PAA - Earnings call transcript Q3 2017 | Plains All American Pipeline, L.P.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the PAA and PAGP Third Quarter 2017 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Roy Lamoreaux. ahead. go Please

Roy I. Lamoreaux

Relations Good Pipeline's Terry. presentation welcome Plains plainsallamerican.com. the to today's of Events Thank website our quarter morning XXXX American at Investor within found third can Slide News earnings All & call section you, be and and conference for call.

are several be morning. see Greg. members and we the I the include limit by that, During Executive Please the and PAGP's found today's with presentation fillings will directly to these turn filings of SEC time, Greg to outlook. are call schedules other Information call financial senior PAGP's differ our for request A and Chief references factors slide today's plan and included not Q&A present forward-looking in will with performance. could such today's website. President at that Acknowledging team to in this analysts, hour will over approximately can in be quarterly EBITDA. Vice Street Pefanis, Relations shareholders cover to one our consolidated PAA's PAA's, presentation Executive available the and we'll call for at Investor on and do others provide PAA's Today's latest the of of Armstrong, to and contain Harry annual non-GAAP the to included information. materially section separately Today's PAGP's SEC. as this for cause that also within results Chairman to Vice call, our several GAAP Chiang, correspond measures, Instead, adjusted from results there earnings of financial the Financial President, and CEO; we've results. comments With Important actual call. We that measures non-GAAP to Swanson, comparable financial results Willie portion the announcing are the most President; PAGP-specific measures PAGP's as chaired Al management to Officer. of call appendix reconciliation the Financial our intend

Greg L. Armstrong

Thanks, and Roy. Good welcome. morning

plan retire board. succeed the continue directors Chairman as that has intend of Harry I At transition board as to December point, for Executive of and and Officer approved me Non-Executive for through of XXXX. board equity that meaningful directors success. Director, team to from Willie leadership the will Chief of of co-founder provides and me will continue the our CEO of rest that become to continue build and will that as Harry confidence upon third to Near earnings next also officer issued and PAA's a release every XX and quarter's I'm holder, performance financial several This and I XX Al the plan preparation the PAA's plan of we In management of highlights with and that a wanted years press our before I quarter release, have process. transition and succession to retire years XXXX, at to as recap plan. Plains and of respect those of I CEO. review reflects to addition to over our and and time with to planning Willie the employee turn an position thoughtful CEO to press the call served My would this as both a Willie, President pleased PAA's end as the at the PAA Willie as have is yesterday

regarding part CEO succeed to into were planning Those level he directors of about Willie identified board that the joined Plains and organization. that What recruiting as years you approximately and Executive Officer Willie as of ago. top discussions appointed to several you Harry Vice may in as activities him know Chief candidate joined years eight the our XXXX PAA deliberately of PAA, U.S. started know, succession in the had not XXXX. and February and was long-term Operating is As the conversations over I many President board me before set

time. and You practices the at and contributed been This two have additional over perspectives XX and years. strategy Willie to the as should in culture, also in his event note last fresh together growth a and mind, value about operational, business that the activities. that to learn Willie well to seamless working brought we PAA's has significant use Harry With last this succession versus years, our process organizational Through that successful Willie, experience as to as over processes provided leadership I plus ensure with process our point commercial, a perspectives, and a have has through transition. an opportunity

As process, to role process on the created as the Chief us together Officer. the over over be of continue Chief U.S. to months, will next newly Commercial and the and facilitate Willie's transition. The seamless take of step Harry cover the will or next Officer role will both few so work in as Canada Operating the transition the the expanded three year next transition

turn now me Willie. to over Let the call

Willie C. W. Chiang

the PAA. profitable company. you, be Thanks, management team, our Harry, legacy I selected honored working forward of board transition, continuing to growth a XX-year to of deeply of Greg. a and employees I'm next for CEO the look our directors, with as long-term all to continuing

million quickly. industry capacity comments said, Hurricanes on refining and impacts that to PAA bringing our of that Harvey the online capacity day make affected a from responded was me X Approximately well, Irma. few of much and with response barrels let Now a and refining

As I'm Al our to report will our have significant on touch and damage financial you all a his only any did to Permian I we significant remarks. that during impact feeding PAA the infrastructure briefly have not Coast producers assets want to team. refining minor from we Gulf that and center the also know, thankful in commend

Houston impacted employees very in. they the so their our support the in our prevent in being way way our also all to others with to are response proud We're to recovery. during and proud disruptions country ongoing of of from producers the employees and our from customers We in jumped the the connected over any pipelines community of to worked many the others like shut all

me move let share projects our the to to We've got of opportunities. going outlined our and strategic you, business sheet, want strategic demonstrate systems, our today. plan on a we've exciting balance from Now, operating positioning, to of strengthen address with and our on lot capitalize I capabilities the and

August. results Now, the respect deleveraging for some Al we specific delivered third guidance timing will details plan section, we of for discuss late And we announced were ahead his slightly in when to track more quarter adjusted the with impacts. but on are that in

coming in as on executing been our on on pipeline online we've X. late the Construction completed the We of JV capital summarized successfully substantially process program commissioning October have projects was the we're pipeline. a number and in slide of Diamond

be the access STACK to STACK also expect modifications operation X of new completed full other the asset in month. our STACK market This service this us multiple later the made provide with Cushing quarter (X:XX) begin pipeline December first into Cashion to extension volumes November in XXXX. service on increased We in and to allow and placed to to enhancing Cushing we've We've commercial for project meaningfully to ramp JV to up and section producers. recently capacity

capacity in long-haul to JV. on utilize Permian and a the modifications I to the expanded systems, expand fully on our to soon track position complete we Cactus we're BridgeTex for be As will

allows us and and plans approximately our early support producer us Cushing and to extending a approach. a between to also in day by system. from to ability increase Permian backed complete future gives we capacity the further XXX,XXX to constraint is expected Colorado be our phased project City July, the a Additionally, in our ahead XXXX to moving It Falls. alleviate expand to Wichita pipeline barrels Cushing full announced is by Permian capacity Sunrise by This speed

roughly On commissioning advancing good that year. also the the Patoka by contracts Permian to as the nearing build X second pipeline backed and multi-phase over the in Saskatchewan facilitate well Diamond expenses be the tank of We're the end increase commercial Two project our storage including at the facility of Fort by additional and as for in Christi additions key future crude XXXX completion. to months, and of will In making as long-term efficiency tankage intra-basin terminals projects demand movements operation the operating segregation additional qualities which past our are project is Basin, few phase the full million Corpus will Cushing, reduce now we storage progress stop James, barrels our support new caverns side, our to in Canada, some of St. Permian completed last pipeline. of the within operations the added warrants.

James, a launched could provide northbound progress for well the from towards of Illinois. joint global the recently movements Additionally, potential U.S. this open although to from have as to Marathon out we're opportunities. pipeline which key James, non-binding Patoka, Capline Company, as the flows reversal project St. BP to timing horizon, markets Louisiana season potential which to Petroleum PAA a seeing access link crude Patoka, on is Coast and export St. for Gulf a in-service further Illinois

track. a transaction. purchaser proceeds Al as with discuss, West remain on will canceled definitive programs Coast Additionally, respect our agreement same recently asset With as that we the generate another roughly signed will sale, terminal to our the

We expect close shortly year-end or thereafter. to by this transaction

approximately for our quarter CapEx. The turn full-year and Al, in project third address over levels Southern call network. maintenance terminal with replacement include before projected I integrity, asset million California $XX an repair associated to Now, XXXX the me reported let amounts the and

nonrecurring to expect mid-XXXX. by project We substantially complete early to this

account expect range schedules CapEx $XXX maintenance with various the million and over At normalized call to asset would the of additions, to Excluding future million and in factors. dependent point, into costs work other project this year fluctuations on to asset taking of turn we $XXX run Al. and this I'll sales a the

Al P. Swanson

Willie. Thanks,

slide XXXX Hurricane despite comparable for net and were guidance million on to adverse from results impact third X, noted $X XQ slightly As a the Harvey. quarter above our results

our and in Although of exceeded million, of $XX the approximately of third from have performance contributions XXXX NGL XXXX quarter timing-related we we portion maintained first quarter portion expect our to of and with adjusted of costing fourth performance reverse the quarter a inventory in A which XXXX. expenses over plus billion. the EBITDA quarter or operating is third at full-year $X.XXX guidance minus guidance, associated

for into two approximately be not million that our we Additionally, results previous items were impacted now factored fourth quarter by guidance. our Transportation expect will $XX segment adversely

BridgeTex to impact commercial would The XXXX. contract sequentially a the collecting note in segment quarter pipeline. in by resolved results of XQ guidance be impact the from noted, updated million deficiencies reduce I settlement is XQ of $XX the contract basis. Transportation restriction including a the reflects reflects downstream for is downstream XQ the several first that also expenses This decrease also will temporary in volume and forecasted and segment and benefit volume that the XXX,XXX the of items, a a event, a on the as BridgeTex expected settlement contract first our onetime XQ. actual settlement second of barrels and for is sales well per on approximately I timing MVC restriction commercial The asset just is in day quarter-over-quarter operating segment weren't profit as on transportation which volumes XQ early of

Excluding we XXXX. timing the continue continued expect reflects XQ onetime the into sales, growth and impact of for of but Transportation issues rate see related run the including EBITDA asset to impact the

producer our $XXX which for preliminary million segment. We detail million fee-based plus and fourth XXXX February the or of $X.X have plan update XXXX information additional XXXX our our conference asset not billion ventures. impact EBITDA activity segment will potential of for incorporate updated discuss & provide or to full-year outlook results guidance Logistics hold We XXXX additional to minus and the when Supply a quarter and current and to our most we sales joint $XXX on adjusted range our of call

equity. of In As and with Series we $XXX slide as preferred remain summarized on we million Willie of X, the our B on X.XXX% deleveraging critical offering elements track October, indicated plan. an completed

par more used for a fixed a As Net the five B right capital Series in becomes plus September in common XX PAA of as convert million, million X.XXX% on units, deleveraging $XXX until the sales year-end. of call to five which assumed closed plans. floating. at and which year million remain The million reset In $XXX won't totaled X.X%, debt. will totaling $X.X floating rate reduce the rate achieve benefit announced LIBOR reminder, our years $XXX beginning has was us of sales retain target, an the proceeds perpetual, $XXX then declared transaction to than reflected balance becomes a were already has flow is which and in to completed never and size our million be we virtually asset October, distribution previously will on six having after over track cash all current sheet quarters. our incremental allow of We this

earlier, the are all segment noted I completed As sales transportation assets. asset

year-end We expect the sales to or complete the early XXXX. by balance of

Additionally, to are of $XXX two nearest we $XX $XXX of prices. retirements, XXXX. fourth among debt totaling expect and commodity the in preferred and reduction, debt XX, will were by to end these quarter the maturing significantly senior early million of we before hedged and and the expect during charges redeem level the $XXX XXXX, our of of these and In million reduce XXXX transaction, lower or we in notes of million X.X% the and our senior majority sales, lower are connection provided maturing applying the By towards current reduced million the note the our the of XXXX. XQ total expense $XXX but intend vast asset to inventory comprised related expensive inventory third May most borrowings May we approximately senior the of interest borrowings distribution reduce Accordingly, at an X.XX% by XXXX million result notes total cash to monetization quarter a senior maturities XXXX $XXX X, with balance two, of which at in notes million next quarter or throughout June assuming and than XXXX. issuances approximately more year-end over additional incur expect our

at from on We program. program in half billion, quarter incremental able by second will be expect accelerate full-year time XXXX and incremental the To early remain hope they now And budget capital X, deleveraging objective level our above the largely we that but extent capital coverage the actions noted million metrics will be significantly billion financial additional by in funded our preferred will, expenditures slide the XXXX. XXXX we Willie with through on are of incremental The into his bring committed as earlier Overall, referenced XXX%. to level. the we of to XXXX includes third about our I approximately and and $X.XX Willie which achieving would $X.XX also note deleveraging offering that execution fourth proceeds our our early coverage the to and cash segment. for profile the remains $XXX above target raised expenditures coverage our XXXX. XXXX. the of and to our negative targeted line the impact be quarter, on mentioned recent is remarks XXX% for for our projects $XXX million position of and credit of as asset fourth materializes, with second projected Supply plan Logistics is distribution by these quarter sales on approximately and guidance PAA's the strengthen XXX%, & was credit Based half capital early

projected matters our coverage shift contribution, a of be over half Excluding for XXXX second XQ to will in segment's is I the included XXX%. approximately now to the positive results. of couple S&L accounting fee-based

Our depreciation for non-cash totaling associated with and included sales asset quarter amortization $XX program. impairment the expense charges our million

back quarter, purchases given our a the In physical Greg. item included PAA's XQ earnings commodities over $XXX not in that turn results. selected million, use or quarter's losses we hedge impacting comparability. include that, mark-to-market of to I'll the gain derivatives a we reflected With to that inventories and any are hedged Additionally, GAAP and sales is financial call of as on derivative which XXXX loss recognized

Greg L. Armstrong

Al. Thanks,

base Permian several platform. to built the are projects for Non-Executive and takeaway call we last retaining business to has XX the and the open for I with a of I respect in before Al, our positioning years, comments Harry, several call look especially Director will Roy that, on the we're powerful Willie, holdings working working my team With with about next turn up And questions. and the years as excited interconnected asset Over to forward CEO PAA to rest to from we Basin. transitions few new a the quick for role significant PAA. over equity the in

Roy I. Lamoreaux

that included the to today's presentation. appendix would Greg. typical materials Thanks, note in earnings I our we've update

Additionally, session, and ask of call for in will as possible as time amount we necessary return question one if to we to address you the us many the from yourself open we allotted time you follow-ups. one limit enter question that the have that the additional now questions. Q&A Terry, have and then the queue questions allow please This follow-up to to this as we're morning. ready participants

Operator

you. go line of Jeremy ahead. the to Please And go JPMorgan. we'll Tonet Thank with

Jeremy Bryan Tonet

morning. Good

Greg L. Armstrong

Good morning, Jeremy.

Jeremy Bryan Tonet

Well, on guidance be materializing if as I how you ramp XXXX is thoughts you in as wondering Anything can at guys far able aren't this activity provide might your just EBITDA share versus there. that was you share to anything expectations? updated point. the producer

Greg L. Armstrong

hasn't changed Jeremy. it much, Really

paying expected. barrels-a-day in performance drilled good. exit wells terms million as high doing respect I you're we'll calls pretty been returns the capital probably battle or discussions range. out mean, in well that somewhat on The matter, counts on still We especially and have X.X to attention the all as practical the to volume there in of obviously, say we I'd going the the much and far, in Permian Permian we're probably a per growth million are doing, growth. between think with been and The barrels-a-day has than X.X higher as So we like we're current line But well thought. that to

completions. fewer In little many been That's in fact by it's, case, a offset better.

the with thought overall, in another. aggregate within one versus But, the about basin, a there we what would disparity happen volumes the are area same. geographically, So, be may

there takeaway we candidly, Intra-basin, it we number, And, in time are doing also some where our is pipes location very track thought. not what acreage. So, only in we're operator the is on DUCs by lag and and comfortable. but our

we I or think probably on about very got estimate resides acreage. near XX% total – to count of we've DUC the XX% our

where the performance the a is respect that's it's a behind pretty that's really our But, the track. I and pipes. not well, think, operating issue, is it a takeaway much leverage, So, Ford areas, are The timing running issue. to bit located. intra-basin on With pipes little but again, is performance the Eagle on as financial not Bakken other

So, us. impact not on having big it's a

Jeremy Bryan Tonet

is I granted, there. into Thanks. wondering, on the That's seen just of the a small helpful. Midland-to-Sealy strong We quite S&L some And part five out. spreads we've business, posted weeks widen tariff see the so quarter was here,

you any far progressing as quarter if provide what as wondering seen could Just to-date far? thought that us just you've is how this so

Greg L. Armstrong

say, to we achieve obviously, there we've end out and what between our given now year. I'd the with expect the of guidance

But positive fair yet, perform of mean, I negative. the the we from pipeline time-to-time I taking really And what here on basin better. And there's it's I something because to intermediate so, same related. instead should not somewhat have and think & our call actually that. term at say tell opportunities for outlook full. recently certainly relative we different position it's storm the to is I any happened today, you, of time, constructive Supply is that still our, We're just pretty Jeremy, differential mean, I'll sit to to Midland-Cushing that's got Logistics as

where normally pipeline dollars that adversely incremental we'd is number S&L side negative of part make is good. So, if was of the it affected. it The

our balances two discussions we some last say consistent with out. is would this calls. of everything have phone on what had So, I

Willie C. W. Chiang

– seasonal. quarter very to our you fourth NGL the consider Also, is need is business from

impact two the So, fourth confident variability But quarter. earnings weather and over quarter we'll between can the those that quarters. the first between we're have

Greg L. Armstrong

Yeah.

previously. on definitely, it's in if to S&L we're it December up slide. going say real in ballpark same it cold So, real if can gets guided fourth I on the overall, XX, in still to January, we've show that the exact think some cold And But, I'd gets quarter. early

Jeremy Bryan Tonet

very helpful. you Willie. and That's all to congratulations Thank

Willie C. W. Chiang

Thanks.

Operator

ahead. go Vikram next with Citi. Please And go the to we'll line Bagri of

Vikram Bagri

$XX guidance, XXXX location end wanted morning. with differentials It the in look to Good And you widened I adjustments. sounded Quality segment, guidance EBITDA start like have is the Jeremy's guidance conservative. characterized from if S&L this million and you is way of lower at have but $XX million meaningfully, I S&L of numbers, year the question. if flat. not, and

you expect So, imply expect want you you this that to that hit year, wide again year? and either next stay that business would lease a NGL if gathering next or rebound differentials number in to year

Greg L. Armstrong

Vikram, Yeah. on try XX% to rude our of but, want time to of going be spend XX% don't we're our and business. again, I

for we're because the Quite future guidance to just, it's as of I on it. going S&L that's weather now about us. lot trying or now Our patterns is color to sense shining give much a make right explained as and right doesn't for to just raining Jeremy candidly, predict

Vikram Bagri

cancellations, guidance, you guidance was million. Understood. And and don't for then, that $XX $XXX assets sale quarter on get $XXX segment this your presentations. If million asset fourth impact fee-based to recent your still add highlighted I and million in I sales account

So, quantify in the prepared remarks? highlighted way you receipt any differences expenses is timing can payments that and operating your of in (XX:XX) impact you there

Al P. Swanson

Yeah.

would it. but operating you're specific We million out part of so million, If $XX is you the $XX I number. talking We spiked take, expenses think, give roughly a about. be difference and didn't

it. on you're So, right top of

Vikram Bagri

Okay.

Al P. Swanson

than talking million $X $X about to difference. less You're million

Vikram Bagri

Okay. Thank you.

Operator

And Mizuho. ahead. next, with Brian the go to we'll of Please line Zarahn go

Brian Joshua Zarahn

Good morning.

Greg L. Armstrong

Good morning, Brian.

Brian Joshua Zarahn

ahead. On Northern asset the transaction sales, good California moving is hear to that

progress geographies reset pursue it do and your different or distribution on the target, be to perhaps similar and you geographies? opportunities expect Given would other in

Greg L. Armstrong

is building additional have we've on, similar we Wichita the will, to incremental City in potentially take that think of the to Falls now obviously of capacity rest Wichita construction Willie access if you able that Basin, to which gives we've the from way got we're us to Falls do to mean, extend I by creating. right When to pipe, capacity the get us now are be just of That Cushing, piece us to touched process two of of from What kind you underwritten, capacity say the advantage Cushing. Colorado to producer the currently opportunities, focuses within is commitments. certainly another Permian to positions it ability I

every that's focus basin We that existing it's just there. we and not But and but to areas capacity have the you Permian as a do have then system the Oklahoma off profitable there area in there. excess rate positive areas. main it's about the and the return just returns Permian. some U.S. of the of kind candidly mean, and because Corpus Cactus quite in a candidly leverage related of close it's what very things II, as terms call of the those So of the of I will of are opportunity other in and be our in would course, be much going there's areas in the there's STACK on to good, so incremental market, some focus

Brian Joshua Zarahn

clearly on enough. the more sales... asset the question the ask I asking I appreciate was on I actually update didn't the Permian. I

Greg L. Armstrong

Oh, I'm sorry.

Brian Joshua Zarahn

opportunities and and could ask No, geographies, $XXX I up that's about MidCon those you then – you system? on asset one. the parts with mostly But and done distribution in II Cactus it'd whether you potentially of or to are other see optimize look you've been – progress other the and your sales your going be you're would anticipate reset, selling or to assets California, the follow okay. the I'll towards million, that given do was actually,

Willie C. W. Chiang

looking one our that This We're that this portfolio. we take optimized make Sure, that asset is our at, inbounds we've question. But terminals. always sure Brian. received interest point, looking are to on we've some I'll the is Willie. LA Basin at

It's to a something some going the million of refineries. be all we're it's on. X with in It's system storage, Los discussions Angeles. more barrels So, having and interconnected that's that got

So, this it's a probably very that we'll That's about. key one point talk piece the at of infrastructure. only

Brian Joshua Zarahn

on if on this partner with How just you II, JV with update Cactus can discussions view potential that shippers? project? potential follow on up tuned your do process. stay We'll And a any I

Willie C. W. Chiang

We news would got had and I report there, this stay Again, of process. just here. best say have but project favorable to the again Willie Brian. a immediately, we a wish I out interest. We I lot is still tuned. Yeah, think

Brian Joshua Zarahn

good. think it's I you've know as analysts Plains. got time, – much. And, miss congratulations. of don't you'll Greg, everyone Very you'll comes, miss sure when the but Willie, I'm I the time research some

Greg L. Armstrong

Thanks, Brian.

Operator

next, And Ann to go Bernstein. with go Salisbury of Jean we'll ahead. Please the line

Jean Ann Salisbury

you a and impacted bit Can the constraints what next talk to we clear Good third-party more they months? looking to the downstream Are see of a about BridgeTex? that over belonging those if Hi. should be couple morning. forward

Willie C. W. Chiang

this constraining third-party system Ann, down out Willie the a that. a This that it's is Jean Yeah, I'll really again. – take barrels is is of terminus.

So, a first they've the got quarter. that in be should project resolved to it and resolve

Jean Ann Salisbury

Okay. it Can you share, I guess, project which is?

Willie C. W. Chiang

project It's coming of out facility. MEH Magellan's their

Jean Ann Salisbury

for then S&L Commercial with assets? follow think has And I which it as responsibility Great. Thank Chief expand the new Officer? the you. Specifically, does historically on can up, earnings a have you sat a bit more the role of

Greg L. Armstrong

had commercial myself It's between commercial plus Sure. here. Harry. Willie We've just dividing function up a and and operational the always oversight of sort

segment. So, yes it would obviously include S&L the

Jean Ann Salisbury

That's all Great. Willie. Okay. congratulations, me, for and

Willie C. W. Chiang

Thank you.

Operator

go ahead. of we'll next to Research. Keith Wolfe the Please with go Stanley And line

Keith Stanley

Can interest Any M&A, on you in some there out of still any gathering some just side? thoughts assets on private Permian morning. Good updated those Hi. assets? give the

Greg L. Armstrong

lot say interest. of I'd

there's our right to a how lend capital So far, not sell high lot able where system fit to we lot into so buy us rather price were the out about that has core a us. to capture and for some areas of still chosen clearing of chin we've it's top our of to bar. so is than because synergies, it been something. on business, the in it market more and been lot really economic very themselves moan out that there probably with It's there, pleased tough to something and build competition. the others to outlook to capital candidly We're that, same than of Still it's but is as groan disrupting a

win-win solutions an potential think I I joint out consolidation wouldn't that ventures. ventures other approach there makes for still think or asset sense, acquisition joint through and M&A to So, there's from ways

Keith Stanley

just And driving the else, down. high the XXXX, of taken level, It Thanks. for BridgeTex were that? implies are that's at Great. volumes a assuming segment just is little volume soft. I'm guidance Okay. constraint. What part Transportation on QX volumes a the

Al P. Swanson

of majority sales was I it that asset mentioned. The the

Greg L. Armstrong

issue. timing a was It

We have think, completed... be Actually, I those. forecasted it'd,

Al P. Swanson

Year-end.

Greg L. Armstrong

...January X.

got earlier. to close so, And we

Al P. Swanson

So, sequential well as XQ, guidance. would prior as to that versus impact be XQ

Greg L. Armstrong

sold be So, XXXX not in it was assumed fourth to quarter. it but our preliminary guidance, was our in

Keith Stanley

you. That makes it. sense. Got Thank

Operator

ahead. of Mateer And next, go Harry Barclays. Please with we'll line go to the

Harry Mateer

Good morning. Hi.

First the question you XXXX XXXX fund is notes. retirement to and just, walk us how Al, maybe of you plan through the can

This prospectus, over CP had quarter, of a $XXX your the you I know from preferred, for outstanding. million little

my is balance. preferred that just the went So, assumption towards proceeds CP

So, notes some other the revolver funded be going are or to or source. redemption asset combination a sales, with

Al P. Swanson

Yeah. sales sales, I proceeds, of expect year-end preferred asset the into the XXXX. we all the asset very or again, by virtually soon majority done to those mean, and plus be either

our inventory, And funded sources, or so, we our that's borrowings. with merchant hedged bank keep to $X.X CP billion, and prefer inventory short-term

distribution. plus have going sales just notes we're just a that by essence, the amount refinance substantial basically pending, and the of these between it that preferred in way. temporarily a to with we and the asset reduced So, calling reducing quarter But proceeds

Harry Mateer

Okay.

the wouldn't So, just for it be some CP million XXXXs? be that? There if fund for it offset XXXXs to to fair debt, off $XXX I'm of take total and there looking at would

Al P. Swanson

material third total reduction see at Correct. to the just for quarter, fourth a between mentioned. reasons you're going But when debt you quarter I and look

Harry Mateer

Got it.

the in Okay. the drove just then, sequential debt? quarter, long-term third what increase in And

Al P. Swanson

the reset proceeds program, geared more but for then our as well the quarter, in bit towards was had payments. third – capital virtually second a just August as we which, Capital asset it, program the the for it kick sales into distribution little the no was half,

combined two what And temporarily quarter. you'll ticked a again up. it reduction those very So, in significant is see fourth

Harry Mateer

you. Thank it. Got

Operator

And next, we'll go Shneur to ahead. the line with Please UBS. Gershuni of go

Shneur Z. Gershuni

Hi. everyone to on Good morning, all guys, and the congratulations changes.

questions start to with here. off Just a few

the the expectations see of of bit. E&Ps comes if growth some for you of you the as of Do how Given seem for comments fall high a end changes that in. living proposals? probably to those that come dynamic some cash the to in for some flows, competing that start these within capacity wonder just for quite the your you talk projects expectations takeaway kind of about about I or lofty for was away wondering can the market potentially if Permian

Greg L. Armstrong

never excess learned is are placid. mind of underestimate what of It and entry economic hurdles, other inside be players. barriers don't disruptive capital, the the nature of the one think things of Well, we we've to to always a get some hard would

the really, that to to fair it's Corpus, out going necessarily board, the and projects. initially on say were all think some we're players, speak, or from the get I'd to everybody there recognized seven were not six them probably say, viable to of really those to I not so of build Permian projects thrown of done that

with to – timing to So, that I think want up have into think there's for be producers but that they there's get be going vehicles that done. fair participant for solid end room that, all project, a not and we'll we our the is that going a There because it that I we in of cost do two to think better is We it's be time. one very We lower, our faster think are to over economics. be going to think say certainly because probably, translate partner room should may one. think our

can't forward go ahead to ours. So, speak we not. willingness or plunge feel somebody I really to and else's good about

Shneur Z. Gershuni

that And not or Great. were opportunities whatever in you think place in that capital business? position to could be you be that a capture to that XXXX, those or present if a changes is you was to last deploy preface does in also wondering I year. sort I downside we And asking the trends impact question fact NGL upside? would about the protect the either S&L If Bakken saying you've Midland, that reversed as to in a for XXXX, able to completely the guidance. talk trading follow-up the had premium year, or against this When the capture in of the any to S&L about and by put I'm about

Harry Pefanis

I – Harry. think is Well, this

the in measures be capture type this think, think the where last put we even have I us not that would would of to on that able maybe place managed we've upside participated. put have just some that our of I we we as magnitude, been would system, historically would available to historic call, we and NGL would ways a participate But the have the maybe opportunities, so in the under upside not inventories. diversified same a the position we mentioned we

differentials I too there's telling you Bakken, the much On the are think capacity.

opportunities would be the invest. I'm not to what So, further set sure

Shneur Z. Gershuni

color, again, the Fair and Willie and once both you Really well. enough. to as congratulations to appreciate Thanks. you Greg

Willie C. W. Chiang

Thanks, Shneur.

Operator

the And next Richardson of go SunTrust. we'll ahead. to Tristan go Please with line

Tristan Richardson

morning, Good guys. Hey.

in number for your any the on curious Permian, that of Just XXXX, any for the opportunity? does Cactus in II outlook spending include assumption

Greg L. Armstrong

when made we that's that And and the sales deleveraging comment in kind going late as projects chasing we're asset over that that, going project spending incremental fruition, extent access given the has equity launched spread to chasing, that II the that all are let's the Nothing extra we our to proceeds million. we a without without as XXXX, Cactus say, of earlier meaningful. Willie – really was of you're we $XXX And that XXXX and jeopardizing handle absolutely XXXX. to into come the XXXX, think the Al raised still market one, to, referred well preferred We the having we're targeting program. in the that can to for

raise go then on public to business flexibility capitalize either ahead our So, pledge not incremental promises and go advantage deleveraging the allow our run in and into equity. and backwards us to our to without built or opportunities take the plans plan and we've in to trying to the

Tristan Richardson

And did Thank some asset Greg, last and into in it, that helpful. see of year? very was of may just one. of this, bulk the SoCal when the integrity you should that terms you. tail project, in next have off then, just the mentioned or but that concludes sort of XQ That's occur we

Willie C. W. Chiang

off bit XXXX XXXX spending first on perhaps and just quarter Yeah. is of that a We're the will in through Tristan, this taper and that Willie. into the quarter. second

Greg L. Armstrong

Yeah.

you was million we've XXXX. I that million, for and got $XX – So, if $XXX think a guidance

back you million. contributed assets off, So, you'd practical if then, a at some And be we $XXX that to that. sold the matter, that as

event, not what So, you forward. $XXX kind but only when we're back a you what out to into we've million need that gets sold, million will as putting to range serviced that also service that that upon onetime back $XXX based of going be to

Tristan Richardson

you, guys, Thank great. very That's much.

Operator

we'll Please of the next, And Tom line go Abrams with ahead. go Morgan to Stanley.

Tom Abrams

but one I down spending Canada, in project. your There's question see I spending had a Canadian just a activity too down, about small of overall you. lot there. and Thank up

just more good capacity You're why in that for much maybe not latent competing much producers on winning that to projects, a maybe some playing I growthy you're more a sure positions, area wondered aren't those up consortiums growing what's attached were just that's or so yourselves, in of that if or who you you? for making projects you're aren't just area capital, not making there type growth not for going bigger that just

Harry Pefanis

of is the lot forecast. are Well, when opportunities also lot a you on of a little just A evaluating our advanced more too the are of Canada. it's liquid geared side. gassier investments at several Canada, to – the there in though mainly and enough in a look infrastructure some some not They're towards projects in include we're

Tom Abrams

this XXXX, much you larger some or potentially? spending something that XXXX then Is might expect in

Harry Pefanis

hope of as little of I'll have chasing of Fort into we're of right will a projects. some amount and a overcapacity mean, develop bit our capacity opportunities have at I assets some we investment in also there's well, opportunities that now. we'll fractionation the obviously, some Sas facilities note, fair at in we Canada, capital

Greg L. Armstrong

and they magnitude. bigger to or happen they way to can early don't. somewhat kind say, too I project be mean, Yeah. projects of either any order going was try it's of The episodic, I

XXXX, that. to triggering result certainly, for that start up, but capacity therefore lot it's really There's certainly and so any to calendar it's start significant tell beyond you I not XXXX of going in to excess say, the there's And forecast it, in probably potential year. will hard filling you a spend

Tom Abrams

Appreciate Thanks a lot. it.

Operator

go next of to with Baird. Please Wang go the Patrick And we'll line ahead.

Patrick C. Wang

elaborate you which CapEx $XXX Specifically, morning, that the projects pull million did guys. Good Hi. on Could relate to? forward?

Willie C. W. Chiang

there's connections delivery one within some there the our a we're the – of projects. is The of three forward large pull is ahead We've would And projects then that our million Yeah. $XXX doing. improve Permian, around areas. got One I'll points. on that one. really bit specific key them We've of some lot getting take no producer – efficiency completions. bucket that I a the into got some third is...

Unknown Speaker

the able XXXX. spending tell just were to to (XX:XX) We XXXX

Willie C. W. Chiang

spending been We right way lag Yeah. Yeah. say year our have trying over with I right versus on the actually come on. this it. was to – to but our we've typically estimates,

than thought actually a we've would. So, bit spent more we we

Patrick C. Wang

Got you.

then, And helpful. really That's Okay. quick.

range lightly specifically? on the past, in On on acknowledging I vary asset sales, of but you widely can a or can multiples touched know the we've program numbers seeing that expecting it give you're general the a broad

Greg L. Armstrong

valuations point, we're and say on specific view I'd but they're discussions internally. prefer it, in attractive not disclose relative still I to them at assets folks to with think this how we

last-mile buyers, that. It's we've the we and worth refiners, to more that and South for share And bucket. that to them looked fair group to be it than this, as all all opportunistic us to continued willing buyers don't whole see to well assets that above opportunistic. into as assets very being we've would terminals selling get further or Louisiana, that along portion to one I folks into for we're of a in you but in we're I So, they're tell and view think hard our would prices. them us general,

Patrick C. Wang

Thanks That's lot. That's a all helpful. All fair. right.

Operator

go with Stephens. of next go the And we'll Please to ahead. Schmid line Matt

Matt Schmid

of and that an on projects? as opportunities how creates Probably, you maybe terms of Cactus existing gravity and guys. quality II and on obviously you're Delaware update morning, the with seeing Good growing and both in Hey. your in opportunities production the just you what just systems thinking well about future you're just provide could for Permian the crude

Willie C. W. Chiang

is this Willie. we've whole (sic) got that. we've Michael quality [Matt] (XX:XX), a on quite This been – strategy issue,

is our our think to a that Basin be are bit I And getting we've on systems in to going belief the lot be about segregate. able barrels a building talked the lighter. to it Delaware quite

a day plus. you at about If million XX-plus amount now, gravity. look It's growing barrels to of X the XXX,XXX

Cactus able of of see of we crux lot the and are those to benefit to a pipeline that's refiners. water are volumes going that of a being I take pushback So, a the because think from really to lot coming, the directly

starting any want see to are lighter. to up already We going refiners stream far it of general lightning The as don't the Cushing. the as

building. So, of we've and a an of everything piece the part been it's integral strategy

Greg L. Armstrong

also Matt, volumes. say, of before pay it recently for would that to incremental other you particular we've crude willing I just comes values, out comingled in will, gets some with if quality that Yeah. have seen a refiners some been

Delaware. And Directionally, But up. two stream yeah, stream obviously, in Midland things, be one the mixed holding pretty reinforce (XX:XX), gets said. whole Willie what we in lighting especially constant. seems the so, whole The if Permian Basin together, that see the it up takes to the

road. We wellhead to really to that can but provide a years, roll forward able to be from comments there's has out then or going pretty are it is four near-term that's valuation. should the be benefit, see, would refinery. and the previously system so, able quality and or made more should And that be to not that it's clock there to reinforce a port won't as the rate the of return where it's segregate make other party feel is pay the three down for load from we of to the being to much we a So, we've direction. one fundamental the starting paid value we'll It's do investments that to all way that? that that get – it the distinctive able quality made harvest And only continue good crude. particular probably long-term some matter. exactly and you pushback thought the And to trending that Ultimately, by if either we about willingness service one, to as second a we've say, that is I

Willie C. W. Chiang

now make an at to going and think point think I the really on right going where would miscue I other the we're become Matt, to issue comment sorry is name is your forward. I this

discussions a be able these been been issue. systems lot this key to barrels. this to a has lighter forward, up think observe until has to be – going of I now, there's the about really And have

Matt Schmid

color you. the congratulations. appreciate and Great. Thank Okay. I

Willie C. W. Chiang

Thank you.

Operator

Next, we'll the Citi. ahead. go Please go line of Bagri with to Vikram

Vikram Bagri

guys. Hey,

(XX:XX) Just quick assets. on of is the a status Can when follow-up expire? you do they MDCs and rail remind what us

Greg L. Armstrong

Rail?

Vikram Bagri

Yeah.

Greg L. Armstrong

I think much most of them have been pretty expired.

So minor we of have couple ones. a

Willie C. W. Chiang

with you we'll think expires, and get the to have on one I Two, back dates. to

Greg L. Armstrong

But it's factor in kind our of outlook that in. that we've given, we've all

Vikram Bagri

Great. you. Thank

Roy I. Lamoreaux

queue. any appreciate you more Terry. Terry, We I the in questions can your close up, it and see don't time, I think

Greg L. Armstrong

today. attending for everybody, Thanks,

Operator

gentlemen, and Service. Teleconference Thank you Ladies for your AT&T does that Executive for conclude conference today. using

You may now disconnect.

Plains All American Pipeline (PAA) 7 Nov 172017 Q3 Earnings call transcript