okay, so we're declaring a dividend for the quarter of 29.25 cents per share which is a17 per share annualized and 2% up from our

Tom Martin: 2024 dividend.

The quarter, we generated net income attributable to KMI of 715 million which is 24% above the second quarter of 2024.

Tom Martin: To generate DPS of 32 cents up 6 cents from last year.

So even excluding the favorable certain items, we still experienced nice double-digit growth from last year. Our growth was driven by greater contributions from our natural gas expansion projects, the outrigger acquisition, and attractive multiple, excuse me, attractive natural gas capacity sales and other services driven by favorable demand on our assets. We also received greater contributions from our Jones Act tankers. On the balance sheet, we ended the quarter with $32.3 billion of net debt and a 4.0 times net debt to adjusted EBITDA ratio. That 4.0 times is down from 4.1 times from the first quarter, which was right after we'd closed the acquisition of Outrigger.

Some of that benefit was due to favorable Market to Market on unsettled Hedges which we treated certain items uh but on an adjusted net income basis, which excludes certain items, we generated 619 million and adjusted, ETFs of 28 cents up, 13 and 12% from last year respectively. So even excluding the favorable certain items. We still experienced nice double digit growth from last year.

Our growth was driven by greater contributions from our natural gas expansion projects, the Outrigger acquisition and attractive multiple, excuse me, attractive natural, gas, capacity, sales, and other services.

Tom Martin: Driven by favorable Demand on on our assets. We also received greater contributions from our Jones act, tankers

On the balance sheet, we ended the quarter with 32.3 billion dollars of net debt.

Tom Martin: And at 4.0 times net debt to adjusted Eva dial ratio.

We expect to end the year with net debt to adjusted EBITDA that rounds up to 3.9 times. Our net debt has increased by $623 million from the beginning of the year, and here is a high-level reconciliation of that change. We generated cash flow from operations of $2.811 billion for the first two quarters. We paid dividends of $1.3 billion. We've invested total capital of $1.42 billion. The outward requisition was approximately $650 million, and all of our other items were a use of cash of about $65 million, and that gets you to the $623 million increase for the year.

Tom Martin: Uh, that 4.0 times is down from 4.1 time from the first quarter. Uh which was right after we closed the acquisition of Outrigger.

Tom Martin: We expect to end the the year with net debt to adjusted Eva that rounds up to 3.9 times.

Tom Martin: Our net debt is increased by 623 million from the beginning of the year.

And here's a high high level reconciliation of that change.

We generated cash flow from operations of 2.811 billion for the first 2. Quarters, we paid dividends of 1.3 billion dollars. We've invested total capital of 1.42 billion. The Outrigger acquisition was approximately 3, 650 million dollars and all of our other items. Uh, were a use of cash of about 65 million and that gets you to the 620 23 million increase for the year.

As Kim mentioned, we expect to exceed budget by at least the contribution from the outrigger acquisition. Our budgeted 2025 adjusted EBITDA growth from 24 was 4%. Just including the outrigger acquisition, our EBITDA growth would increase to 5%. and our adjusted EPS growth would remain at an attractive 10% from 2024. Most of our 2025 budgeted growth comes from expansion project contributions. And we remain on target to place those expansion projects in service on time and on budget with only minor variance. The largest expansion contributions come from Evangeline Pass Project and our South Texas to Houston Project on our Texas Intrastate System.

Tom Martin: A kids as Kim mentioned. We expect to exceed budget by at least the contribution from the Outrigger, acquisition

budgeted 2025 adjusted Eva dog growth from 24 with 4%.

Tom Martin: just including the Outrigger acquisition, our Eva dog growth would increase to 5%

and our adjusted EPS growth would remain at an attractive 10% from 2024.

Tom Martin: Most of our 2025 budgeted growth. Comes from Expansion Project contributions.

And we remain on target to place those uh expansion projects in service, on time and on budget with only minor variances.

Both of those are now in service.

Tom Martin: The largest expansion contributions come from uh evangelene past project and our South Texas to Houston project. Our Texas and Trust State system. Both of those are now in service.

So in my final items, in June, Moody's placed our credit rating on Positive Outlook. And they joined S&P, who put us on positive earlier in the year. Our credit spreads have already improved some as a result.

Tom Martin: So in in in in my final items, in June uh, Moody's placed our credit rating on positive outlook.

So we're off to a good start for the year, tracking to beat our budget. We've sanctioned additional attractive projects that will add to our future growth and expect meaningful cash flow benefits from tax reform.

Our credit spreads have already improved some as a result. So we're off to a good start for the year, tracking to beat our budget. We've sanctioned additional attractive projects that will add to our future growth.

I'll turn it back to Kim for Q&A. Thank you.

Tom Martin: And expect meaningful cash flow benefits from tax reform.

I'll turn it back to Kim for Q&A. Okay. Um Michelle. If you'll come back on and we will take questions.

At this time, if you would like to ask a question, you may press star 1 and to withdraw your question, please press star 2. One moment please for the first question.

Speaker Change: Thank you at this time. If you would like to ask a question, you may press star 1 and to draw your question, please. Press star 2.

Theresa Chen with Barclays, you may go ahead. Good afternoon and congratulations on the progress in the commercial backlog under what seems to be fierce competition.

Speaker Change: 1 moment, please for the first question.

Speaker Change: Teresa Chen with Barkley's, you may go ahead.

Do you think the commercial landscape has changed with these demand tailwinds on a structural basis and what do you think has allowed Kinder to win many of these projects and what kind of learnings can you share that might shape your strategy going forward on the heels of these commercial wins? A couple of points on that. One, I think, you know, part of what allows us to be competitive is the existing asset footprint that we have. We've got an outstanding footprint, and so we are very competitive where we can build off of that footprint and or use the existing footprint to deliver volumes to customers.

Teresa Chen: Good afternoon and congratulations on the progress, um, in the commercial backlog. Um, under what seems to be fierce competition. Do you think the commercial Landscapes has changed with these demand Tailwind on a structural basis? And what do you think has allowed kinder to win many of these projects? And what kind of learnings can you share that might shape your strategy going forward on the heels of these commercial wins?

I'd say, you know, the other things are, I think people trust us to be able to build projects and get them delivered. And so if they've got a significant investment that, you know, they need natural gas delivered, you know, they don't want to be waiting on those molecules. When they get that project in service, you know, they want to be able to have the supply there. So I think our track record and building and delivering projects is helpful. And then I think the way we operate, you know, and the customer service that we provide in terms of trying to make sure that if we have maintenance or other items that our customers know well in advance, trying to make sure that we perform that maintenance at times when our customers would be least impacted and trying to find times when, you know, our customers, when we can find alternative delivery for them.

I think, um, you know what, part of what allows us uh, to be competitive is the existing asset footprint that we have. We've got an outstanding footprint. And so we are very competitive, um, where we can build off of that footprint or, and or use the existing, uh, footprint to to deliver volumes, uh, to customers.

Teresa Chen: I'd say you know the other things are I think people trust us to be able to build um projects and get them delivered. Um and so if they've got a significant investment that you know

Teresa Chen: They need natural gas delivered, you know, they don't want to be waiting on those molecules when they get that project in service. You know, they want to uh, they want to be able to, to have the supply there. So I think our track record and uh, building and, and delivering projects. Um, is uh, is helpful.

So, you know, I think that's some of the things that go into the commercial discussions and allow us, you know, allow us to win projects. And I think, you know, you can see from what we've added to the backlog, we've been very successful.

Teresa Chen: Um, and then I think the way we operate, you know, and the customer service that we provide, um, in terms of, uh, trying to make sure that if we have a maintenance or other items that our customers know, well, in advance, um, trying to make sure that we perform that maintenance at times, when our customers would be least impacted and trying to find time, when, you know, our customers, uh, um, when, uh, we can find alternative delivery for them. So, you know, I think that's some of the things that go into the commercial, uh, the commercial discussions, um, and allow us, you know, allow us to win projects, um,

Teresa Chen: And I think, you know, you can see from the what we've added to the backlog. We've been very successful.

Thank you. And looking forward on additional projects to come potentially in the backlog.

As far as the expansion westward from the Permian, what is the progress on building additional natural gas infrastructure on that front?

And what would something like Copper State Connector amount to in terms of cost, economics, as well as the potential for subsequent brownfield expansions down the line? Okay, let's don't get too far ahead of ourselves. You know, on, you know, Copper State, there's clearly a need in Arizona. You know, I think the Arizona utilities have need for more natural gas. I think there's the potential for data centers, and we're having conversations on those fronts. Obviously, you know, that would be, you know, a large project. There are other Copper State would, I mean, there are other smaller projects that we have that we're looking at.

Speaker Change: Thank you and uh looking forward on additional projects to come potentially in the backlog. As far as the expansion of Westward from the Parian. Um, what is the progress on, um, building additional natural gas infrastructure? Um, on that front and what would something like Copper State connector amount to in terms of cost economics? As well as the potential for subsequent Brownfield, expansions down the line,

Okay, well well, let's all get too far ahead of ourselves. Um, you know, on, you know, Copper State. There's clearly a need in Arizona. Um, you know I think uh the air is oh, no, utilities have need for more natural gas. I think there's the potential for data centers and we're having conversations on those fronts.

But it is a competitive process on Copper State. And, you know, constantly changing tariffs, you know, make things more challenging on these larger projects where we've got to come to agreement with multiple different, multiple different shippers. And then any project that we do on this front, you know, the project's going to have to meet our return thresholds. And so we're going to be very disciplined about how we deploy capital on this. You know, but I mean, a project could be anywhere from 4 to 5 billion ish.

Speaker Change: Um, obviously you know, that would be uh, you know, a large project. Um, there are other Copper State would, I mean, there are other smaller projects that we have that we're looking at. Um, but it is a competitive process on Copper State. Um, and you know, constantly changing tariffs, you know, make things more challenging on these larger projects, where we've got to come to agreement with multiple different, multiple different shippers. And then any project that we do on this front, you know, the Project's going to have to meet

Speaker Change: Our return thresholds. And so we're going to be very disciplined about how we deploy capital on.

This, you know, but I mean, uh, a project could be anywhere from 4 to 5 billion.

Very helpful. Thank you.

Speaker Change: Very helpful. Thank you.

Our next caller is Michael Blum with Wells Fargo. You may go ahead. Thanks, good afternoon, everybody. I had a capital allocation question, really between gas pipelines and gathering investments. You talked about this big opportunity set on the gas pipeline side, your average multiples, you know, between five and six times. But how do we think about a $500 million investment in Kinderhawk? Does that mean this Hainesville investment is generating an even higher return than that, given the higher risk profile?

Speaker Change: Thank you. Our next caller, is Michael Blum with Wells, Fargo, you may go ahead sir.

Times. But how do we think about a hundred million dollar investment in Kinder Hawk?

Just kind of think through all that.

Sure, so let me start by saying no change in the way that we make our investment decisions or in our approach to investment or investment return. The way we've always done it is, you know, we look at the risk reward. So you're looking at, you know, on the risk side, you're looking at how stable are the cash flows. And so that gets into, okay, is it a take or pay contract? Or is it a life of lease dedication? Does it have, you know, if it's a take or pay, is it a five year contract? Or is it a 20 year contract?

Does that mean, this Angel investment is generating an even higher return than that given the higher risk profile, just kind of, think through all that.

Speaker Change: Okay sure. So let me start by saying, no change in the way, uh, that we make our investment decisions or in our approach to investment or investment returns.

What's the credit on that? And so, you know, when you have longer contracts with higher credit worthy partners, and, and their take or pay, then you're within our return threshold range, you're going to skew to the lower side of that range. And when you have things that have commodity exposure, or volume exposure, then you're going to look for a return at the higher end of our target range.

The way we've always done it is, you know, we look at the risk reward. So you're looking at, you know, on the risk side, you're looking at how stable, um, or the cap or the cash flows, um, and so, that gets into okay, is it a take or pay contract or is it a life of lease dedication? Does it have, you know, if it's a take or pay, is it a 5 year contractor? Is it a 20-year contract? What's the credit on that? And so, you know, when you have longer contracts with higher credit worthy Partners, um, and uh, and their taker pay, then you within our return threshold range, you're going to skew to the lower side of that range. And when you have things that have commodity exposure, or volume exposure, then you're going to, uh, look for a return at the higher end of our target range.

Thanks for that. And then just wanted to get an update on how you're thinking about behind-the-meter opportunities. I know you've talked about maybe having something in place with partners. I wanted to see where that stands and how meaningful a driver of future CapEx is. So, I think, you know, when we think about where we've seen the most action on the data center front, if you will, is really from regulated utilities. I mean, that's where we're seeing most stuff get done. So, you know, a regulated utility is able to put it in their rate base. They're going out and they're getting a PPA with the data center provider.

Hey, great. Thanks for that. And then, um, just wanted to get an update how you're thinking about uh, behind the meter opportunities? I know you've talked about maybe having something in place with Partners where they want to see where that stands and how meaningful a driver of uh, future capex. That could be

We have not seen a lot of IPPs that have announced projects at this point in time. But, obviously, we are talking to them and that is, you know, that's a reasonable possibility because I think if IPPs can get contracts, you know, they'll be able to build as well.

But I'm going to turn it over to Sital and he can talk a little bit more about our strategy there. Yeah. So, one of the things, you know, as we look at the landscape on data centers, speed to market is key. And so, as we look at, you know, the opportunity set, as Kim said, our focus has thus far been on the utility side and helping them with their power needs. We are looking at, you know, kind of a broader structure such as, you know, where we've got some key partners that specialize in their respective fields.

Speaker Change: Most um, action on the data center front if you will, is really from regulated utility. So I mean that's where we're seeing most stuff get done. So you know, regulated utility is able to put it in the right base, they're going out and they're getting a con, a PPA with the data center provider. Um, we have not seen a lot of ipps that have announced projects at this point in time. Um, but obviously we are, we're talking to them and that is, you know, that's a reasonable possibility because I think if ipps can get contracts, you know, they they'll be able to to build as well, but I'm going to turn it over to see if only he can talk a little bit more about our strategy there.

Yeah. So um, 1 of the things, you know, as we as we look at the landscape on data centers, uh, speed to Market is is is is key. And so as we as we look at, you know, the opportunity set is Kim said our focus is thus far have been on on the the Utility side and helping them uh, with their power needs. Um, we are looking at, you know, kind of a

You know, our expertise lies in bringing supply to the point. We bring storage and then we, you know, we let the other folks do what they do best, including hyperscalers that know how to build data centers. And so, you know, I think the concept is we are looking at a few key sites in different areas and seeing if we can kind of pull together a bigger, broader project specifically tied to behind the media.

A broader structure such as you know, where we've got some key Partners, uh, that specialize in their respective Fields, uh, you know, our our expertise lies in bringing supply to the, to the points. Uh, we bring storage and then we, you know, we let the other folks do what they do best and, including hyperscalers that know how to build data centers. And so, you know, I think the concept is we we are looking at a few key sites in different areas and and seeing if we can kind of pull together a, uh, a a bigger broader project, specifically tied to behind the meter.

Thank you. Our next caller is John Mackay with Goldman Sachs. You may go ahead. Hey, everyone. Thank you for the time. I'm going to pick up on this project thread, of course. Maybe just talking about the backlog on the gas side, you mentioned about 50% power utilities at this point. That's arguably a larger share than power has in kind of the go-forward gas demand growth we're looking at relative to LNG, I suppose. Maybe could you just talk a little bit about how you'd expect that 50% to kind of trend from here with incremental projects on the horizon, maybe putting aside copper state for a second, start leaning more LNG?

John McKay: Thank you. Our next caller, is John McKay with Goldman Sachs you may. Go ahead sir.

Hey everyone, thank you for the time. Um I'm going to pick up on on this project. Spread of course uh maybe just talking with the backlog, on the gas side. You mentioned about 50% power utilities at this point, that's, you know, arguably a larger share than power has. And kind of the go forward. Um, gas.

Does that mean we need to wait for more FIDs? Maybe just frame up like how that mix looks over the next couple quarters or years. Yeah, I mean, I'd say it's hard to project exactly what that mix is going to look like. Obviously, the biggest driver of demand growth, you know, both in Woodmax projections and in our, you know, internal projections as LNG, and there's a doubling of, you know, expected doubling of LNG. As we've said a number of times, those LNG projects, I mean, generally, when they get sanctioned, there's an original, there's an initial project that is sort of a main line from the facility to the nearest liquid point.

John McKay: The man growth, we're looking at relative to, you know, LNG I suppose. Maybe could you just talk a little bit about how you'd expect that 50% to kind of trend from here? Would incremental projects on the horizon? Maybe putting aside Copper State for a second. Start leaning more LNG. But I mean we need to wait for more fids, maybe just frame up like how that mix looks over the next couple quarters or years.

Yeah. I mean I'd say it's hard to project exactly what that mix is going to look like. Obviously the biggest driver of demand growth. Um you know both in woodmaxx projections and in our you know internal projections as LNG and there's a doubling of you know expected doubling of LNG as we've said. A number of times those LNG projects. I mean generally when they

But then generally, as they move forward with their development, you know, they're looking to find more competitive supply and diversified supply. And so that leads to additional projects, additional projects down the line. One of the things that we've consistently said, and that we consistently see is, and this is especially true in the Woodmax numbers, is, you know, we don't think that the Woodmax numbers accurately reflect the growth that we think we're going to see in power demand. And, you know, that could be a difference between the volumes that they expect to flow and what we expect to sign up in terms of long-term take or pay contracts.

John McKay: There is an original. There's an initial project that is sort of a a a a mainline from the facility to the nearest liquid point. But then generally as uh, as they move forward uh with their development, you know, they're looking to find more competitive Supply and diversified Supply. And so that leads to additional projects, um, additional projects down the the line, you know, 1 of the things that we've consistently said and that we consistently see is and this is a specialty. True. And the woodmack numbers is, you know, we don't think that the woodmack numbers accurately reflect the growth that we think we're going to see in in power demand.

But the demand, the breadth and the scope of the power demand is very enormous. And so, I mean, we're seeing power demand in Arkansas, Louisiana, you know, Georgia, South Carolina, Arizona, Wisconsin, I mean, Texas. And so, I mean, the amount of power demand, I think, and the projects that we're going to see on that front are, you know, when you look at that relative to the expectations for demand in power, I just think there is an alignment there. That's helpful. That's interesting.

Um, and, you know, that could be a difference between the volume that they expect to flow and what we expect to, to sign up in terms of long term, take or pay contracts. Um, but the, the demand, um, the breadth and the scope of the power demand is, um,

John McKay: Is very um enormous. And so I mean we're seeing power demand and Arkansas, Louisiana, you know, Georgia um South Carolina, um Arizona, Wisconsin, I mean Texas and so I mean the the amount of power demand I think and the projects that we're going to see on that front are, you know,

But when you look at that relative to the expectations for demand in power, I I just think there isn't alignment there.

And maybe just for my next question, you touched on the new tax rules should open up some incremental cash flow for you guys. I guess just wondering if you can kind of put a bit of a number around the incremental cash kind of looking forward. And then on a related point, does it change how you think about, you know, your ability to go after projects, your kind of implicit cost of capital? I know you're defending the return profile you want to get, but, you know, does it incremental? Dax Framer changed that at all.

That's helpful. That's that's interesting. And maybe um just for my next question you touched on the new tax rules um should open up some incremental cash flow for you guys. I guess just wondering if you can kind of put a bit of a number around the incremental cash kind of looking forward. And then on related points, you know, does does it change how you think about, you know, your ability to go after projects your kind of implicit cost of capital? I know you're kind of defending the return profile. You want to get but you know, does it incremental um,

John McKay: Tax framework. Change that at all.

Hey, John, it's David. For the tax reform benefit, we're not quantifying it any more specifically than just saying we've got Nice benefits from it beginning in 2025. It's not material in 2025 to our forecast, but we'll see some benefits this year because it was retroactive to the beginning of the year. We are seeing substantial benefits in 2026 and 2027. So as Kim said, we don't expect to be a material federal income taxpayer in either of those years as a result of the tax reform. We see nice benefits thereafter, but we're not quantifying those. And it also depends a little bit on when we put new projects into service because the full expensing provision is really the biggest piece of the benefit that we're getting from tax.

John McKay: Hey John it's David um for the tax reform uh benefit. We're we're not quantifying it any more specifically than just saying we've got.

John McKay: Nice benefits from it. Uh, beginning in 2025, it's not Material in 2025 to our to our forecasts. But uh, we'll see some benefits this year because it was retroactive to the beginning of the year. We are seeing sustained substantial benefits in 26 and 27. So, as Kim said, we we don't expect to be on material Federal Income taxpayer in either of those years as a result of

And I would say, you know, having that incremental cash flow doesn't change our investment strategy. So we're not moving our return threshold because we have incremental cash flow available. I think, you know, our view is and continues to be that for good return projects, there's unlimited capital and we will find a way to finance them. So, you know, obviously we've got a lot of cash flow available, more now than we did before. You know, we've got room on our balance sheet. And, you know, I think with the projects that we're doing, they're attractive projects. And so if we ever needed to, you know, we could we could bring in outside capital.

John McKay: The tax reform. We see nice benefits thereafter, but but we're not, we're not quantifying those. Uh, and it also depends a little bit on when we put new projects into service because the full expensing, um, provision is really the biggest piece of the benefit that we're getting from from tax reform.

John McKay: And I would say, you know, having that incremental, cash flow doesn't change our investment strategy. So we're not moving our return thresholds, um, because we have incremental cash flow available. I think you know, our view is and continues to be that for good return projects. There's unlimited capital and we will find a way to finance them. So, you know, obviously we've got a lot of cash flow, available more now than we did before, you know, we've got room on our balance sheet. Um, and you know, I think with the projects that we're doing um, they're attractive projects, and so if we ever needed to, you know, we could uh we could bring in outside capital,

Thank you. Our next caller is Jeremy Tonet with J.P. Morgan. You may go ahead. Hi, good afternoon. Good afternoon Jeremy.

Thank you. Our next caller, is Jeremy tonette with JP Morgan. You may go ahead sir.

Jeremy Tonette: Hi, good afternoon.

I wanted to turn to Arkansas if I could. We've seen recent reports of hyperscaler activity there and want to double click on your Texas-Arkansas power project. Notice the binding open season there and given the 400 already prearranged there, it seems like that could support 2 gigs, very nice size for the project right there. But do you expect more to come along at that point? Do you see the possibility for more demand beyond that or really kind of have a fit-for-purpose pipe right here and ready to go and anything you could provide as far as incremental details there would be helpful?

Yes, Jeremy, this is Sital. So I'll backspace on that and tell you that it's, you know, that project is supporting power. But broadly, when you think about, you know, the opportunities that we are seeing, incremental opportunities set, not only in Arkansas, Texas, but along that Midwest corridor, we do see incremental demand on the power side, you know, where the utility ultimately uses it, you know, that'll be up to the utility. You know, as we talked about, we're looking at our own behind the meter opportunities. So I think, you know, there is a robust pipeline of opportunities that we are trying to pursue.

Good afternoon. Jeremy want to turn to Arkansas if I could we've seen recent reports of hyperscale or activity there and want to, uh, double click on your Texas, Arkansas Power project. Notice the binding Open Season there in, you know, given the 400 already, uh, pre-arranged there. Uh, it seems like that could support 2 gigs. Um, you know, very nice, uh, size for the project right there. But do you do you expect more to come along at that point? Do you see the possibility, uh, for more demand beyond that, or really kind of have a fit for purpose, pipe right here and uh, and ready to go. And anything you could provide as far as increment incremental details, there would be helpful.

Jeremy Tonette: But, but broadly, when you think about, you know, the, the opportunities that we are seeing, uh, incremental opportunities that it not only in Arkansas, Texas, but along the that Midwest Corridor, uh, we, we do see incremental Demand on the power side. Uh, you know, where, where, where the utility ultimately uses it, you know, that'll be up to the utility. Um, you know, as we talked about, we're looking at our own behind the meter opportunities. Uh, and so I think, you know, there is a robust pipeline of opportunities that we are trying to pursue, um,

And I'd say we don't always know if the power is going to a data center or, you know, what exactly that they're using it for. So we don't always have clear visibility through, you know, our, our customer is, is typically the power, is typically the power plant. Right, right, understood. Just the size of it there could support some nice power for the utility, not for Kinder, understood there.

In Arkansas. And, and and really broader across the network.

Jeremy Tonette: And I'd say we don't always know if the power is going to a data center or you know what exactly is that they're using it for. So we don't always have clear visibility through, you know, our our customer is is typically the power um, is

Jeremy Tonette: To power plants.

But I'll leave that there.

Right. Right, right. Understood just the, the size of it there. It could support some nice, uh, Power for for the utility and not for Kinder, understood their butt.

And just wondering, you know, post the Georgia Power IRP filing here, does this impact, I think, the opportunity set as you see it in the southeast? Could there be upside, I guess, to your current expansion plan scope to make those expansions larger? Yeah, look, I mean, you know, as we've alluded to on previous calls, I think there is a broader opportunity set. You know, we're early in our discussions there, but the fundamentals look sound and the opportunity set looks good. You know, obviously, we're positioned well with the network there, including, you know, the latest set of expansions.

I'll, I'll leave that there and just wondering, you know, post the Georgia, Power IRP filing here. Does this, uh, impact. I think, uh, the, the opportunity set as you see it in the Southeast could there be, uh, upside, I guess to your, your current expansion plan scope to to make those expansions larger

Yeah, look. I mean, uh, you know, as we've alluded to on previous calls, uh, I think, uh, there is a broader opportunity Set, uh, you know, we're early in our discussions there, uh, but the fundamentals look sound and and the

Jeremy Tonette: Opportunities, that looks good.

Jeremy Tonette: Obviously, we're positioned well with the network.

And, you know, as we alluded to on the last call, I think Rich said, we've got ancillary expansion opportunities to layer on top of that. We will pursue those as they present.

Jeremy Tonette: There, including, you know, the the latest set of expansions and uh, you know, as we alluded to on the left, the last call, I think rich said we're, we've got ancillary expansion opportunities to layer on top of that. Uh, we will pursue those as they present themselves.

Thank you. Manav Gupta with UBS. You may go ahead, sir.

Love Gupta: Thank you, my love Gupta with UBS. You may go ahead sir.

Good afternoon. It looks like you have increased the size of Trident from 1.5 to 2 BCF. And as I remember, you did this with Mississippi Crossings also, the pipe got announced at 1.5 and got scaled up very quickly to 2.1. So I'm trying to understand, you know, what's driving this incremental demand, you come in, you announce a project and very quickly, you're able to size it up. So help us talk through those dynamics a little. Yeah, I mean, I'm trying to think of incremental demands associated with with LNG. And it was a fairly easy expansion, because they're all we needed to do was add, add some compression.

Speaker Change: Good afternoon. It looks like you have increased the size of trident from 1.5 to 2 BCS and as I remember you did this with Mississippi Crossings also the pipe got announced at 1.5 and got scaled up very quickly to 2.1. So I'm trying to understand it. You know, what's driving this incremental, demand, you come in, you announced the project and very quickly, you are able to size it up. So help us talk through those Dynamics a little

I think when you go to a phase three, then that would require some looping. So that's a, you know, that's a little bit, that's a little bit bigger nugget to take on. And so that would require, you know, more volume to do phase three. But you know, that pipeline is in a great, great location. And, you know, to be able to get, you know, molecules from Texas all the way over into Louisiana is something people have been trying to do for a long time. And the combination of Trident and KMLA does that. Yeah, in terms of the timing piece, Manav, I mean, really, it's when we get the executed contracts to get us the returns that are sufficient.

Speaker Change: Yeah, I mean on Trident the incremental demands associated with, uh, with LG. Um, and it was a fairly easy expansion because they're all we needed to do was add, uh, add some compression. I think when you go to a phase 3, then that would require some looping. So that's, uh, you know, that's a little bit. Uh, that's a little bit bigger nugget to to take.

Speaker Change: And so that would require, you know, more volume to to do phase 3. But, you know, that pipeline is in a great, great location. Um, and you know, to be able to get, you know, molecules from Texas all the way over into Louisiana, is something people have been trying to do for a long time. Um and the combination of trident and kmla, does that

We know we have other customers that are interested, we'll FID the project, if it makes sense, and then we continue to try and build upon it.

That's been the strategy. Perfect, and it looks like the backlog also benefited from the NGPL new projects. Can you talk about a little more about these projects? Looks like they're power plant related projects, so if you could help us understand this incremental projects from NGPL that added to the backlog in this quarter. Thank you. Yeah, they're both power projects to serve power demand, one's in Arkansas and one's in Wisconsin, essentially.

Speaker Change: Yeah, in terms of the timing piece Moana, I mean, really it's when we get the executed contracts to get us to returns that are sufficient. We know we have other customers that are interested, we lsid the project, if it makes sense and then we continue to try and build upon it. That's that's been the strategy.

Yeah, that's probably all we can tell you at this point.

Perfect and it looks like the backlog in also benefit from the um ngpl uh new projects. Can you talk about a little more about these projects looks like the power plant related projects. So if you could help us understand this incremental projects from ngpl that added to the backlog in this quarter. Thank you. Yeah, they're both power projects. Uh to serve power demand ones in Arkansas and 1 to uh West Wisconsin, potentially. Yeah, that's that's probably all we can tell you at this point.

Thank you. Our next caller is Jean Ann Salisbury with Bank of America. You may go ahead. Hi, I just wanted to follow up to Kim's answer to John's question earlier about when LNG projects sign up for their gas pipeline needs vis-a-vis when they get sanctioned. You've obviously had a ton of LNG contracting activity over the last quarter. I think you're probably still to come this sort of large wave of sanctionings. So I guess my question is if you believe that those projects have kind of already signed up for the gas takeaway that they would need or if that's basically coming as they sanction the projects over the next year.

Speaker Change: Thank you. Our next caller is Gene and Salsbury. With Bank of America, you may go ahead.

Generally what we see, and Cecil will jump in here, is that, you know, when a project gets, to get a project FID, you know, they need to get their financing and put their financing in place, and so to put that financing in place, usually they've got to have a gas supply. And so that's when, you know, the initial project, as I'll call it, you know, from the facility to the nearest liquid point gets sanctioned. And then generally what happens after that is as they continue and they're starting to get closer to in-service, you know, they decide, okay, and they're thinking about really how am I going to supply this on a daily basis.

Speaker Change: Hi, I just wanted to follow up to Kim's. Answer to John's question earlier about when LNG projects sign up for their uh their gas pipeline needs Visa V when they get sanctioned. Um, you've obviously had a ton of LNG Contracting activity, um, over the last quarter, I think you're probably still to come this sort of large wave of sanctioning. So, I guess my question is, if you believe that those projects have kind of already signed up for the gas, takeaway that they would need, or if that's basically coming as they sanction, the projects, over the next year.

Then they start looking at, okay, that liquid point is very competitively priced. I might want to get some cheaper molecules and or what happens if a pipe goes down or something, maybe I also need some diversification. So, you know, that happens more over time, you know, between the time, you know, the project gets sanctioned and before it gets put in service.

Let me just add to what Kim says that given the fact that this demand is occurring primarily along the Gulf Coast where our system is so extensive, this kind of opportunity just lends itself to a structure like we have. I think we cannot overemphasize the benefit that we have from the infrastructure that already exists and the ability to expand it on a reasonable basis. That's very clear. Thank you.

Project FID, you know, they need to get their financing and put their financing in place and so to put that financing in place usually they've got to have a gas supply and so that's when you know the initial project is I'll call it, you know from the facility to the nearest liquid Point, get sanctioned. And then generally what happens after that is as they continue and they're starting to get closer to in service, you know, they decide, okay. And they're, they're thinking about really, how am I going to supply this on a daily basis? Um, then they start looking at okay, that liquid point is very competitively priced. I might want to get some cheaper molecules and or what happens if a pipe goes down or something, maybe I also need some diversification. So you know, that happens more over time, you know, between the time, you know, the the project gets sanctioned and before it gets put in service.

Let me just add to what Kim says that. Given the fact that this demand is occurring primarily along the Gulf Coast where our system is. So extensive, this kind of opportunity just lends itself to a structure like we have, I think we cannot overemphasize the benefits that we have from the infrastructure that already exists and the ability to expand it on a reasonable basis.

And then as a follow up, I wanted to ask about some of the dynamics of Permian gas pipelines. We're very tight on egress capacity today, but something like five BCFD comes online next year, including your own GCX expansion. And I think there are a few other possible projects out of the Permian that seem to be progressing. So I guess the question is, if there's some concern that this could put pressure on rates for Kinder Morgan later in the decade, if some of those initial pipeline contracts begin to roll off, can you just kind of talk about how you would frame that risk?

Of Permian overbuild? So, the contract, GCX and PHPR2, I think those 10-year contracts expire in 29 and 30. What I would say is, given that those were some of the first pipelines built out of the Permian to the Gulf Coast, you know, they have very attractive rates on them. And so, it's two things. One is, I think, you know, they are lower rates than where new projects are getting priced. So, there's going to be some of the cheaper, some of the cheaper transport out of there. And then, you know, the, you know, the, you know, the, you know, the, you know, I forgot what the second point I was going to make, but Sipa, go ahead.

Speaker Change: That's very clear. Thank you. Um, and then as a follow-up, I wanted to ask about some of the Dynamics of Permian gas pipelines. Uh, we're very tight on egress capacity today, but something like 5 BC FD comes online next year, including your your own gcx expansion and I think there are a few other possible projects out of the Parian that seem to be progressing. So, um, I guess the question is, if, if there's some concern that this could put pressure on rates for Kinder Morgan later in the decade, if some of those initial pipeline contracts, begin to roll off. Um, can you just kind of talk about how you would frame that risk of of permanent overbuild?

Speaker Change: Sure so um the contract gcx and PHP are R2. I think those 10 year contracts expire in 29 and 30. Um what I would say is given that those were some of the first pipelines built out of the permanent to the Gulf Coast. You know, they have very attractive rates on them and so um it's 2 things 1 is I think you know they are lower rates than where new projects are getting priced. Um um so there's going to be some of the cheaper uh some of the cheaper transport out of there. Um and then you know the uh um,

Yeah, so, I mean, the other thing, you know, as we think about... The two pipes that we have, if you're talking about kind of recontracting risk, et cetera, those pipelines fit very well in our network, and we have the ability to extract probably, in my view, better value if those aren't recontracted. And so we view that risk as low. When we think about the next project out of the basin, we're going to be very prudent. If, you know, as we think about our focus has shifted to demand pull, when you think about the projects that we sanctioned over the last couple of quarters, so if there is another producer push project, it would obviously have to be very well-contracted and for a longer term.

I forgot what the second point I was going to make but see if it go ahead. Yeah. So I mean what the the other thing, you know, as we think about the the the 2 pipes that we have, if you're talking about kind of recontracting risk, Etc,

those those pipelines fit, very well in our Network, and, and we have the ability to extract

Speaker Change: Probably, you know, in my view a better value once those, you know, if if those aren't recontract and so you know, we view that risk as low, uh when we think about, you know, the next project out of the Basin, we're going to be very prudent. Uh, if if you know, as we think about our Focus has shifted to demand pull when

So those, you know, those pipes go into our Texas interest rate system. They feed contracts that we have in the Austin market. So we have, you know, end use demand attached to that, and that's something that we can offer shippers and customers that other people can't offer. And then the other thing I was going to say is that, you know, when we run our economics in order to be conservative to make sure we get good returns on these projects, we assume, generally, we assume a step down in rates whenever contracts roll. Not saying that that's going to happen here, but that's, you know, that's part of how we make sure that we get the returns we're expecting to get.

Speaker Change: You think about the projects that we sanctioned over the last couple of quarters? Uh, so if there is another producer push project, it would obviously have to be very well contracted and for a longer term.

Speaker Change: So those, you know, those pipes go into our taxes interest rate system, they feed contracts that we have in the Austin market. So we have, you know, in use demand attached to that. And that's something that we can offer Shepherd and customers that that other people can offer. And then the other thing I was going to say is that, you know, when we run our economics in order to be conservative to make sure we get good Returns on these projects, we assume generally we assume a step down in rates whenever contracts roll, not saying that that's going to happen here. Um, but that's, you know, that's part of how we make sure that um, we uh, we get the returns work.

Speaker Change: Acting to guess.

Thank you.

Our next caller is Keith Stanley with Wolf Research. You may go ahead, sir. Hi, good afternoon. I wanted to start on the $500 million Haynesville gathering project. When would the expansion capacity be in service and what's the projected timeline for the volume ramp to get to returns? And then, relatedly, how do you think, if at all, about potential Haynesville takeaway pipelines given all the Louisiana LNG projects we're seeing and your expanded gathering presence? Sure, so on your first question, you know, we plan on getting all of our facilities in by the end of the fourth quarter next year, and so we do see volume ramping up along the way.

Thank you. Our next caller, is Keith Stanley. With wolf research, you may. Go ahead, sir.

Keith Stanley: Wanted to start on the 500 million. Haynesville Gathering project. When would the expansion capacity be in service and what's the projected timeline for the volume ramp to get to returns and then relatedly?

Keith Stanley: How do you think, if at all about potential Haynesville, takeaway pipelines, given all the Louisiana, LG projects we're seeing and you're expanding presence.

Really, you know, we're adding, you know, we're adding treating capacity and we're adding incremental pipe loops just to get, unlock some of the hydraulics there. Look, as we think about the outlook in the Haynesville, you know, you've got a very productive basin that's very close to the demand centers that we've been talking about, and so, you know, there's a definite need to get incremental molecules to those consuming basins, the consumers, right? We've got to get the physical molecule there, but as far as the buildout, the existing buildout that's there, given the growth that we see on the Gulf Coast, I think all that does is create incremental opportunities for us in both our interstate and intrastate networks to be able to connect the dots.

Keith Stanley: And so we do see, volume ramping up along the way. Really, you know, we're adding

You know, you've got a lot of convergence at Gillis right now. We're exploring opportunities downstream of Gillis to connect the market to that supply that's aggregating at Gillis, and if there's an opportunity, you know, we could even consider tying in some of that Kinderhawk production on another takeaway project out of the basin. But once again, all of that's got to be contracted for, and it's got to make economic sense. Great. Thanks for that.

Keith Stanley: You know, we're adding treating capacity and we're adding uh, incremental pipe Loops just to get unlock some of the Hydraulics there. Uh, look as we think about the Outlook in the Haynesville, you know, you've got a, you've got a very productive Basin. Uh, that's very close to the the demand centers that we've been talking about. And so, you know, there's a definite need to get incremental molecules to those consuming bases consuming C the consumers, right? We got to get the physical molecule there. So as far as the, the buildout, uh, the existing buildout that's there, uh, given the growth that we see on the Gulf Coast. Uh, I think all that does is creates incremental opportunities for us, and our, in our, our both, our interstate, and intrastate networks, to be able to, uh, connect the dots. You know, you've got a lot of convergence at Gillis right now, uh, we're exploring opportunities, uh, Downstream of Gillis to connect the, the market to that Supply, that's aggregating at Gillis. And and if there's an opportunity,

Keith Stanley: Uh, you know, we could even consider tying in some of that Kinder Hawk production on another takeaway project, out of the Basin. But once again all of that's got to be contracted for and it's got to make economic sense.

Second one, I wanted to follow up on some of your opening comments, Kim, on the permitting improvement and the Order 871 and no longer having to wait the five-month waiting period before starting construction. When you think in aggregate about those improvements that you're seeing, could this meaningfully accelerate the timeline on some of your larger projects versus original expectations? So the answer is, it depends. So this is a one, on 871, it is a, it's one year, but they've got it out for notice and comment. And I think, you know, our expectation is that they, they likely make this permanent, but we'll just have to wait and see.

Great. Uh, thanks for that the second 1. I I wanted to follow up on some of your opening comments, Kim on the permitting Improvement and the order 871. And not long, no longer having to wait the 5-month waiting period before starting construction. When you think in aggregate about those improvements that you're seeing, could this meaningfully accelerate. The timeline on some of your larger projects versus original expectations.

And so right now, with respect to the one year extension, you know, not a lot of benefit for us. But if they, if they make it permanent, then yes, there will be benefits to our major projects. And, you know, and so it's going to depend. And the reason it depends is, you know, it depends on the procurement schedule. And so when we get the pipe, and when we get the compression, so there are certain projects that we will be able to move up by that five months and take advantage of. And there are others that we won't.

Uh, so the answer is, it depends. Um, so this this is a 1 on, 871. It is a, uh, it's 1 year but they've got it out for notice and comment and I think, um, you know, our expectation is that they, they likely, uh, make this permanent but we'll just have to wait and see. Um, and so right now, with respect to the 1 year extension, you know, not a lot of benefit for us, but uh, if they, um, if they make it permanent then yes there will be benefits to our major projects and um,

Keith Stanley: Uh you know, um and so it's going to depend and the reason it depends is you know, it depends on the procurement schedule and so when we get the pipe and when we get the compression so there are certain projects that we will be able to move up by that 5 months and take advantage of and there are others uh that we won't. The other thing I'd say is on um, is on the

The other thing I'd say on the bigger project is we've actually filed for a waiver for 871. So we're not waiting on the notice and comment period to be to be complete. We've asked them to decide independently on our big project self system for an MSX. And I think we view the likely outcome of that favorably at this point.

Keith Stanley: Uh, prior notice that's uh, that is uh, increased by 50%. So now it's 61 million. That means you don't have to file for a 7c for projects that are less than than 61 million. So the permitting process is much quicker. And so we will definitely benefit, um, from that increase in in the prior notice limit. Um, the other thing I'd say on the bigger project is we've actually filed for a waiver for 871. Um, so we're not waiting on, uh, the notice and comment period, um, to be to be complete. Um, we've asked, uh, to them to, um, uh, decide independently on our big projects health system for in MSX. And I think we uh view, the likely outcome of that favorably at this point.

Thank you.

Our next caller is Zach Van Everen with TPH. You may go ahead. Hi guys, thanks for taking my question. Just going back to the Haynesville expansion real quick. Can you guys speak to the volume or capacity that you're adding there? And then, is this mainly from your larger customers? Are you seeing demand from some of the privates that feed your system as well? It's both. So it's from the larger customers, and it's from the privates. And, you know, somebody may be able to speak to the capacity. But I mean, they are ramping up significantly. You know, if you look at our supply numbers, and Tom, help me with this, because you talked to the board about this today.

Speaker Change: Thank you. Our next caller is Zach, van everin with tph. You may go ahead sir.

Hi guys, thanks for taking my question. Just going back to the the Haynesville expansion real quick. Can you guys speak to the volume or capacity that you're adding there? And then, is this mainly from your larger? Customers are you seeing demand from some of the privates that feed your system as well?

But we're expecting, WoodMAC is expecting a doubling in the production coming out of the Haynesville. So I mean, it's, it's increasing by, I don't know, from 13 to 26, to 26 by 2034. So, I mean, that gives you a sense of the type of volumes that we're talking about. Gotcha, that makes sense.

It's both. So it's from the larger customers and it's from the privates. Um, and you know, somebody may be able to speak to the capacity, but I mean they they are ramping up uh, significantly. You know, if you look at our supply numbers and Tom helped me with this because you talked to the board about this today, but we are expecting. Um, woodmack is expecting a doubling in the production coming out of the Haynesville. So I mean it's it's increasing by, I don't know from 13 to 26 266 to 26 by 2034. So I mean that gives you a sense of the type of volumes that we are talking about

And then maybe one on the LNG side. I know Tennessee Gas feeds the Plaquemines facility and you know, VG continues to talk about potential further expansion at that site. If they were to do that, does Tennessee Gas have the ability to expand more to feed LNG in that area? So first, if they were to do that, I think it further creates opportunities for us, you know, with these projects that we're bringing across. I think ultimately, you know, Tennessee is already full in multiple directions, but we've got, you know, the bottleneck, the bottlenecking capability as we bring this incremental supply from west to east that I've been talking about on the last few calls, you know, we talk about Texas Access Project, which is kind of, you know, continuing on the theme.

Speaker Change: I know Tennessee, Gas feeds the plaque of mine's facility and you know, Fiji continues to talk about potential further expansion at that site. If they were to do that, does Tennessee Gas have the ability to expand more to feed LG in that area.

Uh, so so first, if they were to do that, uh, I think it uh, further creates, uh, opportunities for us, you know, with these projects that we're bringing across. Um, I think ultimately it could, it would, you know, Tennessee is already full in multiple directions, but we've got, you know, the bottleneck the bottleneck and capability as we bring this incremental, Supply, from west to east that. I've been talking about on the last few calls. You know, we talked about uh Texas Access Project which is kind of you know,

We talked about Trident, and we talked about the header, and now we're actually extending into Texas to take volumes across to Louisiana. That helps the bottleneck, and so if Plaquemines were to, you know, further expand, we would look at opportunities to bring incremental gas to the basin, to that area, from not only MSX, but from some of the other pipes in the area, including potentially looking at accessing the Haynesville in a different direction, right? And so, you know, when we talk about Gillis and kind of the directions that these pipes may head, one of those may be going that further eastward direction to kind of help fill that incremental need.

Speaker Change: Continuing on the theme. We talked about Trident that we talked about the header and now we're actually extending into Texas to take volumes across the Louisiana. That helps de bottleneck and so with plaque inman's were to, you know,

Speaker Change: Further expand. Uh, we would look at opportunities to bring incremental gas to the Basin uh to the to that area from not only MSX. Uh but some of our other uh, from from some of the other pipes in the in the area including potentially looking at accessing the Haynesville in a different direction, right? And so, you know, when we talk about Gillis and kind of the directions that these pipes may head, uh, 1 of them,

Speaker Change: this may be going uh that further Eastward direction to kind of help fill that incremental need

Thank you.

Our next caller is Jason Gabelman with TD Cowen. You may go ahead, sir. Hey, good afternoon. Thanks for taking my questions. The first one I wanted to ask was on the Bakken, given, you know, the Outrigger deal's been closed for quite some time. I think you're early six months, and double H is close to ramping up here on the conversion. And so just wondering what the strategy is on gaining volumes there and kind of securing potentially higher rates that that region has to offer versus other regions.

Thank you. Our next caller is Jason.

You may, go ahead, sir.

Speaker Change: Yeah. Hey good, good afternoon. Thanks for taking my questions. Um, the first 1 I want to ask was on the bachan given, um, you know, the Outrigger deal has been closed for quite some time. I I think you're or or at least 6 months and uh, Double H is is close to ramping up here uh, on the conversion. So just wondering what the strategy is on um, gaining volumes there and and and kind of securing uh potentially higher rates that um, that region has to offer versus other basins.

I'll take that. So, so one, on the integration, as we talked about, it's gone well, we're looking at, you know, incremental networking, you know, networking bottlenecks, be able to gain further efficiencies out in the basin. But as far as it goes, as far as Highland Express goes, you know, we just continue to work with our customers there. I don't have anything to report on that we're making progress, but but nothing for this call.

So so so, uh, 1, uh, uh, the the integration as we talked about is gone. Well, we're looking at, you know, incremental networking, you know, networking bottlenecks to be able to gain further efficiencies out in the Basin, but as far as it goes, as far as Highland Express goes, uh, you know, we just continue to work with our customers there. I don't have anything to report on that. We're making progress, but but nothing for this call.

Okay, um, and then just a maybe longer term question. You've talked a lot about the LNG growth on the on the US Gulf Coast and the boon it's been for your business. There is some concern that after this wave of capacity, there's there's going to be a potential oversupply in the market. And I wonder if you're in your conversations with LNG customers, hearing anything around a potential slowdown in contracting or need for additional piping into future plants. After this wave of capacity comes online, or if your LNG customers really expect new builds to continue at pace through through the decade and into the 20th.

Okay, um, and then just, uh, maybe longer term question, you've, you've talked a lot about the LG growth, on the, on the US Gulf Coast and the bun. It's been for your business. Um, there is some concern that after this, wave of capacity. There's there's going to be a potential over Supply in the market, and I wonder if you're in your conversations, with LG customers, um, hearing anything around a potential slowdown in Contracting or, or need for additional piping into future plants. Um, after this wave of capacity comes online or or if your LG customers really expect, um, new builds to to continue at pace through through the decade and and into the 2030s

I mean, from my perspective, I mean, we're not seeing and you can see this from what you know, the LNG builders are announcing, which is they continue to announce new projects. and sign new contracts. And we see, we continue to see projects get announced and projects get expanded. And I think part of the reason that you see that is it is a favorable environment right now to get projects built in the U.S., number one. Number two, I think that, you know, from a trade negotiation standpoint, it helps on the balance of payments and the whole tariff discussion to take gas from the U.S.

Speaker Change: I mean from my perspective I mean we're not seeing and you can see this from what you know the LNG uh uh Builders um are announcing, which is they continue to announce new projects.

Speaker Change: Um, and sign new contracts. And we say we continue to see projects get uh, announced and projects get expanded. And I think part of the reason that you see that is, it is a favorable environment right now to get projects built um in the US number 1. Number 2, I think that you know, from a trade negotiation standpoint,

So, I mean, to date, we have not seen any slowdown in our discussions with these customers.

Tom, you might share your model that you showed the board today in terms of overall growth and worldwide demand and the U.S. portion of it. Sure. I mean, as Richard alluded to in his comments, you know, world demand is expected to grow by 25 percent between now and 2050, and much of that growth, actually more than 25 percent, will be filled, in our view, and I think in the view from others in the market with LNG. Most of that growth, as Rich said, is in, you know, Asia, basically areas where they don't have production. So it's going to have to be LNG that ultimately fills that hole, and, you know, what we've seen so far is that the U.S., while the overall demand profile is growing, the U.S.

Speaker Change: It helps on the balance of payments and the whole tariff discussion to take gas uh, from the US. So I mean to to date, we have not seen any slowdown in our discussions with, uh, with these customers.

Speaker Change: and uh, you know Asia basically areas where they don't have production, so it's going to have to be uh, LNG that that ultimately fills that hole and you know, we what we've seen so far, is that the US

market share is growing as well, so it's almost a doubling effect of the benefits of having LNG infrastructure growing in the U.S., and I think that's for a few reasons. One, you know, the rule of law here in the U.S. as compared to other places around the world, there's a very, you know, advanced network within the U.S. such that if there's ever a need to, you know, leave molecules back in the U.S. and optimize those from a supply resource here in the U.S. that I think gives customers internationally a lot of comfort in knowing that there's going to be plenty of molecules behind these 20-year contracts that they sign with U.S.

While the overall demand profile is growing the US market share is growing as well. So it's almost a doubling effect, uh of the benefits of uh, having LNG infrastructure growing in the US and I think that's for a few reasons 1, you know, the rule of law here in in the US as compared to other places around the world. Uh, there's a very, uh, you know, Advanced Network within the us such that if there's ever a need to you know, leave molecules back in the US, uh, and and and optimize those from a world price environment versus a domestic us, uh environment. We have a great network of infrastructure here in the US, uh to support that and then I think you know, uh the track record, I mean, I think the developers, uh in the US have done an extremely good job of being successful in getting projects online timely and providing, uh,

developers and with customer, midstream companies like us, so I think the U.S. is in a great place. to continue to grow well and north of what the overall global gas demand growth is between now and 2050. So I think that means more to come beyond what we see in the immediate line of sight of projects.

Competitive rates and we have a tremendous Supply resource here in the US that I think gives customers internationally, uh, a lot of comfort in knowing that there's going to be a plenty of molecules Behind These 20-year contracts that they signed with the US, uh, developers and with, uh, customer Midstream companies like us. So, um, I think the US is in a great place.

To, uh, continue to grow, uh, well, and north of what the, uh, the overall, uh, uh, Global, uh, gas demand growth is between now and 2050. So I think that means more to come beyond what we see in the immediate, uh, you know, uh,

Speaker Change: Line of sight of projects.

Thank you.

Our next caller is Brandon Bigum with Scotiabank. You may go ahead. Thanks for taking the questions. Just continuing on the LNG theme here, could you maybe discuss some of the incremental opportunities you see maybe outside the Haynesville and concurrently which basin or basins do you expect to be sort of next on deck to meet all of that growth that you guys have been talking about? Yeah, sure. So outside of the Haynesville, you know, we've, we've talked about this before. The lean Eagleford is going to be important. You know, one of the key themes that's kind of coming to surface is low nitrogen, you know, the nitrogen quality of the gas.

Speaker Change: Thank you. Our next caller is Brandon bigum with Scotia Bank. You may go ahead sir.

All right, thanks for taking the questions. Uh, just continuing on the LG theme Here. Could you maybe discuss some of the incremental opportunities, you see, maybe outside the hanesville and concurrently which Basin or basins do you expect to be sort of next on Deck to meet all of that growth that you guys have been talking about?

And, you know, as you think about LNG plant deficiencies, you know, lower nitrogen equates to better production. So we think the lean Eagleford is going to come into play, especially as it pertains to some of the LNG facilities. You've obviously got the Permian. We, you know, when we think about the Utica and the Marcellus, you know, given the, the, the constrained nature of the basin, it's going to be hard to get extra capacity out of there. That being said, we are evaluating some opportunities to move incremental gas out of out of the Utica down south using our Tennessee network.

And so, you know, that's in its early phases. You know, it's going to take an all of all of the above approach, because it's not just the LNG folks that are looking for molecules. It's the power demand that we just talked about. And it's also the existing organic LDC and the basic power that we've been talking about, you know, since January of 2024. All of that's going to be growing and needing access to molecules. So it's an all of the above basin approach. You know, we've even talked about our Bakken egress project on the residue side, moving gas out, out west.

Speaker Change: Yeah, sure. So uh, outside of the Haynesville, you know we've we've talked about this before. Uh the the lean eagleford is going to be important, you know, 1 of the key themes, that's kind of coming to surface is is uh low nitrogen. You know, the the nitrogen quality of the gas and and you know, as you think about LNG plant deficiencies, you know, lower nitrogen equates to better production. Uh so we think the lean eagleford is going to come into play especially as it pertains to? Some of the Texas LNG facilities, you've obviously got the Parian, uh, we, you know, when we think about the, uh, the Utica and the Marcellus, uh, you know, given the the, the constrained nature of the the Basin, it's going to be hard to get in extra capacity out of there. That being said, we are evaluating some opportunities to move incremental gas out of out, of the, the Utica down south using our, uh, Tennessee Network. And so, you know, that's in its early phases. Uh, you know, it's going to take an awl,

Speaker Change: Of the all of the above approach. Because it's not just the LG folks that are looking for molecules, it's the powers and demand that we just talked about. And, and it's also the existing organic, uh, LDC and then, and, and, and the basic power that we've been talking about is, you know, since January of 2024, um, all of, that's going to be growing and needing access to molecules. So, it's in all of the above Basin approach. Uh, you know, we've even talked about our bak and egress project on the residue.

I mean, that's, that's another example of something that's going to come into play as, as this demand kind of matures.

Using gas out out west. I mean that's that's another example of something that's going to come into play uh as as this demand kind of matures

Okay, great. And then maybe just on the full year budget commentary regarding the EBITDA, you know, reiterating the commentary there about exceeding by at least the outrigger contribution. Could you discuss some of the areas you see outperforming expectations in 2H that sort of offset some of the lighter performance we've seen through 1H to kind of meet that expectation? The outperformance in the second half of the year, consistent with what we've seen in the first half of the year, really, natural gas capacity sales, the outrigger acquisition contribution... Park & Loan Services on our natural gas business, Jones Act tanker contributions, those are all some of the items that are contributing to the second half outperformance and those are consistent with what we've seen in the first half.

Speaker Change: Okay, great. Uh, and then maybe just on the budget. Fully your budget commentary regarding the Evita, you know, reiterating the commentary there about exceeding by at least the Outrigger contribution. Uh could you discuss some of the areas? You see outperforming expectations in 2 H. Uh that's sort of offset. Some of the lighter performance we've seen through 1 H to kind of meet that expectation.

Speaker Change: The the outperformance in the second half of the Year, consistent with what we've seen in the first half of the year, really uh natural, gas capacity, sales the Outrigger acquisition contributions.

Speaker Change: Those are all some of the, some of the items that are contributing to the second half outperformance and those are consistent with what we've seen in the first half.

I would say there was a little bit of timing between the first quarter and the second quarter. We didn't see some of that show up in the first quarter, but on Outrigger particularly and some of the PALS performance as well.

Speaker Change: I would say there was a little bit of timing between the first quarter and the second quarter we didn't see some of that show up in the first quarter but uh on Outrigger particularly in some of the pals performance as well.

Thank you.

Harry Mateer with Barclays. You may go ahead. Good afternoon. You know, David, earlier, you made the point that most of the expected reconciliation bill benefits come from the treatment on depreciation, which I think makes sense as it doesn't look like the 30% of EBIT deductibility for interest was a material constraint for KMI. But having said that, does the expanded interest deductibility cause you to rethink anything on the financing or balance sheet side moving forward to, you know, take greater advantage of those tax benefits on interest expense down the road? No, it really doesn't. It's a good question, but no, it really doesn't.

Speaker Change: Thank you, hearing mature with Barkley's, you may go ahead sir.

Yeah, good afternoon. Um, you know, David earlier you made the point that most of the expected reconciliation Bill benefits come from the treatment on depreciation. Which, you know, I think makes sense. Is it doesn't look like the 30% of you but deductibility for interest was a material constraint, uh, for KMI. But

Speaker Change: having said that, um,

does the expanded interest deductibility caused you to rethink anything on the financing or balance sheet side? Moving forward to, you know, take greater advantage of those tax benefits on the interest, expense down the road.

I think our financing strategy is pretty straightforward and simple. It's pretty plain vanilla. We don't have a ton of external capital needs to fund our growth projects. We can fund $2.5 billion internally from cash flow that we generate. As that EBITDA continues to grow, that will continue to grow. And so we really just use our external financing strategy to refinance our maturing bonds. And this tax reform won't influence that in our...

Speaker Change: No, it really does. It's a good question, but no, it really doesn't. I, I think our

Um, financing strategy is pretty straightforward and simple, it's pretty plain vanilla. And you know, we don't have a ton of external uh Capital needs to fund our growth projects. We can fund, you know, 2 and a half billion dollars internally from cash flow that we generate as that eBay, doc, continues to grow that will continue to grow

Speaker Change: and so we really just use our our external financing strategy to refinance our maturing bonds and uh

There in this, in this tax reform won't won't influence that uh in our view.

Got it. All right.

Thank you. At this time, I am showing no further questions.

Got it. All right. Thank you.

I'll turn the call back over to you for any closing comments. Thank you. Thank you very much. Have a good evening. Thank you. This concludes today's conference call. You may go ahead and disconnect at this time.

Thank you. At this time. I am showing no further questions. I'll turn the call back over to you for any closing comments. Thank you.

Speaker Change: Thank you very much. Have a good evening.

Thank you, this concludes today's conference call. You may go ahead and disconnect it this time.