Q1 2026 WaterBridge Infrastructure LLC Earnings Call

May 7, 2026

Speaker #2: Hello everyone. Thank you for joining us, and welcome to the WaterBridge first quarter 2026 results. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello, everyone. Thank you for joining us, and welcome to the WaterBridge Q1 2026 results. After today's prepared remarks, we will host a question and answer session. I will now hand the call over to Mae Herrington, Director of Investor Relations. Please go ahead.

Operator: Hello, everyone. Thank you for joining us, and welcome to the WaterBridge Q1 2026 results. After today's prepared remarks, we will host a question and answer session. If you like to ask a question please pre I will now hand the call over to Mae Herrington, Director of Investor Relations. Please go ahead.

Speaker #2: If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Mae Harrington.

Speaker #2: Director of Investor Relations. Please go ahead.

Speaker #3: Good morning, and thank you for joining WaterBridge's first quarter 2026 earnings call. I am joined today by our Chief Executive Officer, Jason Long, our Chief Operating Officer, Michael Chalk-Wright, and our Chief Financial Officer, Scott McNeely.

Mae Herrington: Good morning, thank you for joining WaterBridge's Q1 2026 Earnings Call. I'm joined today by our Chief Executive Officer, Jason Long, our Chief Operating Officer, Michael Reitz, and our Chief Financial Officer, Scott McNeely. Before we begin, I'd like to remind you that in this call and the related presentation, we will make forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from results and events contemplated by such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Please refer to the risk factors and other cautionary statements included in our filings with the SEC.

Speaker #3: Before we begin, I'd like to remind you that in this call and the related presentation, we will make forward-looking statements regarding our current beliefs, plans, and expectations which are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from results and events contemplated by such forward-looking statements.

Speaker #3: Your caution not to place undue reliance on forward-looking statements. Please refer to the risk factors and other cautionary statements included in our filings with the SEC.

Mae Herrington: You are cautioned not to place undue reliance on forward-looking statements. Please refer to the risk factors and other cautionary statements included in our filings with the SEC.

Speaker #3: I would also like to point out that our investor presentation and today's conference call will contain discussions of non-gap financial measures which we believe are useful in evaluating our performance.

Mae Herrington: I would also like to point out that our investor presentation and today's conference call will contain discussions of non-GAAP financial measures, which we believe are useful in evaluating our performance. These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release in the appendix of today's accompanying presentation. I'll now turn the call over to Chief Executive Officer, Jason Long.

Speaker #3: These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release, and the appendix of today's accompanying presentation.

Speaker #3: I'll now turn the call over to Chief Executive Officer, Jason Long.

Speaker #4: Thank you, Mae, and good morning, everyone. I'm pleased to report that we delivered a strong first quarter, underscoring the value of our integrated water and infrastructure network and the sustained growing demand for responsible produced water handling solutions across the Delaware Basin.

Jason Long: Thank you, May, and good morning, everyone. I'm pleased to report that we delivered a strong Q1, underscoring the value of our integrated water and infrastructure network and a sustained growing demand for responsible produced water handling solutions across the Delaware Basin. The operational momentum we built through Q1, combined with increased visibility and conviction in our commercial demand outlook for the remainder of the year and a more supportive macro environment, gives us the confidence to raise our 2026 guidance today. As Scott will detail, we are increasing our full-year volume guidance to 2.525 to 2.725 million barrels/day and our adjusted EBITDA guidance to $425 million to $465 million. Q1 produced water handling volumes came in at approximately 2.5 million barrels/day.

Speaker #4: The operational momentum we built through Q1, combined with increased visibility and conviction in our commercial demand outlook for the remainder of the year, and in more supportive microenvironment, gives us the confidence to raise our 2026 guidance today.

Speaker #4: As Scott will detail, we are increasing our full-year volume guidance to 2.525, 2.725 million barrels a day, and our adjusted EBITDA guidance to 425 million to 465 million.

Jason Long: As Scott will detail, we are increasing our full-year volume guidance to 2.525 to 2.725 million barrels/day and our adjusted EBITDA guidance to $425 million to $465 million. Q1 produced water handling volumes came in at approximately 2.5 million barrels/day.

Speaker #4: First quarter produced water handling volumes came in at approximately 2.5 million barrels per day. That represents a modest sequential decline from Q4, which we anticipated.

Jason Long: That represents a modest sequential decline from Q4, which we anticipated. Activity levels at the start of the year are typically lower following a strong prior quarter, and the Q4 was particularly active. Volume growth accelerated through the quarter, and we have strong operational momentum heading into Q2. On the financial side, Q1 revenue was $201 million, and adjusted EBITDA was $102.9 million with adjusted EBITDA margins of 51%. Gross margin per barrel improved sequentially from $0.18 per barrel in Q4 to $0.20 per barrel in Q1, a meaningful improvement that reflects the operating strengths of our model. Now let me turn to our two key growth drivers for the back half of the year, Speedway Phase One and the Kraken Project.

Speaker #4: Activity levels at the start of the year are typically lower following a strong prior quarter, and the fourth quarter was particularly active. Volume growth accelerated through the quarter, and we have strong operational momentum heading into Q2.

Speaker #4: On the financial side, first quarter revenue was $201 million, and adjusted EBITDA was $102.9 million, with adjusted EBITDA margins of 51%. Gross margin per barrel improved sequentially from 18 cents per barrel in Q4 to 20 cents per barrel in Q1, a meaningful improvement that reflects the operating strengths of our model.

Speaker #4: Now let me turn to our two key growth drivers for the back half of the year. Speedway Phase One and the Kraken Project. Speedway Phase One is on track for a mid-year in-service date as we prepare for the pipeline to come online.

Jason Long: Speedway Phase One is on track for a mid-year in-service date as we prepare for the pipeline to come online. We are already signing interruptible contracts with customers looking to utilize available capacity in the H2. To be clear, these are non-obligatory agreements for both sides. We would not build them into our guidance. They are a meaningful demand signal. They indicate that interest in Speedway capacity extends well beyond our committed customer base. They represent potential incremental upside as the pipeline ramps. The Kraken Project MVC increase is expected mid-year as well. Together, Speedway Phase One and Kraken are the primary volume and revenue growth drivers for 2026. Both are progressing on schedule. The other headline from the quarter is the conclusion of our Speedway Phase II open season, which represents up to 500,000 barrels per day at incremental capacity.

Speaker #4: We are already signing interoperable contracts with customers looking to utilize available capacity in the second half. To be clear, these are non-obligatory agreements for both sides.

Speaker #4: We would not build them into our guidance, but they are a meaningful demand statement. They indicate that interest in speedway capacity extends well beyond our committed customer base, and they represent potential incremental upside as the pipeline ramps.

Jason Long: They represent potential incremental upside as the pipeline ramps. The Kraken Project MVC increase is expected mid-year as well. Together, Speedway Phase One and Kraken are the primary volume and revenue growth drivers for 2026. Both are progressing on schedule. The other headline from the quarter is the conclusion of our Speedway Phase II open season, which represents up to 500,000 barrels per day at incremental capacity.

Speaker #4: The Kraken Project NBC increase is expected mid-year as well. Together, Speedway Phase One and Kraken are the primary volume and revenue growth drivers for 2026, and both are progressing on schedule.

Speaker #4: The other headline from the quarter is the conclusion of our Speedway Phase Two open season, which represents up to $500,000 barrels per day of incremental capacity.

Speaker #4: The formal process wrapped up in April, and the results were strong. So I'll let Shop provide some details shortly on what we saw through that process and our expectations going forward.

Jason Long: The formal process wrapped up in April, and the results were strong. I'll let Chop provide some details shortly on what we saw through that process and our expectations going forward. Finally, as our E&P partners require capacity and integrated solutions, WaterBridge will continue to scale our network to meet demand in the most efficient way possible. At the same time, as our infrastructure network continues to grow, we are more encouraged than ever as we consider new ways to create incremental value via the large and growing water resource asset that we own. There is a very interesting and rapidly shifting economic landscape for water supply and demand in the Delaware Basin. Treatment technologies continue to improve and downstream demand from industries like digital infrastructure continue to shift the potential role of treated produced water in the historically water-stressed basin in a meaningful way.

Speaker #4: Finally, as our E&P partners require capacity and integrated solutions, WaterBridge will continue to scale our network to meet demand in the most efficient way possible.

Speaker #4: At the same time, as our infrastructure network continues to grow, we are more encouraged than ever as we consider new ways to create incremental value via the large and growing water resource asset that we own.

Jason Long: At the same time, as our infrastructure network continues to grow, we are more encouraged than ever as we consider new ways to create incremental value via the large and growing water resource asset that we own. There is a very interesting and rapidly shifting economic landscape for water supply and demand in the Delaware Basin. Treatment technologies continue to improve and downstream demand from industries like digital infrastructure continue to shift the potential role of treated produced water in the historically water-stressed basin in a meaningful way.

Speaker #4: There is a very interesting and rapidly shifting economic landscape for water supply and demand in the Delaware Basin. Treatment technologies continue to improve, and downstream demand from industries like digital infrastructure continues to shift the potential role of treated produced water in the historically water-stressed basin in a meaningful way.

Speaker #4: We continue to leverage our role as an industry leader to explore these beneficial reuse opportunities and are excited about the potential opportunities that the scale and strategic geography of our assets may be able to unlock.

Jason Long: We continue to leverage our role as an industry leader to explore these beneficial reuse opportunities and are excited about the potential opportunities that the scale and strategic geography of our assets may be able to unlock. The combination of these factors, Speedway Phase One on track for a mid-year start, Kraken ramping, a Phase II open season that exceeded our expectations, and an operational and commercial environment that has become more supportive since we set the initial guidance, is what underpins our decision to raise guidance today. Chop will give you more color on the operational specifics, and Scott will walk through the financial implications.

Speaker #4: The combination of these factors, Speedway Phase One on track for a mid-year start, Kraken ramping in Phase Two open season that exceeded our expectations, and an operational and commercial environment that has become more supportive since we set the initial guidance.

Speaker #4: It's what underpins our decision to raise guidance today. Shop will give you more color on the operational specifics, and Scott will walk through the financial implications.

Speaker #5: Thank you, Jason, and thank you to everyone joining today. First quarter was a strong start to the year operationally. As Jason mentioned, Speedway Phase One construction is progressing, and we remain on track for a mid-year in-service date.

Michael Reitz: Thank you, Jason, and thank you to everyone joining today. Q1 was a strong start to the year operationally. As Jason mentioned, Speedway Phase One construction is progressing, and we remain on track for a mid-year in-service date. Speedway connects northern Delaware Basin producers to out-of-basin pore space owned by LandBridge, giving our customers access to high-quality, underutilized capacity at the Speed Ranch. As Jason noted, we are already receiving commercial interest in interruptible agreements, which positions us well for a strong ramp in the H2 of the year.

Speaker #5: Speedway connects Northern Delaware Basin producers to out-of-basin pore space owned by Land Bridge, giving our customers access to high-quality, underutilized capacity at the speed ranch.

Speaker #5: As Jason noted, we are already receiving commercial interest in interoperable agreements, which positions us well for a strong ramp in the second half of the year.

Speaker #5: We closed the formal Phase Two open season in April, and we are more bullish than ever about the value that E&P see in this essential long-haul produced water solution.

Michael Reitz: We closed the formal Phase II open season in April and are more bullish than ever at the value that E&Ps see in this essential long-haul produced water solution. Demand for incremental takeaway has been robust, driven by the growing New Mexico produced water handling volumes that we expect in the near to midterm as operators develop high-quality inventory in that part of the Delaware Basin. We are in advanced commercial discussions with a high-quality group of new and existing customers, which we view as a positive for the long-term risk profile of the project. As we finalize underwriting for Phase II, we are focused on capital efficiency and speed to execution. Phase I gave us significant infrastructure on the ground in key New Mexico development geographies. We intend to leverage that foundation to build Phase II in optimized stages that are calibrated to committed customer needs.

Speaker #5: Demand for incremental takeaway has been robust, driven by the growing New Mexico produced water handling volumes that we expect in the near to mid-term as operators develop high-quality inventory in that part of the Delaware Basin.

Speaker #5: We are in advanced commercial discussions with a high-quality group of new and existing customers, which we view as a positive for the long-term risk profile of the project.

Michael Reitz: We are in advanced commercial discussions with a high-quality group of new and existing customers, which we view as a positive for the long-term risk profile of the project. As we finalize underwriting for Phase II, we are focused on capital efficiency and speed to execution. Phase I gave us significant infrastructure on the ground in key New Mexico development geographies. We intend to leverage that foundation to build Phase II in optimized stages that are calibrated to committed customer needs.

Speaker #5: As we finalize underwriting for Phase Two, we are focused on capital efficiency and speed to execution. Phase One gave us significant infrastructure on the ground and key New Mexico development geographies we intend to leverage that foundation to build Phase Two and optimize stages that are calibrated to committed customer needs.

Speaker #5: This allows us to sequence capital more efficiently, optimize returns on each increment of the build-out, and maintain flexibility in what remains an uncertain cost environment for steel and pipe.

Michael Reitz: This allows us to sequence capital more efficiently, optimize returns on each increment of the build-out, and maintain flexibility in what remains an uncertain cost environment for steel and pipe. As noted in our 2026 capital guide, the initial development of the phase II build-out is expected to begin in the H2 of 2026. We will continue to update the market as our underwriting progresses. Our synergistic relationship with LandBridge also supports our broader infrastructure strategy. LandBridge's access to contiguous out-of-basin pore space gives us the ability to route volumes away from areas with elevated pore pressure and concentrated upstream development. This is consistent with our historically conservative and distributed approach to produced water handling. We are excited by the progress we have made with permitting and look forward to continuing to establish new solutions for our customers.

Speaker #5: As noted in our 2026 Capital Guide, the initial development of the Phase Two build-out is expected to begin in the second half of 2026.

Speaker #5: And we will continue to update the market as our underwriting progresses. Our synergistic relationship with Land Bridge also supports our broader infrastructure strategy. Land Bridge has access to contiguous out-of-basin pore space and gives us the ability to route volumes away from areas with elevated pore pressure and concentrated upstream development.

Michael Reitz: Our synergistic relationship with LandBridge also supports our broader infrastructure strategy. LandBridge's access to contiguous out-of-basin pore space gives us the ability to route volumes away from areas with elevated pore pressure and concentrated upstream development. This is consistent with our historically conservative and distributed approach to produced water handling. We are excited by the progress we have made with permitting and look forward to continuing to establish new solutions for our customers.

Speaker #5: This is consistent with our historically conservative and distributed approach to produced water handling. We are excited by the progress we have made with permitting and look forward to continuing to establish new solutions for our customers.

Speaker #5: And I'll now turn the call over to Scott for a review of the findings.

Michael Reitz: I'll now turn the call over to Scott for a review of the financials.

Speaker #6: Thank you, Shop, and good morning, everyone. Today, we are raising our full-year 2026 guidance. We now expect produced water handling volumes at 2.525 to 2.725 million barrels per day and adjusted EBITDA of $425 to $465 million.

Scott McNeely: Thank you, Charles, and good morning, everyone. Today, we are raising our full-year 2026 guidance. We now expect produced water handling volumes of 2.525 to 2.725 million barrels per day and adjusted EBITDA of $425 to 465 million. Capital expenditure guidance of $430 to 490 million is unchanged. This raise reflects two changes since we set guidance in mid-March. First, our commercial and operational demand outlook has strengthened. We have a better line of sight into the H2. Speedway Phase One is on track for a midyear start and is already attracting interruptible interest beyond our committed base. The Kraken MVC increase is expected on a similar timeline, and the Phase II open season produced a stronger demand signal than we anticipated.

Speaker #6: Capital expenditure guidance of $430 million to $490 million is unchanged. This raise reflects two changes since we set guidance in mid-March. First, our commercial and operational demand outlook has strengthened.

Scott McNeely: First, our commercial and operational demand outlook has strengthened. We have a better line of sight into the H2. Speedway Phase One is on track for a midyear start and is already attracting interruptible interest beyond our committed base. The Kraken MVC increase is expected on a similar timeline, and the Phase II open season produced a stronger demand signal than we anticipated.

Speaker #6: We have a better line of sight into the second half. Speedway Phase One is on track for a mid-year start and is already attracting interoperable interest beyond our committed base.

Speaker #6: The Kraken NBC increase is expected on a similar timeline, and the Phase Two open season produced a stronger demand signal than we anticipated. Second, the macroeconomic environment has become more supportive of the E&P activity levels, and current discussions with our customers and subsequent operational visibility provide increased confidence in our expectations throughout the year.

Scott McNeely: Second, the macroeconomic environment has become more supportive of E&P activity levels, and current discussions with our customers and subsequent operational visibility provides increased confidence in our expectations throughout the year. Turning to Q1 results, revenue was $201 million, a 4% sequential decrease from $208.9 million in Q4. As expected, the decline was driven by lower seasonal activity to start the year, partially offset by the continued ramp in Kraken volumes. Net income was $9.5 million for the quarter, with a net income margin of 5% as compared to a net loss of $13.6 million in Q4 2025. Adjusted EBITDA was $102.9 million, with adjusted EBITDA margin of 51%, consistent with recent quarters.

Speaker #6: Turning to Q1 results, revenue was $201 million of 4% sequential decrease from $208.9 million in Q4. As expected, the decline was driven by a lower seasonal activity to start the year, partially offset by the continued ramp in Kraken volumes.

Scott McNeely: As expected, the decline was driven by lower seasonal activity to start the year, partially offset by the continued ramp in Kraken volumes. Net income was $9.5 million for the quarter, with a net income margin of 5% as compared to a net loss of $13.6 million in Q4 2025. Adjusted EBITDA was $102.9 million, with adjusted EBITDA margin of 51%, consistent with recent quarters.

Speaker #6: Net income was $9.5 million for the quarter, with the net income margin of 5% as compared to a net loss of 13.6 million in Q4 2025.

Speaker #6: Adjusted EBITDA was $102.9 million with an adjusted EBITDA margin of 51%, consistent with recent quarters. Adjusted operating margin was $111.3 million and gross margin improved sequentially to 48.2 million or 20 cents per barrel up from 46.8 million and 18 cents per barrel in Q4.

Scott McNeely: Adjusted operating margin was $111.3 million, Gross margin improved sequentially to $48.2 million, or $0.20 per barrel, up from $46.8 million and $0.18 per barrel in Q4. Capital expenditures in Q1 were $110.9 million, primarily driven by Speedway Phase One construction. On the balance sheet, we ended the quarter with total liquidity of $500.7 million, including $50.7 million of cash and approximately $450 million of available capacity under our $500 million revolving credit facility. Total debt was $1.486 billion, and our covenant net leverage ratio was 2.3x. We remain committed to our long-term leverage target of less than 3x. Our capital allocation framework remains consistent.

Speaker #6: Capital expenditures in the first quarter were $110.9 million primarily driven by Speedway Phase One construction. On the balance sheet, we ended the quarter with total liquidity of $500.7 million, including 50.7 million of cash and approximately $450 million of available capacity under our $500 million revolving credit facility.

Speaker #6: Total debt was $1.486 billion and our covenant net leverage ratio was 3.3 times. We remain committed to our long-term leverage target of less than 3 times.

Speaker #6: Our capital allocation framework remains consistent: prioritize high-return organic growth, maintain balance sheet discipline, and opportunistically return capital to shareholders. This quarter, we declared a dividend of $0.05 per share, payable on June 18 to shareholders of record as of June 4.

Scott McNeely: Prioritize high return organic growth, maintain balance sheet discipline, and opportunistically return capital to shareholders. This quarter, we declared a dividend of $0.05 per share, payable on 18 June to shareholders of record as of 4 June. To close, WaterBridge delivered solid Q1 results consistent with our plan, and we are raising our full-year outlook to reflect what we can see from here. That raise is grounded in operational milestones with defined in-service timelines, a commercial demand picture that has continued to build confidence, and a macroeconomic backdrop that is supportive of E&P activity levels across our operating footprint. Our contract structure, long-term fixed fee with CPI escalators and minimum volume commitments, means that volume growth converts to revenue and cash with high predictability, giving us increasing confidence in our long-term volume and revenue trajectory. Thank you. Operator, please open the line for questions.

Speaker #6: To close, WaterBridge delivered solid first-quarter results consistent with our plan, and we are raising our full-year outlook to reflect what we can see from here.

Speaker #6: That raise is grounded in operational milestones as defined in-service timelines, a commercial demand picture that has continued to build confidence, and a macroeconomic backdrop that is supportive of E&P activity levels across our operating footprint.

Scott McNeely: That raise is grounded in operational milestones with defined in-service timelines, a commercial demand picture that has continued to build confidence, and a macroeconomic backdrop that is supportive of E&P activity levels across our operating footprint. Our contract structure, long-term fixed fee with CPI escalators and minimum volume commitments, means that volume growth converts to revenue and cash with high predictability, giving us increasing confidence in our long-term volume and revenue trajectory. Thank you. Operator, please open the line for questions.

Speaker #6: Our contract structure, long-term, fixed fee with CPI escalators, and minimum volume commitments means that volume growth converts to revenue and cash with high predictability, giving us increasing confidence in our long-term volume and revenue trajectory.

Speaker #6: Thank you. Operator, please open the line for questions.

Speaker #1: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad.

Operator: We will now begin the question-and-answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Derrick Whitfield of Texas Capital. Your line is open. Please go ahead.

Speaker #1: To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from Derek Whitfield of Texas Capital. Your line is open. Please go ahead.

Speaker #5: Hey, good morning again, guys. And thanks again for your time.

Derrick Whitfield: Hey, good morning again, guys, and, thanks again for your time.

Speaker #6: Hey, good morning, Derek.

Jason Long: Hey, good morning, Derrick.

Speaker #5: I wanted to start—I wanted to start with Speedway Phase Two. You guys have clearly done a nice job of articulating the need for durable, long-haul disposal within the Delaware, following your successful open season.

Derrick Whitfield: Wanted to start with Speedway Phase II. You guys have clearly done a nice job of articulating the need for durable long-haul disposal within the Delaware. Following your successful open season, how would you characterize the split between new and existing clients and the need for further capacity additions beyond Phase II as clients really start to recognize the challenges the basin will face over the next decade?

Speaker #5: How would you characterize the split between new and existing clients and the need for further capacity additions beyond Phase Two as clients really start to recognize the challenges the basin will face over the next decade?

Speaker #6: Yeah, thanks for the questions, Shop. I'll take that one. But I think that's a good question. I think it's a healthy mix of current and new customers.

Michael Reitz: Thanks for the question. This is Chop. I'll take that one. I think that's a good question. I think it's a healthy mix of current and new customers. You know, we've seen our existing customers, we've grown with them. We've also got, you know, as I mentioned, a healthy mix of new customers that are prioritizing takeaway. They're prioritizing, you know, secure disposal takeaway as opposed to just recycling, and that's what's really important about the Speedway Pipeline.

Speaker #6: We've seen our existing customers. We've grown with them. We've also got as I mentioned, a healthy mix of new customers that are prioritizing takeaway they're prioritizing secure disposal takeaway as opposed to just recycling and that's what's really important about the Speedway pipeline.

Speaker #6: I think there's just broad recognition now that produced water volumes are growing at a rate much greater than the need for recycling, and that's really driving, I think, just further recognition by E&Ps that long-haul flow assurance solutions are going to be critical to enable their operations over the next decade.

Jason Long: I think there's just broad recognition now that produced water volumes are growing at a rate much greater than the need for recycling. That's really driving, I think, just further recognition by E&Ps that long-haul flow assurance solutions are going to be critical to enable their operations over the next decade.

Speaker #5: Great. And then just with regard to your activity outlook, I wanted to focus on what you're hearing in your client conversations. While still clearly early in the higher price environment we have today, we are seeing industry pull forward with activity where possible.

Derrick Whitfield: Great. Just with regard to your activity outlook, I wanted to focus on what you're hearing in your client conversations. While it's still clearly early in the higher price environment we have today, we are seeing industry pull forward with activity where possible. I guess, based on your conversations for water needs, how would you characterize that? Are you seeing clients increasingly look to more optimal co-development, including the deeper intervals, given the benefit of higher prices now?

Speaker #5: I guess based on your conversations for water needs, how would you characterize that? And are you seeing clients increasingly look to more optimal co-development, including the deeper intervals given the benefit of higher prices now?

Speaker #6: Yeah, I'll take the first piece, Derek, and enhance it, Shop, to speak to the development strategy and approaches. But starting the year, I think that there was broad recognition by the back half of the year, and that was certainly top of mind as they worked through their budgeting message, their expectations to us.

Scott McNeely: Yeah, I'll take the first piece, Derrick, and then hand it to Chop to speak to the development strategy and approaches. You know, starting the year, I think that there was broad recognition by the E&Ps of potential oversupply risk the back half of the year, and that was certainly top of mind as they worked through their budgeting and messaged their expectations to us. I think if you fast-forward to today, with the current macro backdrop, there is a recognition that in the near to medium term, the macro environment is just going to be much more constructive. I think to your point, we've seen producer expectation and movement react relative to how constructive the new environment is.

Speaker #6: And I think if you fast forward to today, with the current macro backdrop, there is a recognition that, in the near to medium term, the macro environment is just going to be much more constructive.

Scott McNeely: I think if you fast-forward to today, with the current macro backdrop, there is a recognition that in the near to medium term, the macro environment is just going to be much more constructive. I think to your point, we've seen producer expectation and movement react relative to how constructive the new environment is.

Speaker #6: And I think to your point, we've seen producer expectation and movement react relative to how constructive the new environment is. And Shop, do you want to go into specifics on the development approaches we're seeing folks take?

Scott McNeely: Chop, I mean, do you wanna go into specifics on the development approaches we're seeing folks take to-

Speaker #5: Yeah, I mean, we're hearing some of people looking at deeper benches given the higher commodity pricing. I think a majority of producers haven't been able to shift that quickly, but it is something they're evaluating.

Michael Reitz: Yeah. I mean, we're hearing some of people looking at deeper benches given the higher commodity pricing. I think, you know, a majority of our producers haven't been able to shift that quickly, but it is something they're evaluating. Yeah, we're pretty excited about that.

Speaker #5: So, yeah, we're pretty excited about that. Great update, guys. I'll hop back in to you.

Derrick Whitfield: Great update, guys. I'll hop back into queue.

Speaker #6: Thanks, Derek.

Jason Long: Thanks, Derrick.

Michael Reitz: Thanks, Derrick.

Speaker #1: Your next question comes from the line of John McKay of Goldman Sachs. Your line is open. Please go ahead.

Operator: Your next question comes from the line of John MacKay of Goldman Sachs. Your line is open. Please go ahead.

Speaker #7: Hey, team.

John MacKay: Hey, team. Thank you again for the time. I want to go back to the guidance. You guys talked about a couple of upside pieces here. I think we would have thought of maybe a higher boost for the year just on some more straightforward things like skim oil alone. Can you maybe just walk us through again some of the buckets of maybe conservatism you see in there and really just how you are thinking about the balance of the year from here?

Speaker #5: Hey, team. Thank you again for the time. I want to go back to the guidance you guys talked about a couple of the upside pieces here.

Speaker #5: I think we would have thought of maybe a higher boost for the year just on some more straightforward things like skim oil alone. So can you maybe just walk us through again some of the buckets of maybe conservatism you see in there and, yeah, really just how you're thinking about the balance of the year from here?

Speaker #6: Yeah. Hey, John. Thanks for the thoughtful question. Now, look, it's a fantastic point. I mean, we obviously didn't look to move our guidance in reaction to, call it, direct commodity price exposure through the end of the year.

Scott McNeely: Yeah. Hey, John. Thanks for the thoughtful question. No, look, it's a fantastic point. I mean, we obviously didn't look to move our guidance in reaction to, call it direct, commodity price exposure through the end of the year. You know, this was really a move in reaction to produced water expectation kind of through year-end. I mean, if you were to layer in just the strip pricing and the uptick we've seen in skim, you know, I think that alone presents meaningful upside above the midpoint today. Just given, call it how fluid that situation is and how much movement we're seeing there, we're being a bit cautious as it relates to incorporating any kind of uptick in commodity prices to our guidance we're messaging to the street.

Speaker #6: This was really a move in reaction to produced water expectations kind of through year-end. I mean, if you were to layer in just the strip pricing and the uptick we'd see in skim, I think that alone presents meaningful upside above the midpoint today.

Scott McNeely: I mean, if you were to layer in just the strip pricing and the uptick we've seen in skim, you know, I think that alone presents meaningful upside above the midpoint today. Just given, call it how fluid that situation is and how much movement we're seeing there, we're being a bit cautious as it relates to incorporating any kind of uptick in commodity prices to our guidance we're messaging to the street.

Speaker #6: But just given how fluid that situation is and how much movement we're seeing there, we're being a bit cautious as it relates to incorporating any kind of uptick in commodity prices to our guidance for messaging to the street.

Speaker #7: All right. That's fair. Maybe just going back to Speedway Phase Two then, are you guys I know it's understand you're still working through the commercial terms, etc.

John MacKay: All right. That's fair. Maybe just going back to Speedway Phase II then. Understand you're still working through the commercial terms, et cetera, but generally speaking, would you expect kind of similar returns as Speedway Phase One, better, softer? Just how are you thinking about that broadly? Maybe just next would be when you'd expect to be able to come to the market with kind of more formal terms around this. Thanks.

Speaker #7: But generally speaking, would you expect kind of similar returns as Phase One? Better? Softer? Just how are you thinking about that broadly? And maybe just next, would be when you'd expect to be able to come to the market with kind of more formal terms around this?

Speaker #7: Thanks.

Speaker #6: Yeah. We're obviously still working through the tail end of the commercialization and documentation there. And I think once the dust settles, we'll certainly circle back and give the market a bit more details.

Scott McNeely: We're obviously still working through the tail end of the commercialization and documentation there. I think once the dust settles, we'll certainly circle back and give the market a bit more details. Just speaking to it broadly, I think we, you know, we certainly have spoken to just the supply-demand economics of high-quality flow assurance in the basin and what that's done, you know, for us as you think through some of these more recent projects, and we continue to see that momentum here in Speedway, in Speedway Phase II. You know, like I mentioned, we're wrapping up kind of the commercialization and documentation, and I think, you know, we are optimistic and look forward to circling back to the market once that's FID'd with more detail.

Speaker #6: But just speaking to it broadly, I think we certainly have spoken to just the supply-demand economics of high-quality flow assurance in the basin and what that's done for us as you think through some of these more recent projects.

Speaker #6: And we continue to see that momentum here in Speedway Phase Two. Like I mentioned, we're wrapping up kind of the commercialization and documentation. And I think we are optimistic and look forward to circling back to the market once SFIG with more detail.

Speaker #7: All right. Fair enough. Thank you.

John MacKay: All right. Fair enough. Thank you.

Speaker #6: Yeah. Thanks, John.

Scott McNeely: Yeah. Thanks, John.

Operator: Your next question comes from the line of Kevin of Pickering Energy Partners. Your line is open. Please go ahead.

Speaker #1: Your next question comes from the line of Kevin of Pickering Energy Partners. Your line is open. Please go ahead.

Speaker #5: Hey. Good morning, guys. And realize this question is kind of maybe another way to ask the previous one. But just kind of curious if the demand or sorry, that the if you could talk about the impact to margins that we will see from Speedway One and Two, when those come online, and should we think of kind of the high demand and interest in interruptible volumes as the tailwind for those margins?

Kevin MacCurdy: Hey, good morning, guys. Realize this question is kind of maybe another way to ask the previous one. Just kinda curious if, you know, if you could talk about the impact to margins that we will see from Speedway One and Two when those come online. Should we think of kind of the high demand and interest in interruptible volumes as a tailwind for those margins?

Speaker #6: Hey, I'm good to hear from you. I mean, the punchline is we expect to see margin expansion as these higher rate contracts come online.

Scott McNeely: Hey, Kevin. Good to hear from you. I mean, the punchline is we expect to see margin expansion as these higher rate contracts come online. I mean, I think depending on the situation, there may be different cost elements to them, but ultimately, we're seeing better call it project-level margins. As a result, that's going to lead to margin expansion across the broader business here. You know, over the next several years as Kraken ramps, Speedway ramps, we would certainly see some uptick there. Now, on the interruptible side, you know, as we voiced over previously, we typically see interruptible volumes at a rate that exceeds the contracted rate, you know, really without any kind of expansion on the cost side. Those would be even higher margin barrels at that point.

Speaker #6: I mean, I think they're depending on the situation, there may be different cost elements to them. But ultimately, we're seeing better, call it, project-level margins and as a result, that's going to lead to margin expansion across the broader business here.

Speaker #6: So over the next several years, as Kraken ramps, Speedway ramps, we would certainly see some uptick there. Now, on the interruptible side, as we've voiced over previously, we typically see interruptible volumes that are rates that exceed the contracted rate.

Scott McNeely: You know, over the next several years as Kraken ramps, Speedway ramps, we would certainly see some uptick there. Now, on the interruptible side, you know, as we voiced over previously, we typically see interruptible volumes at a rate that exceeds the contracted rate, you know, really without any kind of expansion on the cost side. Those would be even higher margin barrels at that point.

Speaker #6: Really, without any kind of expansion on the cost side. So those would be even higher-margin barrels at that point. So, as we continue to win more of these, call it interruptible opportunities, and deliver that solution, I think there's also a real potential for margin and expansion as a result of that.

Scott McNeely: As we continue to win, you know, more of these interruptible opportunities and deliver that solution, I think there's also real potential for margin and expansion as a, as a result of that.

Speaker #7: Great answer, Scott. And maybe as my follow-up, I'll go back to slide 10. I really appreciate this slide. But thinking kind of longer term, I mean, do you guys have an expectation of when these deeper zones in the Delaware start to contribute more of the volumes?

Kevin MacCurdy: Great answer, Scott. Maybe as my follow-up, I'll go back to slide 10. I really appreciate this slide. But thinking kind of longer term, I mean, do you guys have an expectation of when these deeper zones in the Delaware start to contribute more of the volumes? How is that kind of built into your long-term outlook?

Speaker #7: And how is that kind of built into your long-term outlook?

Scott McNeely: Chuck, do you want to talk to the deeper zones? Okay. Yeah. I'm happy to jump in as well. I mean, I think we've already seen some evolution kind of in thinking here. You know, certainly as E&P operators are trying to get very smart about capital efficiency, rig efficiencies. You've seen development, you know, cube development. Other folks have called it other things. The punchline is, you know, rather than targeting these shallow zones with 1 or 2 wells, going much deeper and bringing these large multi-well pads online. As a result, the oil production is coming with a higher water cut. I don't see, nor do we kind of institutionally see the need for capital efficiency moving away from our industry anytime soon.

Speaker #6: Chuck, do you want to talk through the deeper zones? Okay. Yeah, I'm happy to jump in as well. I mean, I think we've already seen some evolution kind of in thinking here.

Speaker #6: Certainly, as E&P operators, are trying to get very smart about capital efficiency, rig efficiencies. You've seen development. CUBE development, other folks have called it other things.

Speaker #6: But the punchline is, rather than targeting these shallow zones with one or two wells, they're going much deeper and bringing these large multi-well pads online. As a result, the oil production is coming with a higher water cut.

Scott McNeely: The punchline is, you know, rather than targeting these shallow zones with 1 or 2 wells, going much deeper and bringing these large multi-well pads online. As a result, the oil production is coming with a higher water cut. I don't see, nor do we kind of institutionally see the need for capital efficiency moving away from our industry anytime soon.

Speaker #6: I don't see nor do we kind of institutionally see the need for capital efficiency moving away from our industry anytime soon. So I think producers are getting smarter and smarter on this.

Scott McNeely: I think producers are getting smarter and smarter on this, and as a result, you're gonna see more and more of this on a go-forward basis. Now, how do we think through that from a forecasting standpoint? We are not modeling call it any kind of expansion to water oil ratios over time. There is a pretty meaningful amount of upside here. For the sake of being conservative, that is not something that we've got layered into certainly any near-term guidance, much less any of our longer term forecasts at this point.

Speaker #6: And as a result, you're going to see more and more of this on a go-forward basis. Now, how do we think through that from a forecasting standpoint?

Speaker #6: We are not modeling any kind of expansion to water-oil ratios over time. And so there is a pretty meaningful amount of upside here but for the sake of being conservative, that is not something that we've got layered into certainly any near-term guidance, much less any of our longer-term forecasts at this point.

Speaker #7: I appreciate the time. Thanks.

Kevin MacCurdy: Appreciate the time. Thanks.

Speaker #6: Yeah. Thank you.

Scott McNeely: Yeah, thank you.

Speaker #1: Your next question comes from the line of Eli Josen of JPMorgan Securities LLC. Your line is open. Please.

Operator: Your next question comes from the line of Eli Joseph of J.P. Morgan Securities LLC. Your line is open. Please go ahead.

Speaker #7: Hey. Good afternoon. Just wanted to stick with Speedway. Are you guys seeing more customer demand to lock in MVCs on Phase One? And can you remind us roughly what percentage of that pipes capacity has MVCs on it?

Eli Joseph: Hey, good afternoon. Just wanted to stick with Speedway. Are you guys seeing more customer demand to lock in MVCs on Phase One? Can you remind us, like, roughly what percentage of that pipe's capacity has MVCs on it? Just thinking about meeting some of that elevated near-term demand, especially with the new customers. Thanks.

Eli Jossen: Hey, good afternoon. Just wanted to stick with Speedway. Are you guys seeing more customer demand to lock in MVCs on Phase One? Can you remind us, like, roughly what percentage of that pipe's capacity has MVCs on it? Just thinking about meeting some of that elevated near-term demand, especially with the new customers. Thanks.

Speaker #7: Just thinking about meeting some of that elevated near-term demand, especially with the new customers. Thanks.

Speaker #6: Yeah. Thanks for the question. We are fully committed on Speedway Phase One. And that we're expecting to ramp over the next two years. So as we contract on Speedway Phase Two, we've got some demand that may get utilized on Speedway Phase One as we develop the Speedway Phase Two pipeline project.

Michael Reitz: Yeah, thanks for the question. You know, we are fully committed on Speedway Phase One, and that we're expecting to ramp over the next 2 years. As we contract on Speedway Phase II, we've got some demand that may get utilized on Speedway Phase One as we develop the Speedway Phase II pipeline project. It's a nice way to utilize the infrastructure that's in the ground without over-committing firm capacity, because that is something that we voiced to our customers on Speedway that we're not going to do, is overcommit firm capacity. Great question. We are seeing a lot of demand. Yeah, look forward to filling that pipe with some committed volumes from Speedway Phase II.

Speaker #6: So it's a nice way to utilize the infrastructure that's in the ground without overcommitting firm capacity because that is something that we've voiced to our customers on Speedway that we're not going to do is overcommit firm capacity.

Speaker #6: So great question. We are seeing a lot of demand. And yeah, look forward to filling that pipe with some committed volumes from Speedway Phase Two.

Speaker #7: Got it. And then maybe just switching over to beneficial reuse, I don't know if you guys have had any discussions with different stakeholders across the industry, whether that's data centers or other opportunities, but just anything to update us on there would be great.

Eli Joseph: Got it. You know, maybe just switching over to beneficial reuse. I don't know if you guys have had any discussions with different stakeholders across the industry, whether that's data centers or, you know, other opportunities. Anything to update us on there would be great. Thanks.

Eli Jossen: Got it. You know, maybe just switching over to beneficial reuse. I don't know if you guys have had any discussions with different stakeholders across the industry, whether that's data centers or, you know, other opportunities. Anything to update us on there would be great. Thanks.

Speaker #7: Thanks.

Speaker #6: Yeah. I mean, I'll just say we've said for a while that this water is a resource and it's only a matter of time before that's unlocked outside of the industry.

Scott McNeely: Yeah, I mean, you know, we've said for a while that this water is a resource, and it's only a matter of time before that's unlocked outside of the industry. I think, obviously with the meaningful ramp we've seen on the power side, on the digital infra side, I think that really shines a light on the value of the water that we have custody of. As you can probably imagine, being one of, if not the largest water handling companies in West Texas, we're right in the mix of those kinds of discussions. You know, I would say when we kind of hit that right milestone, we're excited to kind of step out to the public and kind of speak to what we expect to see and happen there.

Speaker #6: I think, obviously, with the meaningful ramp we've seen on the power side, on the digital infra side, I think that really shines a light on the value of the water that we have custody of.

Speaker #6: So as you can probably imagine, being one of if not the largest water-handling companies in West Texas, we're right in the mix. Those kinds of discussions.

Scott McNeely: As you can probably imagine, being one of, if not the largest water handling companies in West Texas, we're right in the mix of those kinds of discussions. You know, I would say when we kind of hit that right milestone, we're excited to kind of step out to the public and kind of speak to what we expect to see and happen there.

Speaker #6: And I would say, when we kind of hit that right milestone, we're excited to kind of step out to the public and kind of speak to what we expect to see and happen there.

Speaker #6: But it's probably a little premature at this point.

Scott McNeely: It's probably a little premature at this point.

Speaker #7: Great. Thanks.

Eli Joseph: Great. Thanks.

Eli Jossen: Great. Thanks.

Scott McNeely: Great.

Speaker #1: Your next question comes from the line of Praneesh Satish of Wells Fargo. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Praneeth Satish of Wells Fargo. Your line is open. Please go ahead.

Speaker #7: Thank you. Good morning. I guess I just wanted to go back to Speedway Phase One and make sure I understand it correctly. So the pipeline is 500,000 barrels per day.

Praneeth Satish: Thank you. Good morning. I guess I just wanted to go back to Speedway Phase One and make sure I understand it correctly. The pipeline is 500,000 barrels per day. I think you said you're fully contracted kind of as you look out over the next few years. Is the opportunity then, at least in the near term, there's less contracts and the opportunity for more kind of interruptible volumes on Speedway? And then, for those interruptible volumes on Phase One, I guess just like how meaningful are those? Like, are we talking, you know, tens of thousands of barrels per day or 100,000 barrels per day? Just any kind of context there.

Speaker #7: I think you said you're fully contracted, kind of as you look out over the next few years. And so is the opportunity then, at least in the near term, there's less contracts and the opportunity for more kind of interruptible volumes on Speedway.

Speaker #7: And then for those interruptible volumes on Phase One, I guess just how meaningful are those? Are we talking tens of thousands of barrels per day or 100,000 barrels per day?

Speaker #7: Just any kind of context there.

Speaker #6: Hey, Praneesh. No, good question. So, as Chuck mentioned, we expect volumes to ramp on Speedway Phase One, but when it comes online this summer through 2028.

Scott McNeely: Hey, Praneeth. No, good question. As Michael Reitz mentioned, you know, we expect volumes to ramp on Speedway Phase One for when it comes online this summer through 2028. When we think through that being fully committed, that is, call it once volumes hit maturity in 2028 and going forward. And so, you know, what that means is between now and 2028 is there's a fair bit of uncommitted, unutilized capacity that we can leverage to capture some of these spot and interruptible barrels. And so, you know, how much is that? How can we quantify that? I would say we've got more than 100,000 barrels a day of effectively uncommitted capacity here in the near term that we could deploy and potentially capture some upside on relative to what we're committed to.

Speaker #6: So when we think through that being fully committed, that is call it once volumes hit maturity in 2028 and going forward. And so what that means is between now and 2028 is there's a fair bit of uncommitted, unutilized capacity that we can leverage to capture some of these spot and interruptible barrels.

Speaker #6: And so how much is that? How can we quantify that? I would say we've got more than 100,000 barrels a day of effectively uncommitted capacity here in the near term that we could deploy and potentially capture some upside on relative to what we're committed to.

Speaker #6: Now, to Chuck's point also, as volumes ramp, when we do become fully committed, we've got to be a little bit more thoughtful in when and how we take interruptible barrels relative to our obligations with contracted customers.

Scott McNeely: The Charles's point also is, as volumes ramp, when we do become fully committed, we've got to be a little bit more thoughtful in when and how we take interruptible barrels, you know, relative to our obligations with contracted customers. Those opportunities, you know, will exist, and we will continue to capitalize on those. The second piece Charles mentioned is as we commercialize Speedway Phase II, there's also the potential to deploy some of that unutilized Speedway Phase One capacity as a resource to handle some of those Phase II volumes. Now what that solves for us is the ability to delay deploying capital to build out some of that infrastructure. By sequencing the capital out, you know, in a more thoughtful way, we're able to obviously optimize the returns out of that project.

Speaker #6: But those opportunities will exist, and we will continue to capitalize on those. Now, the second piece Chuck mentioned is as we commercialize Speedway Phase Two, there's also the potential to deploy some of that unutilized Phase One capacity as a resource to handle some of those Phase Two volumes now.

Scott McNeely: The second piece Charles mentioned is as we commercialize Speedway Phase II, there's also the potential to deploy some of that unutilized Speedway Phase One capacity as a resource to handle some of those Phase II volumes. Now what that solves for us is the ability to delay deploying capital to build out some of that infrastructure. By sequencing the capital out, you know, in a more thoughtful way, we're able to obviously optimize the returns out of that project.

Speaker #6: What that solves for us is the ability to delay deploying capital, to build out some of that infrastructure. And so by sequencing the capital out in a more thoughtful way, we're able to obviously optimize the returns out of that project.

Speaker #6: Now, to the extent we can do that is going to really be driven by how discussions ultimately evolve and get finalized here in the near term.

Scott McNeely: To the extent we can do that is going to really be driven by how discussions ultimately evolve and get finalized here in the near term. You know, we continue to be very, very thoughtful on ensuring none of our capacity goes unutilized, really in an effort to maximize the returns we're getting, you know, dollar for dollar here.

Speaker #6: But we continue to be very, very thoughtful on ensuring none of our capacity goes unutilized really in an effort to maximize the returns we're getting dollar for dollar here.

Speaker #7: Gotcha. That's helpful. And maybe just shifting gears and going back to Eli's question on data centers. So I guess Power Bridge is developing a 2-gigawatt data center in Reeves County.

Praneeth Satish: Gotcha. That, that's helpful. Maybe just shifting gears and going back to Eli's question on data centers. I guess PowerBridge is developing a 2 GW data center in Reeves County. Can you discuss whether A, that creates an opportunity for WaterBridge on the water side to deliver water to the data center? Is there any framework or kind of MOU or kind of in place where you would have the right to win that business?

Speaker #7: Can you discuss whether A, that creates an opportunity for WaterBridge to on the water side to deliver water to the data center, and then is there any framework or kind of MOU or kind of in place where you would have the right to win that business?

Speaker #6: Well, I'll frame it like this. I think with all of these data center announcements, in the permitting, in the Delaware, inclusive of Power Bridge, there is an ample opportunity for WaterBridge to play a meaningful role as the water solutions provider there.

Scott McNeely: I'll frame it like this. I think with all of these data center announcements in the Permian, in the Delaware, inclusive of PowerBridge, there is an ample opportunity for WaterBridge to play a meaningful role as the water solution provider there. You know, looking at PowerBridge specifically, we haven't disclosed any terms around water supply there. You know, I don't want to get too far over myself in terms of speaking to that now. I would say as we come back to the market with updates there, that's certainly a piece that, you know, we look forward to communicating. At the end of the day, all of these power generation projects, all these digital infra projects need a meaningful amount of water, and that's our specialty.

Speaker #6: Deep. Looking at Power Bridge specifically, we haven't disclosed any terms around water supply there. So I don't want to get too far over myself in terms of speaking to that now.

Scott McNeely: You know, I don't want to get too far over myself in terms of speaking to that now. I would say as we come back to the market with updates there, that's certainly a piece that, you know, we look forward to communicating. At the end of the day, all of these power generation projects, all these digital infra projects need a meaningful amount of water, and that's our specialty.

Speaker #6: I would say as we come back to the market with updates there, that's certainly a piece that we look forward to communicating. But at the end of the day, all of these power generation projects, all these digital infra projects, need a meaningful amount of water and that's our specialty.

Speaker #6: And so we are actively involved in a number of discussions to service that solution.

Scott McNeely: We are actively involved in a number of discussions to service that solution.

Speaker #7: Gotcha. Thank you.

Praneeth Satish: Gotcha. Thank you.

Speaker #6: Yeah. Thank you.

Scott McNeely: Yeah. Thank you.

Speaker #1: If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question.

Operator: Your next question comes from Don Crist of Johnson Rice. Your line is open. Please go ahead.

Speaker #1: If you are muted locally, please remember to unmute your device. Your next question comes from Dawn Christ of Johnson Rice. Your line is open.

Operator: Your next question comes from Don Crist of Johnson Rice. Your line is open. Please go ahead.

Speaker #1: Please go ahead.

Speaker #8: Good morning, guys. Thanks for letting me in here. I had a inflation question on the construction of Speedway One and Two. We've been hearing a lot of inflation on the cost of resin and polyethylene and those sort of things.

Don Crist: Morning, guys. Thanks for letting me in here. I had an inflation question on the construction of Speedway One and Two. You know, we've been hearing a lot of inflation on the cost of resin and polyethylene and those sort of things. Just curious as to if you've forward bought all your supplies for Speedway One to where you avoided most of those or you've hedged out some of the cost possibly on Speedway Phase Two to mitigate those costs as well. Just anything around that would be helpful.

Speaker #8: And just curious as to if you forward-bought all your supplies for Speedway One to where you avoided most of those, or you've hedged out some of the cost possibly on Speedway Phase Two, to mitigate those costs as well.

Speaker #8: Just anything around that would be helpful.

Speaker #6: Hey, Dawn. This is Chuck. I'll take that one. Good to talk to you. Yeah, you're absolutely right. We've seen increases in both steel as well as poly due to the resin market.

Michael Reitz: Hey, Don. This is Chop. I'll take that one. Good to talk to you. Yeah, you're absolutely right. We've seen increases in both steel as well as poly, you know, due to the resin market. Speedway Phase One, we committed to that poly before these increases, so we're insulated to that swing. You know, on Speedway Phase II, we are being strategic with when we purchase. We were able to secure some resin for Speedway Phase II-related projects at attractive pricing. We continue to, you know, update our economics to account for the fact that prices are going up and they are pretty volatile. You know, luckily our producer partners are aware of that, and they are sympathetic to that.

Speaker #6: Speedway Phase One we were we committed to that poly before these increases. So we're insulated to that. That swing. But on Speedway Phase Two, we're being strategic with when we purchase.

Speaker #6: We were able to secure some resin for Speedway Phase Two-related projects at attractive pricing, and we continue to update our economics to account for the fact that prices are going up and they are pretty volatile.

Michael Reitz: We were able to secure some resin for Speedway Phase II-related projects at attractive pricing. We continue to, you know, update our economics to account for the fact that prices are going up and they are pretty volatile. You know, luckily our producer partners are aware of that, and they are sympathetic to that.

Speaker #6: And so, luckily, our producer partners are aware of that, and they're sympathetic to that. So, yeah, those conversations have been going well. And I think we're in a really good spot to weather that increase. I appreciate that color.

Scott McNeely: Yeah, those conversations have been going well, and I think we're in a really good spot to weather that increase.

Michael Reitz: Yeah, those conversations have been going well, and I think we're in a really good spot to weather that increase.

Don Crist: I appreciate that color. Just one other kind of macro question from me. You know, with the increase in oil prices, we've heard that people are eliminating white space in their completion calendars. As a result, there may be a wall of water that is being held back right now because of natural gas takeaway. We all know that those pipelines are coming in later this year. Just any color around the potential for additional volumes coming out because of, you know, external factors related to natural gas takeaway and those sort of things that may hit later this year or early next year.

Speaker #6: And just one other kind of macro question for me. With the increase in oil prices, we've heard that people are eliminating white space in their completion calendars.

Speaker #6: And as a result, there may be a wall of water that is being held back right now because of natural gas takeaway. And we all know that those pipelines are coming in later this year.

Speaker #6: But just any color around the potential for additional volumes coming out because of external factors related to natural gas takeaway and those sort of things that may hit later this year or early next year.

Speaker #6: Handling walls of water are our specialty, Dawn. I mean, I say that half-jokingly, but if you look at the peak volumes we saw in fourth quarter nearly touching 3 million barrels a day, I think we've proven even before Speedway comes online that we've got the ability to handle very massive peaks with the infrastructure at scale we have in the ground today.

Scott McNeely: Handling walls of water are our specialty, Don. I mean, I, I say that half jokingly, but if you look at the peak volumes we saw in Q4 nearly touching 3 million barrels a day, I think we've proven even before Speedway comes online that we've got the ability to handle very massive peaks with the infrastructure scale we have in the ground today. Speedway is only gonna further bolster our ability to do that. We agree with your outlook there, and we're intentionally getting ahead of that, and I think we're positioned to capitalize on it.

Speaker #6: And Speedway is only going to further bolster our ability to do that. And so we agree with your outlook there, and we're intentionally getting ahead of that.

Speaker #6: And I think we're positioned to capitalize on it.

Speaker #8: Yeah. And I would just add that the sour gas window, right? The new infrastructure that's coming in the sour gas window is going to create just an additional wall of water.

Michael Reitz: Yeah. I would just add that the sour gas window, right?

Michael Reitz: The new infrastructure that's coming in the sour gas window is gonna create just an additional wall of water. Speedway Phase One and Phase II, we're strategically positioned in and around that sour gas window. We should see incremental volumes as because of that as well.

Speaker #8: So, Speedway Phase One and Two—we're strategically positioned in and around that sour gas window. So, we should see incremental volumes because of that as well.

Speaker #7: I appreciate the color, guys. I'll turn it back.

Don Crist: I appreciate the color, guys. I'll turn it back.

Speaker #6: Thanks, Dawn.

Scott McNeely: Thanks, Don.

Operator: We have reached the end of our Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.