Q2 2026 Plains GP Holdings LP Earnings Call

August 7, 2026

Operator: Good day. Thank you for standing by. Welcome to the PAA and PAGP Q2 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speakers today, Blake Fernandez, Vice President of Investor Relations. Please go ahead.

Speaker #1: Good day, and thank you for standing by. Welcome to the PAA and PAGP second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #1: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded.

Operator: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speakers today, Blake Fernandez, Vice President of Investor Relations. Please go ahead.

Speaker #1: I would now like to hand the conference over to your speaker today, Blake Fernandez, Vice President of Investor Relations. Please go ahead.

Speaker #2: Thank you, Daniel. Good morning. Welcome to Plains All-American second quarter 2026 earnings call. Today's slide presentation is posted on the Investor Relations website, under the News and Events section, at ir.plains.com.

Blake Fernandez: Thank you, Danny. Good morning. Welcome to Plains All American Q2 2026 earnings call. Today's slide presentation is posted on the investor relations website under the News and Events section at ir.plains.com. An audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide two. An overview of today's call is provided on slide three. A condensed consolidated balance sheet for PAGP and other reference materials are in the appendix. Today's call will be hosted by Willie Chiang, Chairman, CEO, and President, Al Swanson, Executive Vice President and CFO, and other members of the management team. With that, I'll turn the call over to Willie.

Speaker #2: An audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide 2. An overview of today's call is provided on slide 3.

Blake Fernandez: An audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide two. An overview of today's call is provided on slide three.

Speaker #2: A condensed consolidating balance sheet for PAGP and other reference materials are in the appendix. Today's call will be hosted by Willie Chiang. Chairman and CEO and President, Al Swanson, Executive Vice President and CFO, and other members of the management team.

Blake Fernandez: A condensed consolidated balance sheet for PAGP and other reference materials are in the appendix. Today's call will be hosted by Willie Chiang, Chairman, CEO, and President, Al Swanson, Executive Vice President and CFO, and other members of the management team. With that, I'll turn the call over to Willie.

Speaker #2: With that, I'll turn the call over to Willie.

Speaker #3: Thank you, Blake. Good morning, everyone, and thank you for joining us. This morning, we reported second quarter adjusted EBITDA attributable to Plains of $738 million, which puts us on track to deliver our full-year EBITDA guidance of 2.88 billion, plus or minus 75 million for 2026.

Willie Chiang: Thank you, Blake. Good morning, everyone. Thank you for joining us. This morning, we reported Q2 adjusted EBITDA attributable to Plains of $738 million, which puts us on track to deliver our full-year EBITDA guidance of $2.88 billion ±$75 million for 2026. Al will cover more details on our results in his portion of the call. The conflict in the Middle East and supply disruptions from the Strait of Hormuz illustrate the importance of reliable, secure, and responsibly produced energy. We believe this increases the value of existing infrastructure. We are well-positioned to help play a critical role in meeting global energy demand well into the future. While the macro environment has been volatile, we are successfully executing on our three key initiatives for the year.

Willie Chiang: Thank you, Blake. Good morning, everyone. Thank you for joining us. This morning, we reported Q2 Adjusted EBITDA attributable to Plains of $738 million, which puts us on track to deliver our full-year EBITDA guidance of $2.88 billion ±$75 million for 2026. Al will cover more details on our results in his portion of the call.

Speaker #3: Al will cover more details on our results in his portion of the call. The conflict in the Middle East and supply disruptions from the Strait of Hormuz illustrate the importance of reliable secure and responsibly produced energy.

Willie Chiang: The conflict in the Middle East and supply disruptions from the Strait of Hormuz illustrate the importance of reliable, secure, and responsibly produced energy. We believe this increases the value of existing infrastructure.

Speaker #3: We believe this increases the value of existing infrastructure and we are well-positioned to help play a critical role in meeting global energy demand well into the future.

Willie Chiang: We are well-positioned to help play a critical role in meeting global energy demand well into the future. While the macro environment has been volatile, we are successfully executing on our three key initiatives for the year.

Speaker #3: While the macro environment has been volatile, we are successfully executing on our three key initiatives for the year. In May, we closed on the sale of our Canadian NGL business, bringing our leverage down to 3.3 times.

Willie Chiang: In May, we closed on the sale of our Canadian NGL business, bringing our leverage down to 3.3x. Additionally, we have captured our targeted Cactus III synergies, which will enhance our connectivity to the Corpus Christi market in oil exports longer term. Finally, we expect to realize $50 million of efficiencies across the organization by year-end 2026, along with an additional $50 million by the end of 2027. Strong producer activity and customer demand, coupled with our premier crude oil footprint, are creating new organic investment opportunities. As we outlined in our June press release in detail on slide five, we increased our growth capital spending for 2026 from $350 million to a range of $400 to 450 million. These are predominantly quick-hit projects that will contribute to the 2027 EBITDA and will generate a greater return above our hurdle rate.

Speaker #3: Additionally, we have captured our targeted CACTUS III synergies, which will enhance our connectivity to the Corpus Christi market in oil exports over the longer term. Finally, we expect to realize $50 million of efficiencies across the organization by year-end 2026, along with an additional $50 million by the end of 2027.

Speaker #3: Strong productivity and customer demand coupled with our premier crude oil footprint are creating new organic investment opportunities. As we outlined in our June press release and detailed on slide 5, we increased our growth capital spending for 2026 from $350 million to a range of $400 to $450 million.

Willie Chiang: Strong producer activity and customer demand, coupled with our premier crude oil footprint, are creating new organic investment opportunities. As we outlined in our June press release in detail on slide five, we increased our growth capital spending for 2026 from $350 million to a range of $400 to 450 million. These are predominantly quick-hit projects that will contribute to the 2027 EBITDA and will generate a greater return above our hurdle rate.

Speaker #3: These are predominantly quick-hit projects that will contribute to the 2027 EBITDA and will generate a greater return above our hurdle rate. This includes a further build-out of our Permian Gathering System to service additional dedicated acreage in the Midland and Delaware basins.

Willie Chiang: This includes a further build-out of our Permian gathering system to service additional dedicated acreage in the Midland and Delaware Basins. The acreage is backed by several high-quality producers and spans multiple counties. This brings our POP JV total dedicated Permian acreage to approximately 5.1 million acres. Additionally, we're expanding our Canadian gathering systems. The additional capacity and connectivity will support strategic projects in the Clearwater and the Duvernay formations and are backed by producer commitments. Finally, we have sanctioned a very capital-efficient expansion of the Cactus III Pipeline, adding an additional 75,000 barrels a day capacity. This brings the total capacity of the line to 725,000 barrels a day. The expansion will come online by the end of this month and will support increased demand for export barrels out of the Corpus Christi market.

Speaker #3: The acreage is backed by several high-quality producers and spans multiple counties. This brings our POP JV total dedicated Permian acreage to approximately 5.1 million acres.

Speaker #3: Additionally, we're expanding our Canadian gathering systems. Additional capacity and connectivity will support strategic projects in the Clearwater and the Duvernay formations and are backed by producer commitments.

Willie Chiang: The additional capacity and connectivity will support strategic projects in the Clearwater and the Duvernay formations and are backed by producer commitments. Finally, we have sanctioned a very capital-efficient expansion of the Cactus III Pipeline, adding an additional 75,000 barrels a day capacity.

Speaker #3: Finally, we have sanctioned a very capital-efficient expansion of the CACTUS III pipeline adding an additional 75,000 barrels a day capacity. This brings the total capacity of the line to 725,000 barrels a day.

Willie Chiang: This brings the total capacity of the line to 725,000 barrels a day. The expansion will come online by the end of this month and will support increased demand for export barrels out of the Corpus Christi market.

Speaker #3: The expansion will come online by the end of this month and will support increased demand for export barrels out of the Corpus Christi market.

Speaker #3: We continue to evaluate additional investment opportunities, both organic and inorganic, that strengthen our portfolio and complement our existing asset base. With regard to Permian production, we now expect approximately 100,000 to 200,000 barrels a day of growth in 2026 versus 2025 on an exit-to-exit basis.

Willie Chiang: We continue to evaluate additional investment opportunities, both organic and inorganic, that strengthen our portfolio and complement our existing asset base. With regard to Permian production, we now expect approximately 100,000 to 200,000 barrels a day of growth in 2026 versus 2025 on an exit-to-exit basis. Upside from our previous forecast of relatively flat production is mainly due to natural gas egress coming online earlier than expected. Importantly, the ramp up in Permian oil production will create meaningful momentum into 2027 while having minimal impact to EBITDA this year. Our capital allocation framework and efficient growth strategy remain intact. We have a commitment to capital discipline to optimize our asset base and maintaining a very flexible balance sheet while returning significant cash to shareholders. With that, let me turn the call over to Al to cover our quarterly performance and other financial matters.

Speaker #3: The upside from our previous forecast of relatively flat production is mainly due to natural gas egress coming online earlier than expected. Importantly, the ramp-up in Permian oil production will create meaningful momentum into 2027, while having minimal impact to EBITDA this year.

Speaker #3: Our capital allocation framework and efficient growth strategy remain intact. We have a commitment to capital discipline, to optimize our asset base, and maintaining a very flexible balance sheet while returning significant cash to shareholders.

Speaker #3: With that, let me turn the call over to Al to cover our quarterly performance and other financial matters.

Speaker #2: Thanks, Willie. Slide 6 and 7 contain adjusted EBITDA walks that provide additional details on our performance. For the second quarter, we reported crude oil segment adjusted EBITDA of $690 million representing a significant increase from the first quarter level.

Al Swanson: Thanks, Willie. Slide 6 and 7 contain adjusted EBITDA walks that provide additional details on our performance. For the Q2, we reported crude oil segment adjusted EBITDA of $690 million, representing a significant increase from the Q1 level. This was driven by a combination of Cactus III synergies, efficiencies, market-based opportunities, and the absence of headwinds from the Q1. I would note that Q2 results include approximately $14 million of one-off environmental remediation expenses. Moving to the NGL segment, we reported adjusted EBITDA of $40 million, which reflects the mid-May closing date on the sale of the business. We are contemplating removing NGL segment EBITDA from our reporting in the Q3 and instead reporting adjusted EBITDA with one segment. A summary of 2026 guidance and key assumptions are on slide eight.

Speaker #2: This was driven by a combination of CACTUS III synergies, efficiencies, market-based opportunities, and the absence of headwinds from the first quarter. I would note that second quarter results include approximately $14 million of one-off environmental remediation expenses.

Speaker #2: Moving to the NGL segment, we reported adjusted EBITDA of $40 million, which reflects the mid-May closing date on the sale of the business. We are contemplating removing NGL segment EBITDA from our reporting in the third quarter and instead reporting adjusted EBITDA with one segment.

Speaker #2: A summary of 2026 guidance and key assumptions are on slide 8. As Willie outlined, we raised growth capital to a range of $400 million to $450 million and increased our Permian production forecast to 100,000 to 200,000 barrels a day exit-to-exit.

Al Swanson: As Willie outlined, we raised growth capital to a range of $400 million to $450 million and increased our Permian production forecast to 100,000 to 200,000 barrels a day exit to exit. Maintenance capital was decreased to $175 million, largely due to the timing of the NGL sale. Regarding our pipeline loss allowance revenue, we are approximately 70% hedged for the balance of the year at an average WTI price around $62. We plan to disclose our 2027 hedge position in February in conjunction with our full year outlook. As illustrated on slide nine, we expect to generate approximately $1.75 billion of free cash flow in 2026 and return significant capital to unit holders while maintaining financial flexibility. Our pro forma leverage ratio at the end of the Q2 was 3.3 times, reflecting approximately $2.9 billion of debt reduction driven by the NGL divestiture.

Speaker #2: Maintenance capital was decreased to $175 million, largely due to the timing of the NGL sale. Regarding our pipeline loss allowance revenue, we are approximately 70% hedged for the balance of the year at an average WTI price of around $62.

Speaker #2: We plan to disclose our 2027 hedge position in February in conjunction with our full year outlook. As illustrated on slide 9, we expect to generate approximately $1.75 billion of free cash flow in 2026 and return significant capital to unit holders while maintaining financial flexibility.

Speaker #2: Our proforma leverage ratio at the end of the second quarter was 3.3 times, reflecting approximately 2.9 billion dollars of debt reduction driven by the NGL divestiture.

Speaker #2: With that, I will turn the call back to Willie.

Al Swanson: With that, I will turn the call back to Willie.

Speaker #3: Thanks, Al. Slide 10 highlights the 7% countdown on annual growth of our crude business over the past few years. Our efficient growth strategy and the sale of the NGL business position us well to execute through a range of market environments, generating a more durable cash flow and creating long-term value.

Willie Chiang: Thanks, Al. Slide 10 highlights the 7% compound annual growth of our crude business over the past few years. Our efficient growth strategy and the sale of the NGL business position us well to execute through a range of market environments, generating a more durable cash flow and creating long-term value. We continue to build momentum into 2027 with increasing Permian production and a strong balance sheet with leverage at the low end of our target range. Our capital allocation framework priorities remain the same. One, return cash to unit holders through our targeted $0.15 per unit annual increases. Two, execute on accretive bolt-on acquisitions and organic CapEx. Three, maintain a strong balance sheet with financial flexibility.

Speaker #3: We continue to build momentum into 2027 with increasing Permian production and a strong balance sheet with leverage of the low end of our target range.

Speaker #3: Our capital allocation framework priorities remain the same. One, return cash to unitholders through our targeted $0.15 per unit annual increases. Two, execute on accretive bolt-on acquisitions and organic CapEx.

Speaker #3: And three, maintain a strong balance sheet with financial flexibility. We have already identified, and expect to capture, an additional $50 million of streamlining costs in 2027, and we are well-positioned to capture potential tailwinds from the volatile oil macro environment.

Willie Chiang: We have already identified and expect to capture an additional $50 million of streamlining costs in 2027. We are well positioned to capture potential tailwinds from the volatile oil macro environment. With that, I'll turn the call over to Blake to lead us into Q&A.

Speaker #3: With that, I'll turn the call over to Blake to lead us into Q&A.

Speaker #2: Thanks, Willie. As we enter the Q&A session, please limit yourself to two questions. This will allow us to address questions from as many participants as possible in our available time this morning.

Blake Fernandez: Thanks, Willie. As we enter the Q&A session, please limit yourself to two questions. This will allow us to address questions from as many participants as possible in our available time this morning. With that, operator, please open the call for questions.

Speaker #2: With that, operator, please open the call for questions.

Speaker #4: As a reminder, to ask a question, please press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again.

Operator: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Gabriel Marin with Mizuho. Your line is open.

Speaker #4: In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster.

Speaker #4: Our first question comes from Gabriel Marin with Mizuho, your line is open.

Speaker #5: Hey, good morning, team. I just wanted to ask about the revised capex, which I know came out a couple weeks ago. Can you just talk about this level of $400 million plus in investment capital?

Gabriel Marin: Hey, good morning team. I just wanted to ask about the revised CapEx, which I know came out a couple of weeks ago. Can you just talk about this level of $400 million plus in investment capital? Maybe how sustainable you think that will be, given that some of it's Canadian, some of it's Permian, some of it's Cactus. Just curious how you're thinking about in 2027 and beyond.

Gabriel Moreen: Hey, good morning team. I just wanted to ask about the revised CapEx, which I know came out a couple of weeks ago. Can you just talk about this level of $400 million plus in investment capital? Maybe how sustainable you think that will be, given that some of it's Canadian, some of it's Permian, some of it's Cactus. Just curious how you're thinking about in 2027 and beyond.

Speaker #5: Maybe how sustainable you think that will be, given that some of it's Canadian and some of it's Permian, some of it's CACTUS. Just curious how you're thinking about it in 2027 and beyond.

Speaker #2: Sure. Good morning, Gabe. It's Chris Chandler. So Willie laid out in our slides also show the drivers that led us to change the guidance for 2026.

Chris Chandler: Sure. Good morning, Gabe. It's Chris Chandler. Willie laid out in our slides, also show the drivers that led us to change the guidance for 2026. Some of those are typical 18 to 24-month projects, so the spend will carry into 2027 and maybe a little into 2028. The way I think about it is, I don't expect 2027 to look significantly different than 2026, but it is trending a little higher than our historical $300 to $400 million range net to Plains. We'll provide 2027 guidance, obviously, when we provide full-year guidance in late January, early February.

Speaker #2: Some of those are typical 18 to 24-month projects. So the spend-to-carry into 2027 and maybe a little in the 2028. The way I think about it is I don't expect 2027 to look significantly different than 2026, but it is trending a little higher than our historical 300 to 400 million dollar range.

Speaker #2: Net to planes. So we'll provide 2027 guidance. Obviously, when we provide full year guidance in late January, early February.

Speaker #5: Thanks, Chris. And then maybe if I could just ask about the Cactus expansion and adding the 75,000 barrels a day. Just how long do you think that it takes to fill, and to what extent can you keep adding these bite-sized expansions to Cactus going forward before you have to contemplate something much bigger than that?

Gabriel Marin: Thanks, Chris. Maybe if I could just ask about the Cactus expansion and adding the 75,000 barrels a day. Just how long do you think that takes to fill, and to what extent can you keep adding these bite-size expansions to Cactus going forward before you have to contemplate something much bigger than that?

Gabriel Moreen: Thanks, Chris. Maybe if I could just ask about the Cactus expansion and adding the 75,000 barrels a day. Just how long do you think that takes to fill, and to what extent can you keep adding these bite-size expansions to Cactus going forward before you have to contemplate something much bigger than that?

Speaker #3: Gabe, good morning. It's Jeremy Gobel. To answer your question, our marketing affiliate can fill the space now and capture the volatility that we're seeing.

Jeremy Goebel: Gabe, good morning. It's Jeremy Goebel. To answer your question, our marketing affiliate can fill the space now and capture the volatility that we are seeing. The expectation is to contract that over time when we see the market. The reason we executed on it earlier than expected is you saw a lot of volatility, you saw growing production, you saw a really short time period, very capital efficient, and you see on the demand side, new buyers on the market. Our marketing affiliate can fill that role until someone wants to take the space from us. We can fill it quickly and then turn it to a term basis, which is our ultimate goal.

Speaker #3: The expectation is to contract that over time when we see the market. So the reason we executed on it earlier than expected is you saw a lot of volatility; you saw growing production; you saw a really short time period, very capital efficient.

Speaker #3: And you see on the demand side, new buyers on the market. So our marketing affiliate can fill that role until someone wants to take the space from us.

Speaker #3: So we can fill it quickly and then turn it to a term basis, which is our ultimate goal. And then ask your question on are there other opportunities.

Gabriel Marin: Thanks, Jeremy.

Gabriel Moreen: Thanks, Jeremy.

Jeremy Goebel: To your question on are there other opportunities, our team continues to evaluate capital-efficient opportunities, and we'll update you as we have them.

Speaker #3: Our team continues to evaluate capital efficient opportunities and will update you as we have them.

Speaker #5: Thanks, Jeremy.

Gabriel Marin: Thanks, Jeremy.

Gabriel Moreen: Thanks, Jeremy.

Speaker #4: Thank you. Our next question comes from Manav Gupta with UBS. Your line is open.

Willie Chiang: Yeah.

Operator: Thank you. Our next question comes from Manav Gupta with UBS. Your line is open.

Speaker #6: Good morning, guys. I know it’s a little early, but I was thinking maybe you could talk a little bit about how 2027 is shaping up for you.

Manav Gupta: Good morning, guys. I know it's a little early, but I was thinking maybe you could talk a little bit about how 2027 is shaping up for you. The puts and takes, especially given the number of new pipelines expected, which will alleviate the Permian egress problem so that crude could come to the market. Help us understand the puts and takes for 2027 versus 2026.

Speaker #6: The puts and takes, especially given the number of new pipelines expected, which will alleviate the Permian egress problems, so that crude could come to the market.

Speaker #6: So help us understand the puts and takes for 2027 versus 2026.

Speaker #2: Manav, it's Willie. Let me try to address this. We're not going to give you guidance on 2027 because the world continues to evolve. What we really want to convey to you is that, longer term—whether it's the end of '26 or early '27—is really going to be determined by how things shape up in the Middle East.

Willie Chiang: Manav, it's Willie. Let me try to address this. We're not going to give you guidance on 2027 because the world continues to evolve. What we really want to convey to you is that longer term, whether it's the end of 2026, early 2027, is really going to be determined by how things shape up in the Middle East. There remains a lot of uncertainty as everyone knows. The oil markets are very extreme, but as we view this, as the longer this goes, the more you draw global inventories to low levels, the more important North America is going to be to providing energy to the rest of the world. Everything we're doing is positioning us to be able to capture that when it comes.

Speaker #2: There remains a lot of uncertainty as everyone knows. The oil markets are very extreme, but as we view this, as the longer this goes, the more you draw global inventories to low levels.

Speaker #2: The more important North America is going to be to providing fuel for the rest of the energy to the rest of the world. So everything we're doing is positioning us to be able to capture that when it comes.

Speaker #2: And you tell me the oil price, you tell me when things resolve, we can easily put a number together. But that's probably the extent I'll share on what our views are other than it being very constructive.

Willie Chiang: You tell me the oil price, you tell me when things resolve, we can easily put a number together, but that's probably the extent I'll share on what our views are other than it being very constructive, and we've got a lot of momentum going into 2027.

Speaker #2: And we've got a lot of momentum going into '27.

Manav Gupta: Perfect. My quick follow-up that I just wanted to understand from you is that your balance sheet is fixed. I think earlier in the year, last year, you were looking at more bolt-on opportunities. Now I think you are looking at more organic growth projects also. Can you help us understand the balance between future growth driven by bolt-ons versus organic opportunities?

Speaker #6: Perfect. My quick follow-up that I just wanted to understand from you is that your balance sheet is fixed. I think at earlier in the year last year, you were looking at more bolt-on opportunities.

Speaker #6: Now, I think you have been looking at more organic growth projects as well. Can you help us understand the balance between future growth driven by bolt-ons versus organic opportunities?

Speaker #3: Manav, this is Willie again. The answer is we look at all of them. We've got lots of levers to pull. The organic opportunities present themselves.

Willie Chiang: Manav, this is Willie again. The answer is we look at all of them. We've got lots of levers to pull. The organic opportunities present themselves, we do it. If it's the bolt-ons, we execute on those. I'm really pleased where we are with our balance sheet, where it is, and ability to pull the levers on lots of different things, whether it's bolt-ons, whether it's CapEx, returning more cash to shareholders, and even taking out the pref. Those are some of the options that we have. It's a good position to be in, and we'll play the right card when the time comes.

Speaker #3: We do it. If it’s the bolt-ons, we execute on those. I’m really pleased with where we are. With our balance sheet where it is and the ability to pull the levers, there are lots of different things—whether it’s bolt-ons, whether it’s CapEx, returning more cash to shareholders, and even taking out the press.

Speaker #3: Those are some of the options that we have. So it's a good position to be in, and we'll play the right card when the time comes.

Speaker #6: Thank you so much.

Manav Gupta: Thank you so much.

Speaker #3: Thank you.

Willie Chiang: Thank you.

Speaker #4: Thank you. Our next question comes from Praneeth Satish with Wells Fargo. Your line is open.

Operator: Thank you. Our next question comes from Praneeth Satish with Wells Fargo. Your line is open.

Speaker #5: Great. Good morning, everyone.

Praneeth Satish: Great. Good morning, everyone. Just going back to the guidance, you raised the exit-to-exit Permian production growth by 100,000 to 200,000 barrels per day on improving gas egress. You kind of had strong Q2 results, but you left the 2026 EBITDA guidance unchanged. I guess intuitively, I would have expected at least some of those flush volumes to reach your system and contribute to earnings upside this year. Maybe you can just help us understand why the higher volume outlook doesn't necessarily translate into higher EBITDA guidance for this year, and how you're thinking about the timing of when you realize those benefits.

Speaker #2: So just going back to the guidance you raised, the exit-to-exit Permian production growth by 100 to 200,000 barrels per day on improving gas egress.

Speaker #2: But I guess your and you kind of had strong Q2 results, but you left the 2026 EBITDA guidance unchanged. I guess intuitively, I would have expected at least some of those flush volumes to reach your system.

Speaker #2: And contribute to earnings upside this year. So maybe you can just help us understand why the higher volume outlook doesn't necessarily translate into higher EBITDA guidance for this year.

Speaker #2: And how you're thinking about the timing of when you'd realize those benefits.

Speaker #3: Yeah, this is Al. One core first quarter crude was kind of the low point for us. Q2, we reported the $690 million I mentioned, which is up over $100 million from the first quarter.

Jeremy Goebel: Yeah. This is Al. Q1 crude was kind of the low point for us. Q2, we reported the $690 million I mentioned, which is up over $100 million from Q1. Our guide at the midpoint currently for H2 is above the $690 million. The math would say it'd be in the low 700s. We've modeled in a very strong kind of exit to the year. We do believe that we will be seeing and capturing volumes. We had a bit of that in already, but we do expect really that this sets us up for the momentum that Willie mentioned for 2027, more so than a quote, a raise for H2, since we've already modeled a pretty strong H2.

Speaker #3: Our guide at the midpoint currently for the second half is above the $690 million. The math would say it’d be in the low $700s.

Speaker #3: So we've modeled in a very strong kind of exit to the year we do believe that we will be seeing and capturing volumes. We had a bit of that in already, but we do expect really that this sets us up for the momentum that Willie mentioned for 2027, more so than a quote a raise for the second half of the year since we've already modeled a pretty strong second half of the year.

Speaker #2: Gotcha. That's helpful. And then maybe switching gears, on the CACTUS III expansion. So you guys have one of the last meaningful brownfield expansion opportunities in the Permian with CACTUS.

Praneeth Satish: Got you. That's helpful. Then maybe switching gears on the Cactus III expansion. You guys have one of the last meaningful greenfield expansion opportunities in the Permian with Cactus. I guess I'm just trying to understand how you balance adding incremental capacity versus just maintaining a tighter market, where you could benefit from stronger recontracting rates, as it's been a tough slog the last few years. I'm sure you've done some internal analysis on that trade-off, but I guess, with you going forward with this expansion, can we assume that the expected returns are compelling enough, I guess, to outweigh the benefits of a tighter market? Just how should we think about that?

Speaker #2: So I guess I'm just trying to understand how you balance adding incremental capacity versus just kind of maintaining a tighter market where you could benefit from stronger recontracting rates as it's been a tough slog the last few years.

Speaker #2: So I mean, I'm sure you've done some internal analysis on that trade-off, but I guess with you going forward with this expansion, can we assume that the expected returns are compelling enough, I guess, to outweigh the benefits of a tighter market?

Speaker #2: Just how should we think about that?

Speaker #3: Praneeth, good question. This is Jeremy. First of all, the 75,000 barrels a day won't change the market. And our outlook for production is substantially higher than 75,000 barrels a day.

Jeremy Goebel: Reneesh, good question. This is Jeremy. First of all, the 75,000 barrels a day won't change the market, and our outlook for production is substantially higher than 75,000 barrels a day. The market from a supply and demand takeaway will be net tighter. The economic returns is very capital efficient. That's not in question. They'll be very good. From our standpoint, we're executing on it. Basin is very well contracted. Cactus I is very well contracted. Cactus II is very well contracted. We're working to continue on Cactus III. We don't think this impacts our ability to contract at strong rates across the system. We think the volatility will present some opportunities to pay for the expansion in the short period of time and give us the opportunity to contract more space.

Speaker #3: So the market from a supply and demand takeaway will be net tighter. The economic returns is very capital efficient that's not in question. They'll be very good.

Speaker #3: From our standpoint, we're executing on it base in is very well contracted. CACTUS I is very well contracted. CACTUS II is very well contracted.

Speaker #3: And we're working to continue on CACTUS III. So we don't think this impacts our ability to contract at strong rates across the system. And we think those volatility will present some opportunities to pay for the expansion in the short period of time and give us the opportunity to contract more space.

Speaker #2: Got it. Thank you.

Praneeth Satish: Got it. Thank you.

Speaker #4: Thank you. Our next question comes from Jeremy Tonnett with JP Morgan Securities. Your line is open.

Operator: Thank you. Our next question comes from Jeremy Tonet with J.P. Morgan Securities. Your line is open.

Operator: Thank you. Our next question comes from Jeremy Tonet with JPMorgan Securities. Your line is open.

Speaker #7: Good morning, team. Thank you for taking questions. This is Francina on for Jeremy. Just wanted to dig a bit deeper on the guide. That appears to kind of present declines at side of regions other than the Permian.

[Analyst] (J.P. Morgan Securities): Good morning, team. Thank you for taking questions. This is Francina on for Jeremy. Wanted to dig a bit deeper on the guide, that appears to present declines outside of regions other than the Permian. Can you walk us through what you're seeing, with volume expectations and where that leads us in terms of puts and takes to the current maintained guide? Thank you.

[Analyst] (JPMorgan Securities): Good morning, team. Thank you for taking questions. This is Francina on for Jeremy. Wanted to dig a bit deeper on the guide, that appears to present declines outside of regions other than the Permian. Can you walk us through what you're seeing, with volume expectations and where that leads us in terms of puts and takes to the current maintained guide? Thank you.

Speaker #7: Can you walk us through what you're seeing with volume expectations and kind of where that leads us in terms of puts and takes to the current maintained guide?

Speaker #7: Thank you.

Speaker #3: Sure. This is Jeremy. Look, we're seeing increased activity. The Permian is at 30 rigs from the trough. The Eagle Ford is at 10 rigs.

Jeremy Goebel: Sure. This is Jeremy. Look, we're seeing increased activity. Like the Permian has added 30 rigs from the trough. The Eagle Ford's added 10 rigs. The Powder River Basin is up 33%, so from nine to 12 rigs. Canada continues to grow. We're seeing opportunities across the system as evidenced by the expansion capital across the system. From our standpoint, we're cautiously optimistic that that will continue, and it should be good for both our assets in the Permian and outside the Permian. As for the guide, I think Al covered that. We are certainly in position to continue to execute as volatility. The most volatile piece was Q2. Q3 price volatility was slower. Volatility in margins across the regions got pretty narrow. It was just a different quarter.

Speaker #3: The Powder River basin is up 33%. So from 9 to 12 rigs, Canada continues to grow. So we're seeing opportunities across the system as evidenced by the expansion capital across the system.

Speaker #3: So from our standpoint, we're cautiously optimistic that that will continue, and it should be good for both our assets in the Permian and outside the Permian.

Speaker #3: As for the guide, I think Al covered that. We are certainly in position to continue to execute as volatility the most volatile piece was the second quarter.

Speaker #3: The third quarter price volatility was slower. Volatility in margins across the regions got pretty narrow. It was just a different quarter. And so the same situation because ships are moving all over the place could represent itself in the third and fourth quarter.

Jeremy Goebel: The same situation, because ships are moving all over the place, could re-present itself in Q3 and Q4. We certainly expect to continue to do as well as we can, but right now, we're maintaining guidance flat. We think we're going to execute on what we've already put in the plan and hope to meet it.

Speaker #3: So we certainly expect to continue to do as well as we can. But right now, we're maintaining guidance flat, but we think we're going to execute on what we've already put in to plan and hope to meet it.

Speaker #7: Thank you. That's helpful. And then wanted to also touch on what you're seeing for the Canadian organic growth opportunity set. And whether there's opportunities more so present near term or longer term, if you could talk about that.

[Analyst] (J.P. Morgan Securities): Thank you. That's helpful. Wanted to also touch on what you're seeing for the Canadian organic growth opportunity set, and whether those opportunities more so present near term or longer term, if you could talk about that. Thank you.

[Analyst] (JPMorgan Securities): Thank you. That's helpful. Wanted to also touch on what you're seeing for the Canadian organic growth opportunity set, and whether those opportunities more so present near term or longer term, if you could talk about that. Thank you.

Speaker #7: Thank you.

Speaker #3: Sure. We're very excited about Canada. The Clearwater around our rainbow asset we are continuing to add capacity. And every time we add it, it gets full.

Jeremy Goebel: Sure. We're very excited about Canada. The Clearwater around our Rainbow asset, we are continuing to add capacity, and every time we add it gets full. We're excited about it. Those are long-term contracts. Same with our Rangeland asset, which sits in the Duvernay, and we can bring those either north to Edmonton or south to the US markets. Both of those areas are seeing capital. Our Manitou asset, which we haven't talked about much, is seeing substantial activity. There may be an opportunity to partner with some of the egress that's coming out of Canada. I think we see a lot of opportunities in and around our gathering footprint and how that might fit with assets like our Cushing terminal or our Capline assets downstream. I think we're excited about Canada and knock-on effects for the rest of our business.

Speaker #3: So we're excited about it. And those are long-term contracts. Same with our Rangeland asset, which sits in the Duvernay. And we can bring those either north to Edmonton or south to the US markets.

Speaker #3: So both of those areas are seeing capital our magnitude asset, which we haven't talked about much, is seeing activity substantial activity. There may be an opportunity to partner with some of the egress that's coming out of Canada.

Speaker #3: So I think we see a lot of opportunities in and around our gathering footprint and how that might fit with assets like our Cushing terminal or our Capline assets downstream.

Speaker #3: So I think we're excited about Canada and knock-on effects for the rest of our business.

Speaker #7: That's very helpful. Thank you, team. I'll leave it there.

[Analyst] (J.P. Morgan Securities): That's very helpful. Thank you, team. I'll leave it there.

[Analyst] (JPMorgan Securities): That's very helpful. Thank you, team. I'll leave it there.

Speaker #4: Thank you. Our next question comes from Spiro Dunas with City. Your line is open.

Operator: Thank you. Our next question comes from Spiro Dounis with Citi. Your line is open.

Speaker #6: Thanks, operator. Morning, team. I want to start off first with market-based opportunities. Can you talk through the outlook into the second half of '26 and maybe where are you still expect to see some areas for opportunities and kind of just curious how you're thinking about differentials, volatility, curve structure, storage, and how much of that is contemplated in the guide here?

Spiro Dounis: Thanks, operator. Morning, team. I want to start off first with market-based opportunities. Can you maybe talk through the outlook into H2 of 2026 and maybe where you still expect to see some areas for opportunities? Kind of just curious how you're thinking about differentials, volatility, curve structure, storage, and how much of that is contemplated in the guide here.

Speaker #3: This is Jeremy. We're not forecasting market-based opportunities other than what we've captured. So, I think from our standpoint, if those opportunities present themselves, we will.

Jeremy Goebel: This is Jeremy. We're not forecasting market-based opportunities other than what we've captured. I think from our standpoint, if those opportunities present themselves, we will. We can play time, quality, and location spreads across the system, and we will. From our standpoint, we feel very well-positioned with where the guide is. As volatility presents itself, we'll capture it just as we did in Q2.

Speaker #3: We can play time, quality, and location spreads across the system. And we will. And so from our standpoint, we feel very well positioned with where the guide is.

Speaker #3: And as volatility presents itself, we'll capture it just as we did in the second quarter.

Speaker #6: Got it. Thanks, Jeremy. Second question, maybe just focusing on exports. If you're seeing changes in customer behavior, Jeremy, I know you mentioned seeing new customers show up.

Spiro Dounis: Got it. Thanks, Jeremy. Second question, maybe just focusing on exports. Jer, if you are seeing changes in customer behavior. Jeremy, I know you mentioned seeing new customers show up. Curious if that applies to exports here and how you are thinking about flows to Corpus versus Houston into H2 2026.

Speaker #6: I'm curious if that applies to exports here. And how are you thinking about flows to corpus versus Houston into the back half of '26?

Jeremy Goebel: Yes, we are seeing different customers be interested instead of being spot purchasers or under term contracts only from the Middle East look to expand where they purchase barrels for some level of security of supply. That is a different behavior than we have seen. I think you have seen it across commodities as well. We are going to continue to look at that as ability to term up additional space. Corpus versus Houston. Look, both are very good markets. The Corpus market does demand a premium. It is a single quality barrel. That is WTI, largely some WTI. Houston has a broader mix of what gets exported. It has more refining capacity. They are both very good markets. Both markets are largely tight. You have close to 90% utilization in both markets.

Speaker #3: So yes, we are seeing different customers be interested instead of being spot purchasers or under term contracts only from the Middle East look to expand where they purchase barrels.

Speaker #3: For some level of security of supply. So that is a different behavior than we've seen, I think you've seen it across commodities as well.

Speaker #3: So we're going to continue to look at that as ability to term up additional space. Corpus versus Houston, look, both are very good markets.

Speaker #3: The corpus market does demand a premium. It's a single quality barrel that's WTI largely, some TL. Houston's got a broader mix of what gets exported.

Speaker #3: It's got more refining capacity. They're both very good markets. Both markets are largely tight. You've got close to 90% utilization in both markets, so we're cautiously optimistic that both will continue to grow as the markets tighten.

Jeremy Goebel: We are cautiously optimistic that both will continue to grow as the markets tighten and get to back where you are closer to the longer-term margins where we will contract additional space.

Speaker #3: And get to back where you're closer to the longer term margins where we'll contract additional space.

Speaker #6: Spiro, this is Willie. You know our assets well, but I think the thing I wanted to highlight is on our visits with people we've been talking about the market shifting to a demand pull model.

Willie Chiang: Spiro, this is Willie.

Spiro Dounis: Hi.

Willie Chiang: You know our assets well, I think the thing I wanted to highlight is on our visits with people, we've been talking about the market shifting to a demand pull model. We've been in a supply push model for quite some time with surplus supply in the world. I do think the question that you're asking is really hitting on a key thing which we believe is happening. With de-inventoring of the global inventory of the crude supplies, this is really shifting to a demand-pull market. Your question about others wanting to come and get access to barrels really as a security of supply is very true. If you look back in the Q2, we actually had record crude exports out of the Gulf Coast.

Speaker #6: We've been in a supply-push model for quite some time, with surplus supply in the world. I do think the question that you're asking is really hitting on a key point, which we believe is happening.

Speaker #6: With the inventorying of the global inventory of crude supplies, this is really shifting to a demand-pull market. And your question about others wanting to come and get access to barrels, really as a security of supply, is very true.

Speaker #6: And if you look back in the second quarter, we actually had record crude exports out of the Gulf Coast. And as these things typically work because you've got a long supply chain with ships, that shifted.

Willie Chiang: As these things typically work, because you've got a long supply chain with ships, that shifted, and now we had more volumes going up to Cushing. That could easily start shifting back as global events happen. The key thing for us is we've got great assets that can play all these different options. Hard to exactly figure out what will happen, but when it will happen, we feel we'll be in the right place and time to be able to capture it.

Speaker #6: And now we had more volumes going up to Cushing. But that could easily start shifting back as global events happen. So the key thing for us is we've got great assets that can play all these different options.

Speaker #6: Hard to exactly figure out what will happen. But when it will happen, we feel we'll be in the right place and time to be able to capture it.

Speaker #6: Got it. Great to hear, Willie. Appreciate the call today. Thank you, gentlemen.

Spiro Dounis: Got it. Great to hear, Willie. Appreciate the call today. Thank you, gentlemen.

Speaker #3: Thank you.

Jeremy Goebel: Thank you.

Speaker #4: Thank you. Our next question comes from Keith Stanley with Wolfe Research. Your line is open.

Operator: Thank you. Our next question comes from Keith Stanley with Wolfe Research. Your line is open.

Speaker #5: Hi. Good morning. Only one question for me. I wanted to dig into the Cactus III economics a little more. So your Permian CapEx this year is only up 35 million.

Keith Stanley: Hi, good morning. Only one question from me. I wanted to dig into the Cactus III economics a little more. Your Permian CapEx this year is only up $35 million. You have the $40 million earn-out. It kind of implies the Cactus III project is, call it, $50 to 75 million, which would be a really high return for you guys. Looking forward, how can we think about the cost of future phases of expansion of Cactus III? Do they get a lot more expensive than this, or can you replicate this a few more times?

Speaker #5: You have the $40 million earn-out. So it kind of implies the Cactus III project is, call it, $50 to $75 million, which would be a really high return for you guys.

Speaker #5: So looking forward, how can we think about the cost of future phases of expansion of Cactus III? Did they get a lot more expensive than this?

Speaker #5: Or can you replicate this a few more times?

Speaker #3: Hey, good morning, Keith. It's Chris Chandler. I'll take that. First, let's talk about the phase we just completed, 75,000 barrels a day. Without sharing the exact number, I think you're reading into our numbers well in that the expansion we just completed was highly economic.

Chris Chandler: Hey, good morning, Keith. It's Chris Chandler, I'll take that. First, let's talk about the phase we just completed, 75,000 barrels a day. Without sharing the exact number, I think you're reading into our numbers well in that the expansion we just completed was highly economic. We were able to do it for far less than we anticipated when we acquired the asset, able to do it more quickly. I would think of it in terms of tens of millions of dollars. That doesn't include the earn-out that we disclose in the slide. Very economic and very quick to market, as Jeremy shared. We're taking a close look at future expansion opportunities. Those will have to be backed by customer commitments, of course.

Speaker #3: We were able to do it for far less than we anticipated when we acquired the asset. Able to do it more quickly. I would think of it in terms of tens of millions of dollars.

Speaker #3: And that doesn't include the earn-out that we disclosed in the slide. So very, very economic and very quick to market, as Jeremy shared. We're taking a close look at future expansion opportunities.

Speaker #3: Those will have to be backed by customer commitments, of course. But I think it's safe to say that the cost for those future phases are looking more economic than we originally premised as well when we acquired the assets.

Chris Chandler: I think it's safe to say that the cost for those future phases are looking more economic than we originally premised as well when we acquired the asset. We're really pleased overall. We've been able to capture the synergies with Cactus III expansion opportunities are ready to go and look very economic when the customer support is firmed up.

Speaker #3: So we're really pleased overall. We've been able to capture this synergies with Cactus III and expansion opportunities are ready to go and look very economic when the customer support is firmed up.

Speaker #5: Thank you.

Keith Stanley: Thank you.

Speaker #3: Sure.

Chris Chandler: Sure.

Speaker #4: Thank you. Our next question comes from AJ O'Donnell with TPH. Your line is open.

Operator: Thank you. Our next question comes from AJ O'Donnell with TPH. Your line is open.

Speaker #7: Hey, good morning, everyone. Maybe if I could just follow on to the last question a little bit. Could you talk a little bit more about just kind of the economics of the expansion?

AJ O'Donnell: Hey, good morning, everyone. Maybe if I could just follow on to the last question a little bit. Could you talk a little bit more about just kind of the economics of the expansion? Just thinking, I believe you said the affiliates could fill the space right now. As you work to contract that over the longer term, where do you kind of see the rates on that project falling? Like largely where they're at right now, or does that get a premium?

Speaker #7: Just thinking I believe you said the affiliate could fill the space right now. But as you work to contract that over the longer term, where do you kind of see the rates on that project falling?

Speaker #7: Largely, where they are at right now? Or does that get a premium?

Speaker #3: Good question. It depends on how we contract that. If it's with the shippers that we have in the past, it's going to look just like the rates we disclosed last year and the year before when we did our recontracting effort.

Jeremy Goebel: Good question. It depends on how we contract that. If it's with the shippers that we have in the past, it's going to look just like the rates we disclosed last year and the year before when we did our recontracting effort. The long-term rates are in that ballpark, and we'll continue it there. If we opportunistically find other markets, it all depends on the structure, the term, and everything else. We don't necessarily want to give away our playbook on the earnings call. I would say long-term, expect it to be consistent with where we have been executing.

Speaker #3: So the long-term rates are in that ballpark. And we'll continue to look there. If we opportunistically find other markets, we will it all depends on the structure, the term, and everything else.

Speaker #3: So, we don't necessarily want to give away our playbook on the earnings call, but I would say, long-term, expect it to be consistent with where we have been executing.

Speaker #7: Okay, great. And then just one more on Cactus III. I think in February, you kind of described stabilizing the base pipeline, then looking at capital-efficient expansions.

AJ O'Donnell: Okay, great. Just one more on Cactus III. I think in February, you kind of described stabilizing the base pipeline, then looking at capital efficient expansion. In May, you said an expansion would kind of be phased and paced to demand. Now that the first 75 is sanctioned, is the base pipeline fully recontracted and stabilized? How soon could we expect to see additional phases?

Speaker #7: And then in May, you said an expansion would kind of be phased and paced to demand. And now that the first 75 is sanctioned, is the base pipeline fully recontracted and stabilized?

Speaker #7: And how soon could we expect to see additional phases?

Speaker #3: Good question. So the duration of the next phases will be longer than this one. So I think it will take some time for the next phases.

Jeremy Goebel: Good question. The duration of the next phases will be longer than this one. I think it will take some time for the next phases. As far as the base contract, we have sufficient demand right now to contract the pipeline, the expansion. On the other, it's a matter of price. I think we see sufficient demand to contract the base pipeline. As far as future expansions, they will take.

Speaker #3: But as far as the base contract, we have sufficient demand right now to contract the pipeline, the expansion, and the other. It's a matter of price.

Speaker #3: So I think we see sufficient demand to contract the base pipeline. As far as future expansions, they will take time to come up.

Speaker #6: And AJ, this is Willie. I think a lot of that really depends on my earlier comments about how much people need the barrels—back to that demand pull, right?

Willie Chiang: AJ, this is Willie. I think a lot of that really depends on my earlier comments about how much people need the barrels back to that demand pull. Right? What Jeremy's talking about is it's basically, ideally, a longer-term contract. It's the tenor versus the price. That's going to evolve. At some point, we think it's going to continue to be scarce, and that's why we're pretty constructive with the market going forward, including the export markets.

Speaker #6: We're talking Jeremy was talking about is it's basically ideally longer-term contract, it's the tenor versus the price. And that's going to evolve. And at some point, we think it's going to continue to be scarce.

Speaker #6: And that's why we're pretty constructive of the market going forward, including the export markets.

Speaker #7: All right. Thanks for all the details.

AJ O'Donnell: All right. Thanks for all the details.

Speaker #3: Thanks, AJ.

Willie Chiang: Thanks, AJ.

Speaker #4: Thank you. Our next question comes from Jackie Kalidis with Goldman Sachs. Your line is open.

Operator: Thank you. Our next question comes from John Katalis with Goldman Sachs. Your line is open.

Operator: Thank you. Our next question comes from Jackie Koletas with Goldman Sachs. Your line is open.

John Katalis: Hi. Good morning. Thank you so much for the time. Just thought I'd follow up on a question quickly. You reiterated your confidence in capturing the $50 million of cost efficiencies by the end of this year and then another in 2027. Can you just provide us a progress update here on where these savings are physically materializing? What could drive incremental efficiencies from here?

Jackie Koletas: Hi. Good morning. Thank you so much for the time. Just thought I'd follow up on a question quickly. You reiterated your confidence in capturing the $50 million of cost efficiencies by the end of this year and then another in 2027. Can you just provide us a progress update here on where these savings are physically materializing? What could drive incremental efficiencies from here?

Speaker #8: Hi, good morning. Thank you so much for the time. Just thought I'd follow up on a question quickly. You reiterated your confidence in capturing that the 50 million of cost efficiencies by the end of this year.

Speaker #8: And then another in 2027. You just provide us a progress update here on where the savings are physically materializing. And what could drive incremental efficiencies from here?

Speaker #3: Good morning, Jackie. It's Chris Chandler. Yeah, we've made good progress on our commitment to capture 50 million dollars in 2026 of efficiencies. Certainly, the NGL sale was a catalyst in that area.

Chris Chandler: Morning, Jacki. It's Chris Chandler. Yeah, we've made good progress on our commitment to capture $50 million in 2026 of efficiencies. Certainly, the NGL sale was a catalyst in that area, but not by any means the entire driver. We've made a number of changes that contribute to that $50 million and an additional $50 million that we expect to capture in 2027. I think in terms of reassessing and streamlining our organizational structure, looking at the number of employees we have in leadership and management roles. We're more focused in a crude oil pure-play company, so that demands a different level of oversight and a different approach to how we run the business and our business processes.

Speaker #3: But not by any means the entire driver. We've made a number of changes that contribute to that 50 million. And an additional 50 million that we expect to capture in 2027.

Speaker #3: But I think in terms of reassessing and streamlining our organizational structure, looking at the number of employees we have in leadership and management roles, we're more focused in accrual pure play companies.

Speaker #3: So that demands a different level of oversight and a different approach to how we run the business and our business processes. We've done some targeted right sizing of our trucking business, closed and consolidated some marketing offices.

Chris Chandler: We've done some targeted right-sizing of our trucking business, closed and consolidated some marketing offices, and just taking a fresh look at everything we do and how we do it from a business process standpoint. As to capture year to date, it's fair to say we've realized a little less than half of the $50 million so far this year. We're on track to capture the remaining by year end 2026. Again, we feel good about capturing an additional $50 million in 2027. Hope that helps.

Speaker #3: And just taking a fresh look at everything we do and how we do it from a business process standpoint. So as to capture year-to-date, it's fair to say we've realized a little less than half of the 50 million.

Speaker #3: So far this year, and we're on track to capture the remaining by year in 2026. And again, we feel good about capturing an additional 50 million in 2027.

Speaker #3: Hope that helps.

Speaker #8: No, very helpful. I appreciate it. And then just a follow-up on the Canadian gathering system. Just thought I could talk a little bit more about the moving pieces are, overall, the incremental Canadian egress.

John Katalis: No, very helpful. I appreciate it. Just a follow-up on the Canadian gathering system. Just thought you could talk a little bit more about the moving pieces are overall, the incremental Canadian egress and a little bit more color on what you're thinking about the timing there and then potential size capacity on Rangeland.

Jackie Koletas: No, very helpful. I appreciate it. Just a follow-up on the Canadian gathering system. Just thought you could talk a little bit more about the moving pieces are overall, the incremental Canadian egress and a little bit more color on what you're thinking about the timing there and then potential size capacity on Rangeland.

Speaker #8: And a little bit more color on what you're thinking about the timing there and then potential size capacity on rangeland.

Speaker #3: Oh, good question. So, I think from our standpoint, think of Rangeland as a gathering system. And so, the expansions there are filling latent capacity.

Jeremy Goebel: Oh, good question. I think from our standpoint, think of Rangeland as a gathering system, the expansions there are filling latent capacity. The Wascana is an expansion of capacity as a main line and building laterals. As far as egress goes, first we'll look to fill our existing, which we do on the Wascana and Rangeland today. I think there are some other more capital efficient projects that will probably go. It may be something, do we work with those counterparties on opportunities, like I said, around Capline and Cushing and other locations. I don't think the Rangeland expansion would be competitive with some of those projects based on scale.

Speaker #3: The Rainbow is an expansion of capacity of the mainline and building laterals. As far as egress goes, first we’ll look to fill our existing, which we do on Moscana and Rangeland today.

Speaker #3: I think there are some other more capital-efficient projects that will probably go. It may be something, do we work with those counterparties on opportunities, like I said, around Capline and Cushing and other locations.

Speaker #3: I wouldn't I don't think the rangeland expansion would be competitive with some of those projects. Based on scale.

Speaker #8: That's helpful color.

John Katalis: That's helpful color.

Jackie Koletas: That's helpful color.

Speaker #4: Thank you. Our next question comes from Gabe Dowd with Truth. Your line is open.

Operator: Thank you. Our next question comes from Gabe Daoud with Truist. Your line is open.

Speaker #7: Thanks, operator. Hey, morning, team. I was hoping to maybe just ask another Permian macro question. Any views, just given conversations with producers now, for '27?

Gabe Daoud: Thanks, operator. Hey, morning, team. Was hoping could maybe just ask another Permian macro question. Any views, just given conversations with producers now for 2027, any views on where the rig count could go from here? Just trying to frame when you think there could be an acceleration in crude volumes at a basin level, maybe approaching 8 million barrels per day, because I think that's probably what the basin hits by 2030. If crude remains elevated, I'd imagine you could maybe see some acceleration. Curious maybe what your overall views are on that.

Speaker #7: Any views on where the rig count could go from here? And then just trying to frame when you think there could be an acceleration in crude volumes at a basin level, maybe approaching 8 million barrels per day.

Speaker #7: Because I think that's probably what the basin hit by 2030. But if crude remains elevated, I'd imagine you could maybe see some acceleration. So curious, maybe what your overall views are on that.

Speaker #3: So first of all, the gas egress has come on quicker than we expected. And with that, as you've seen, the G&P operators, their plants are filling up quickly.

Jeremy Goebel: First of all, the gas egress has come on quicker than we expected. With that, as you've seen with the G&P operators, their plants are filling up quickly. The same is occurring. The 100 to 200, we are seeing volume from July into August that trends probably favorably to those numbers. We could see it go. We have a positive bias based on the last few weeks. From our standpoint, as Willie mentioned, positive momentum going into 2027. Look, Willie mentioned it. You have to give us a price. You have to give us the economic background. Productivity has improved, the 260 rigs you see today are more efficient than the 260 rigs you saw in 2025.

Speaker #3: The same is occurring. So, the 100 to 200, we are seeing volume from July into August. That trend is probably favorable to those numbers. So we could see it go—we have a positive bias based on the last few weeks.

Speaker #3: So from our standpoint, as Willie mentioned, positive momentum going into 2027. Look, Willie mentioned that you have to give us a price. You have to give us the economic background.

Speaker #3: But productivity has improved. So, the 260 rigs you see today are more efficient than the 260 rigs you saw in 2025. So we're excited about the opportunity to grow through the second half of this year and into next year.

Chris Chandler: We're excited about the opportunity to grow through H2 of this year and into next year, and it's just a matter of the duration of that as to where the basin gets to. You see a very favorable path to get to north of 7 million barrels a day. Continued improvements on recoveries, reducing break-even prices, and supportive commodity prices will be required to get to 8 million barrels a day, but it's not an unreasonable scenario. We're just, like Willie said, you got to tell us the backdrop. Tell us where the basin gets to.

Speaker #3: And it's just a matter of the duration of that is to where the basin gets to. So you see a very favorable path to get to north of 7 million barrels a day.

Speaker #3: Continued improvements on recoveries. Reducing break-even prices. And support of commodity prices will be required to get to 8 million barrels a day. But it's not an unreasonable scenario.

Speaker #3: We're just like Willie said, you got to tell us the backdrop and tell us where the basin gets to.

Speaker #7: No, that's helpful. Thanks for that.

Gabe Daoud: No, that's helpful. Thanks for that.

Speaker #3: Gabe, it's Willie. You've heard many of the other calls, and as I look at the transcripts and the summaries of them, there are a number of the producers that have really touted the ability to produce more.

Willie Chiang: Gabe, it's Willie. As I look at the transcripts and the summaries of them, there are a number of the producers that have really touted the ability to produce more. That's good, right? We want our industry to produce at the most efficient and economic point, I think people are starting to crack the code on that.

Speaker #3: So that's good, right? We want to be able to we want our industry to produce. At the most efficient and economic point. And I think people are starting to crack the code on that.

Speaker #7: No, that's right, Willie. A lot of operators have highlighted surfactants and other technologies to improve productivity and recovery factors, so that could also be a tailwind, as you noted.

Gabe Daoud: No, that's right, Willie. A lot of operators have highlighted surfactants and other technologies to improve productivity and recovery factors. That could also be a tailwind, as you noted. Thanks, guys. Maybe a quick follow-up. In the conversations, is there a specific price for 2027 where you feel operators could be a bit more active? I see 70 on the screen now for 2027. Is it 75 get folks more excited? Just curious from your conversations if there's a signal that seems pretty obvious as to where producers could add.

Speaker #7: But thanks, guys. Maybe just a quick follow-up. So in the conversations, is there a specific price for '27 where you feel operators could be a bit more active?

Speaker #7: I see 70 on the screen now for '27. Is it 75, get folks more excited? Just curious from your conversations if there's a signal that seems like pretty obvious as to where producers could add.

Speaker #3: I'll let Jeremy forecast the price.

Willie Chiang: I'll let Jeremy forecast the price.

Jeremy Goebel: Yeah. Less about price, but more about activity. Your first question was, where could you see incremental activity? I think you've heard a number of operators talk about deeper benches in the Midland Basin being very productive, and I think you'll continue to see capital move into those. In the Delaware Basin, New Mexico continues to expand in all directions. Vertically, they keep going to find other benches, and horizontally, it keeps going north and to the west. From our standpoint, New Mexico continues to expand and surprise to the upside. You're even seeing some of the deeper benches work in areas like the Woodford Barnett in the Delaware Basin in certain areas. I think the basin continues to expand its resource base, and we're excited about that because it sits under our footprint.

Speaker #2: Less about price, but more about activity. So your first question was, where could you see incremental activity? I think you've heard a number of operators talk about deeper benches and the Midland Basin being very productive.

Speaker #2: And I think you'll continue to see capital move into those. In the Delaware Basin, New Mexico continues to expand in all directions. Vertically, they keep going to find other benches.

Speaker #2: And then horizontally, it keeps going north and to the west. And so from our standpoint, New Mexico continues to expand and surprise to the upside.

Speaker #2: You're even seeing some of the deeper benches work in areas like the Woodford and Barnett in the Delaware Basin and certain areas. So I think the basin continues to expand its resource base.

Speaker #2: And we're excited about that because it sits under our—

Speaker #7: Awesome. Great color. Thanks, guys.

Sunil Sibal: Awesome. Great color. Thank you.

Gabe Daoud: Awesome. Great color. Thank you.

Speaker #4: Thank you. Our next question comes from Teresa Chen with Barclays. Your line is open.

Operator: Thank you. Our next question comes from Theresa Chen with Barclays. Your line is open.

Speaker #5: Good morning. Thank you for taking my questions. Willie, going back to your comments about your organization's ability to capture tailwinds from this macro environment, and some of Jeremy's comments to earlier questions—just looking at the past several months of heightened market volatility—has anything about the performance of your commercial organization exceeded your expectations?

Theresa Chen: Morning. Thank you for taking my questions. Willie, going back to your comments about your organization's ability to capture tailwinds from this macro environment and some of, I think, Jeremy's comments to earlier questions. Just looking at the past several months of heightened market volatility, has anything about the performance of your commercial organization exceeded your expectations? Are there specific examples where the team was able to capitalize on market dislocations or emerging opportunities in ways that surprised you?

Speaker #5: Are there specific examples where the team was able to capitalize on market locations or emerging opportunities in ways that surprised you?

Speaker #2: Teresa, one, it's good to hear your voice. The answer is there's a lot of we've got a good team that captures different opportunities. And while not getting into all of the different strategies we've had, I would point to the response and being able to get barrels down to the Gulf Coast.

Willie Chiang: Theresa, one, it's good to hear your voice. The answer is we've got a good team that captures different opportunities. While not getting into all of the different strategies we've had, I would point to the response in being able to get barrels down to the Gulf Coast. We had record exports during Q2. We were able to basically source barrels and help facilitate moving those. That volume, that's one of our strategies. We've been able to capture some values around the shape of the forward curve. That has been good. The other piece of value that always comes, it's not the market opportunities, but it's the discussions that we have with our producer partners on where their pinch points are that set up for some of these capital projects that we are now putting into place.

Speaker #2: We had record exports during the second quarter. We were able to basically source barrels and help facilitate moving those. So that volume and that's one of our strategies.

Speaker #2: We've been able to capture some volumes or values around the shape of the forward curve. That has been good. And the other piece of value that always comes it's not the market opportunities, but it's the discussions that we have with our producer partners on where their pinch points are that set up for some of these capital projects that we are now putting into place.

Speaker #2: Oil price level itself, we stand to gain on PLA. I think as Al shared, we've got a little bit of PLA left to hedge.

Willie Chiang: Oil price level itself, we stand to gain on PLA. I think as Al shared, we've got a little bit of PLA left to hedge. We hedged a good portion of that going into this year, and so we didn't have a lot much to play with, but we still have some barrels out there that could help us for the rest of the year. Hopefully that helps you.

Speaker #2: We've captured we hedged a good portion of that going into this year. And so we didn't have a lot much to play with. But we still have some barrels out there that could help us for the rest of the year, hopefully that helps you.

Speaker #5: It does. Thank you. And in terms of capturing marketing-related earnings, related to wide quality differentials, clearly there are a lot of variables at play here.

Theresa Chen: It does. Thank you. In terms of capturing marketing-related earnings related to wide quality differentials, clearly there are a lot of variables at play here. Specifically, how do you think about the growing volume of Venezuelan barrels in the Gulf Coast, increasing heavy supply in PADD 3, coupled with incremental westbound egress for WCS over time, whether that be a TMX expansion or 1 million barrel per day West Coast oil pipeline? How does that change your views on heavy differentials across North America and your marketing and optimization opportunities there as a result?

Speaker #5: Specifically, how do you think about the growing volume of Venezuelan barrels in the Gulf Coast? Increasing heavy supply in PAD 3, coupled with incremental westbound egress for WCF over time—whether that be a TMX expansion or a 1 million barrel per day West Coast oil pipeline—how does that change your views on heavy differentials across North America and your marketing and optimization opportunities there as a result?

Jeremy Goebel: Theresa, good question. It's a very dynamic question. The pace of growth in Canada and the pace of growth in Venezuela will dictate that, right? If you pull the Saudi barrels out of the Gulf Coast and you have more Venezuelan coming in, maybe that's somewhat of a dislocation. Realistically, as Venezuela pushes in, it pushes Canadian back and widens those differentials a bit. There are spreads with heavy differentials across grades. The West Coast could add egress. It's a function of how quickly is egress added in Canada? How quickly does Venezuelan production get to the Gulf Coast, and can it grow on a sustained basis versus production? You have those three things dictating it, and they're all moving at different speeds. Anytime there's a dislocation, our team can capture it, but our preference is first to move it.

Speaker #2: Teresa, good question. It's very dynamic question. The pace of growth in Canada and the pace of right? And if you pull the Saudi barrels out of the Gulf Coast and you have more Venezuelans coming in, maybe that's somewhat of a dislocation.

Speaker #2: But realistically, as Venezuela pushes in, it pushes Canadian back and widens those differentials a bit. And there are spreads with heavy differentials across grades.

Speaker #2: But the West Coast could add egress. So it's a function of how quickly is egress added in Canada, how quickly does Venezuelan production get to the Gulf Coast and can it grow on a sustained basis?

Speaker #2: Versus production. So you have those three things dictating it. And they're all moving at different speeds. And so anytime there's a dislocation, our team can capture it.

Speaker #2: But our preference is first to move it. So, look, we'll look to move barrels, and if there are dislocations that we can capture, we will.

Jeremy Goebel: We'll look to move barrels, and if there's dislocations that we can capture, we will. I think from our standpoint, growth is good, dislocations are good, and we'll help our customers get around those dislocations.

Speaker #2: So I think from our standpoint, growth is good, dislocations are good, and we'll help our customers get around those dislocations.

Speaker #3: And Teresa, this is really nice.

Willie Chiang: Theresa, this is Willie.

Theresa Chen: Thank you very much.

Speaker #5: Thank you very much.

Willie Chiang: On the Venezuela question, if it was around our views on heavy barrels coming into the Gulf Coast, I think it's healthy because those barrels are originally designed for the Gulf Coast, and that pushes barrels back, which allows us to have more opportunities with that.

Speaker #3: On the Venezuela question, if it was around our views on heavy barrels coming into the Gulf Coast, I think it's healthy because those barrels were originally designed for the Gulf Coast.

Speaker #3: And that pushes barrels back, which allows us to have more opportunities with that.

Speaker #5: Thank you very much.

Theresa Chen: Thank you very--

Speaker #4: Thank you.

Operator: Thank you.

Willie Chiang: Thanks, Theresa.

Speaker #2: Thanks, Teresa.

Speaker #4: Our next question comes from Sanil Sibal with Seaport Global. Your line is open.

Operator: Our next question comes from Sunil Sibal with Seaport Global. Your line is open.

Speaker #7: Yes. Hi, everybody. So, first of all, just a clarification. I think Al mentioned that in Q2, you had $14 million of environmental remediation expense.

Sunil Sibal: Yes. Hi, good morning. First of all, just a clarification. I think Al mentioned that in Q2 you had $14 million of environmental remediation expense. I was curious, is there any impact of that in the H2 also in terms of your efforts on that front?

Speaker #7: I was curious, is there any impact of that in the second half also in terms of your efforts on that front?

Al Swanson: This is Al. No, they were one-off. We do not expect that to recur in the H2.

Speaker #3: This is Al. No, they were one-off. We do not expect that to recur in the second half.

Speaker #7: Okay. Then obviously, a lot of discussion on today's call on Permian as well as Canadian opportunities. I was curious, as you think about the 400 to 450 million of CapEx spent that you incur in forward years, are there other regions or any specific regions where you see outsized opportunities?

Sunil Sibal: Okay. Obviously a lot of discussion on today's call on Permian as well as Canadian opportunities. I was curious, as you think about the $400 million to $450 million of CapEx spend that you incur in forward years, are there other regions or any specific regions where you see outsized opportunities?

Speaker #2: Sanil, this is Willie. The better chance to get higher returns is around our assets. And while we don't target assets only by region, if we've got strong returns anywhere along our value chain, we consider it.

Willie Chiang: Sunil, this is Willie. The better chance to get higher returns are around our assets. While we don't target assets only by region, if we've got strong returns anywhere along our value chain, we consider it. The chances are it's going to be in the areas that have more activity. We remain very disciplined on our thresholds, and it's more return-driven and strategy-driven than region-driven.

Speaker #2: But the chances are it's going to be in the areas that have more activity. But we remain very, very disciplined on our thresholds and it's more return-driven and strategy-driven than region-driven.

Speaker #7: Okay. So you're implying, Willie, here that $400 to $450 million, you can basically get through that in those two regions primarily, right?

Sunil Sibal: Okay. You're implying, Willie, here that $400 to 450 million, you can basically get through that in those two regions primarily, right?

Speaker #2: That'd be a good assumption.

Willie Chiang: That'd be a good assumption.

Speaker #7: Okay. Thank you.

Sunil Sibal: Okay. Thank you.

Speaker #4: Thank you. I'm showing no further questions at this time. I'd now like to turn it back to Willie Chiang for closing remarks.

Operator: Thank you. I'm showing no further questions at this time. I would now like to turn it back to Willie Chiang for closing remarks.

Speaker #2: Thanks, Daniel. And thanks, everyone, for joining us today. We look forward to seeing you on the road and are excited for what's ahead. Take care, and have a safe weekend.

Willie Chiang: Thanks, Daniel, and thanks everyone for joining us today. We look forward and are excited to see you on the road. Take care and have a safe weekend.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Q2 2026 Plains GP Holdings LP Earnings Call

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