PAA - Earnings call transcript Q3 2018 | Plains All American Pipeline, L.P.

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Operator

Good day, everyone, and welcome to the PAA and PAGP Third-Quarter 2018 Earnings Call. Today's call is being recorded. At this time, I would like to turn the call over to Roy Lamoreaux. Please go ahead.

Roy I. Lamoreaux

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

performance. provide We forward-looking PAA cause schedules our in Instead, will could section website. to do latest presentation of slide GAAP from the intend the During our with information. results financial appendix reconciliation call, comments PAA's that results to since SEC. quarterly factors non-GAAP actual of to included outlook. Also to our Financial are filings measures measures materially comparable with also directly see cover the consolidated on differ are our results of SEC for filings that Important and separately the call. appendix in presentation PAA's included non-GAAP we've materials we'll references PAGP's PAGP's some included not adjusted Relations A such annual PAGP's to found results. include EBITDA. contain be for measures reference these financial most today's PAGP's specific the in Please Investor within Today's PAGP's additional financial can as correspond the Information

by Our and Swanson, Executive Officer; Chief call Vice Financial will Executive hosted Chief Willie President be Chiang, and Al Officer.

to and of I Vice Additionally, the for team Harry Planning Pefanis, other our and now Q&A With the today's and Commercial; President, Group Chandler, present over call. that, Jeremy Chief Chris Vice are Commercial Senior President available senior Strategic call Acquisitions; turn and members Goebel, and Senior Willie. President, portion will Officer; management of

Willie C. W. Chiang

thank to everyone, you call. joining Roy. for Thanks, afternoon our and Good

information points begin hitting by released today. Let high of me the the we

and reported third X slide detail, our afternoon discuss results this Al we more expectations. quarter that solid exceeded as on will meaningfully in outlined As

both guidance in guidance growth continued for Logistics growth to will update in XXXX sale of Al interest characterized expectations fee-based or adjusting for momentum our in S&L. prior quarter the We've continued remains we segments quarter of the Pipeline, preliminary increased anticipate to which a of our and updated fourth into Supply for from reflected We year segments after preliminary overperformance S&L and our in with fee-based XXXX. after continue and a line which in through recent for as an BridgeTex our XXXX, Our provided the was executed XXXX our as results reflects our our these execution. provide XX% for reflect and XXXX and guidance. trends

across ahead first of this to we of of we're Global far, to year, future we've holds objectives So delivered constructive. results our half The within deleveraging benefit to execute our to continue track multiple our benefit. continues on to the U.S. leads positioned basins this oil we several years, production world as next and North slide In demand of the most American liquids X, anticipate are and asset growth and model regard supply. largest believe about excited for the stakeholders. what base source the visible well-positioned the We're as the and are and grow, remain illustrated and fundamentals we growing crude to business XXXX. industry the guidance our over that achieve and on our

years. next minus day, a exit to the expect for or with be X.X Permian, barrels million gains the volumetric and in annual growth production production year-end continue several plus rate forecast in to Permian expect similar we of in Specifically line we our

Cushing, To U.S. combination as and flows our Diamond solutions new is centers that of takeaway Additionally, in should market we regions for other producing well-positioned we that key River including Oklahoma. which expect capacity existing activity increased serve illustrated Red to and Eagle slide including the Ford, is continue our to Williston driving Pipeline expansion on a increase Mid-Continent, options opportunities. through increased end This on Rockies, progress optimization key and demand to capital-efficient systems. system to capacity X, and drive

plans pipeline. owners line purge distance would plans advancing finalizing be and the a expansion short Additionally, the to a capacity to our potential project reverse The to coupled the Pipeline with are extend Capline programs. relatively These are Diamond be efficient of provide to systems returns incremental pipeline our potential guidance would to for and connect to Permian into existing assets our growth driver transportation remain and business. at the attractive capital Capline. projects Meanwhile, solutions our the current largest leverage

than increase XXXX our average on full-year to slide less impacts XX% In of Permian day. barrels of we by volumes BridgeTex total, timing sale the shown we are The Sunrise. or million partially day. in-service partial barrels million full-year X.X offset earlier slightly of activity completion volumes Permian a than a timing the tariff X, more tariff and As expect expect of X approximately

a expect and bottlenecking placement into tariff our early able Permian much hard volumes, add needed market. the project, acknowledge early, Sunrise I'd early growth a expansion to uplift like supported service work, multiple publicly creativity our capacity in meaningful the we our by this and were By bringing For well of the of happen. project, expansion projects. to to With Sunrise as respect commissioning of into the quarter, production Permian making service team to in we Sunrise coordination expansion as fourth continuation the of

XXXX. also April continue Cactus Construction our with II late track on balance service third good on quarter make capital in-service of targeted and of We to partial our for XXXX the program. is by pipeline of progress full

and and the terminalling our basin. schedule, of gathering expansions with capacity storage are complementary on Additionally, projects expansions our system along intra-basin advancing footprint throughout multiple debottlenecking

ExxonMobil The shippers continue continue make meaningful commitments. to on will by be third-party ExxonMobil, progress the on anchored JV. also additional to We project we work with and

finalizing commercial through and We venture joint also working documents. are agreements

in have terminal Petroleum, Midland, signed earlier, which pipeline participate of system acquired in a the a As that, call from the join has midstream and look including We're on Midstream, near Lotus over assets project JV Lotus letter sharing to announced the recently Centurion project the intent to Al. updates forward additional turn Occidental to future. the the I'll and in additional joint pleased venture. to With

Alan P. Swanson

Willie. Thanks,

As mentioned, related in performance expectations The due is primarily in third-quarter NGL Willie S&L favorable exceeded Canada regional the performance profit audit our strong dollar one-time segment. the to Permian, primarily well sharing differentials the of result our as million strong $XX and business. to our S&L arrangement in our results basis a in recovery as

$XX was we Permian driven As EBITDA in volume sales adjusted and to growth, decrease asset primarily segment a by fee-based of $XX EBITDA X%. or slide segment growth well. growth asset shown adjusted was offset of primarily on Transportation partially million segment Transportation – as Facilities $XXX segment X, year-over-year reflecting adjusted of due million Year-over-year by reported facility million sales, EBITDA

of by million The We BridgeTex approximately results As XX% guidance by in minus for million. in the million. XXXX on our driven shown in PAA of I on $XXX slide X%, plus proceeds or $X.XX sale balance the EBITDA reported to million. gain Pipeline, a adjusted year. a generating we segment sale updated the sale net closed out billion, $XXX to by our guidance our through strong point performance resulted lowering will X, or previously expectation $XXX the on and guidance increased $XX of our XX, incorporates XXXX our which of third-quarter impact S&L of our September XXXX anticipated that than stronger also interest fee-based

maintenance percent, and replace, of our by ability than and over operations. decision unit to implied $XXX common resulting DCF X% or complete approximately $X.XX. be expected of $XX of updated in per instead a per anticipated Retained billion, XXXX. $X.XX for XXXX represents part our certain to $X.XX ongoing CapEx to to common note work pipeline. Our to commitment flow projects million million. approximately implied I safe during also ensure guidance repair, million, unit, $X.XX of our previously to XXXX approximately DCF XX% the reliable increased we $XXX unitholders, cash These is are XXXX more increase segments will to with billion or our year available that is This due

addition approximately which was indicated guidance, XXXX And I that The million, XX% also of for $XXX XXXX BridgeTex billion, we over reduction call, guidance likely would provided. growth $X.XX to to our provide directional $X.XXX On in fee-based adjusted discussed S&L August equated previously to to billion. outperform adjusted XXXX EBITDA we EBITDA a sale an preliminary total guidance. guidance will to S&L $X.X result which performance billion. the In directional represent approximately of XX% update guidance of XXXX XXXX XXXX guidance, our our earnings

February call; current preliminary we'll assessment, their our guidance intend S&L for provide producers based we XXXX to our to fee-based definitive on from data gather guidance as BridgeTex more updating timing. as on our CapEx and incorporate we XXXX and our for sale completion the are outlook Additionally, And regarding plans, follows. as well current but continue

We to or BridgeTex XXXX XX% previous for adjusted year-over-year, XX% fee-based This growth to or sale. $X.XX expect minus guidance as segment plus XX% from minus our plus equates essentially increase adjusted is to which unchanged EBITDA billion. fee-based the

be results degree thus expect Facility segment, expected relative We as and initial a this is slightly Transportation guidance. XXXX to segment all our of XXXX our far driven flat outperformance be fee-based to by growth to to of our down reflect

plus XXXX that $XXX guidance would total XXXX expect minus outperform EBITDA also at billion. We place Directionally, or minus $X.X likely our adjusted S&L will plus million. or

Although return narrow upside for into this XXXX, XXXX some Permian we new lower we will the in Canadian EBITDA as differentials our of pipeline both we to in segment to in anticipate capacity a and comes segment expect have adjusted service. potential S&L level as

S&L As reduce are outsized debt a either able fund to we proceeds the or intend to capital. generate use we to reminder, such to extent earnings,

call Willie, brief back our plan. on the update me Before let handing to provide deleveraging over a

X.X being EBITDA at a debt As These are X.X targets, closer had our adjusted year from September of ratio PAA to and down times long-term ratio to illustrated X.X total adjusted EBITDA and a adjusted slide metrics EBITDA to on X, debt ago. with debt the times. ratio turns of a to XX, total

in As $X.X our half our XXXX-XXXX combined note of capital Willie mentioned, also that I deleveraging unchanged XXXX. we complete billion. expect at plan program first to will remains the

sanctioning to our the expect of progression XXXX February level, our full-year we driven ExxonMobil plan million project conjunction to provide XXXX with new However, $X $XXX call. addition in in projects. to update billion of We expected the capital to our primarily guidance by increase updating on the an plans capital JV other on program closer

Multiple flow cash center wanted operational eliminates, XX come that on limits, how summarized the completing our of to that credit slide on we time, forward. consistent support and equity will flexibility, plan, share we our programs. on retain thoughts fund common maintain level closer to level financial going manage over metrics some mid-BBB are board issue factors are consider and ratings to As plan to a to of not deleveraging distribution and need our if to management commitment routine and capital significant the a with growth we

With of the first I these be to increase mind, completing factors will deleveraging soon the back in call that, as distribution as in distribution the plan, a over potentially May. to the position we to With upon Willie. expect in quarter payable turn XXXX

Willie C. W. Chiang

Thanks Al.

time As progress productive of XX, our XXXX be a you can meaningful to on towards see, making slide summarized and real goals. it organization, we're as continues be pleased to each these for

and and years, the an in team Greg call for CEO entire make questions, XX-year them want the Greg, built a we business X. sure the CEO incredible for effective have Plains, had to and they October thank Armstrong, acknowledge to the as and transition. wanted and Harry over of efforts me placed retired opening the that I to Before trust smooth Co-Founder thank I

recent forward, the cycle steps the As we the industry and we've to for we look future. taken acknowledge position the company

multiple in invest continue our operations our for and the to our future. to excellence, on the organization through while advance further portfolio cycle; improve initiatives continue We focus optimization, sharpening business to

Plains growth As a footprint American entity result, with areas. believe key as stronger we emerging an is in North that asset a exceptional

equity enabling capital of I'll will us delivering be XXXX. time. to growth the should to execution drive said, call over remain which responsible Roy. programs, us first the self-fund that we significant half beyond. the expect well of and financial We results business while expect DCF our routine All to intensely the portion to and XXXX, partnership plan, unit for complete plan the flexibility, provide we of deleveraging focused on attractive our growth position in over reliable XXXX and continue to turn safe, strong in our This

Roy I. Lamoreaux

Thanks, Willie.

will queue we if from then as as the allow limit Q&A Now, our follow-ups. us please the practical top time question the follow-up available one yourself many you in enter and this additional session, to afternoon. to This questions to have question, return one as participants and address

evening to the questions. to address I we're available and Ann, additional and this plan Magill questions. call open ready be Brett for Additionally, to now tomorrow

Operator

from Thank JPMorgan. you. We'll with take our Jeremy first question Tonet

Jeremy Bryan Tonet

Good afternoon.

Willie C. W. Chiang

Hi, Jeremy.

Jeremy Bryan Tonet

here. with wanted more was the takeaway from the flowing. quarter. seems fourth in how I is And start that just day seeing detail, think, Is ramp Cushing, level? a can into versus Anything other refineries. quarter provide still – how much XXX you you're of there that's barrels wondering this it online higher Sunrise to and XXX to Hi. here the a quarter XXX expand see I there, I see or XXX,XXX you capacity moving you'll off like upon what in bit now just got EBITDA third Valero there And was and on a if the you said, guess, you've could

Willie C. W. Chiang

Harry, you want to cover that?

Harry N. Pefanis

Sure.

Sunrise with Falls a around would developed XXX,XXX November. area. we the a or of a operations We more takeaway Initially, a to barrels day. XXX,XXX at in few barrels out in commissioning generators barrels be markets thought XXX,XXX started day Wichita full October, probably day. day sort It's in barrels XXX,XXX So, around a capacity

So sort can But move the a that's today. XXX,XXX about barrels we that the capacity takeaway pipeline day. see of

and is goal and find to throughput try our takeaway course, to options. Of maximize try additional

Willie C. W. Chiang

obvious find us markets those to Wichita So, initiative an Jeremy, continue Falls. for downstream additional to is

set is capacity forward. So, we a map where the XXX the opportunity are using between to today going

Jeremy Bryan Tonet

just Canadian S&L you you I about to S&L there, dips when kind this the buybacks hands it is debt talked couple our want the kind just in bit looks but just of for up touch the of higher? There far front this smaller number to What reducing NGL? lift some sketch half kind what you (XX:XX) get dividend, see or here of weighted know as part capital thoughts or you any of are That's business, real a And get composition? quick, guide trying back Is what and around nature? the the putting like. of And as more I wide this there. as super-sized to funding quarters can as year wondering, and far on a Thanks. And it's more into crude you when one-time increasing the earnings, it's maybe or very the helpful. stepped and up

Willie C. W. Chiang

questions. Four

– talking were Jeremy, Jeremy, XXXX, go ahead, about sorry. So, your I'll maybe particular you I'm on –

Jeremy Bryan Tonet

front Yeah. a for I can mean, particular, on XX thoughts? that the was for come XX that or also feel S&L, just get being there trying the else those picture in share just anything guide but into buybacks you halfway, and philosophically to could

Willie C. W. Chiang

until not we really widen When as of and start the did or numbers, differentials jump me let the year. to the we fit. Al margins I expect the So then Harry S&L the here in off and get back can they see the we with started to shared think that half year, all

in that obviously widened that quarter be pipelines. to come S&L, year able primarily to we've what's may quarter. kind when And able we that went we out about Canadian differentials with of constraints actually differentials crude additional that and the So the crude been some you think fourth the there some. Permian the capture around were also year, thought able if into catch think are we to And for fruition to differentials primarily I fourth capture. the There's happens in is most of differentials

late capacity of there's of a So our third – online our amount until starts takeaway that quarter. Cactus comes is up XXXX really view capacity pipeline limited

the his Al there a the pipelines, but hits remarks, crude S&L XXXX opportunities certainly segment, the that. to expect don't capture some of after during are lot able out persist in to arbitrage there's as once pointed and there to Permian in be So we differentials prepared

period is to value. that this opportunistic of an So us time that really some of allows capture

to by of I number to the a I the get of gives to is take buybacks, bolster we're it flexibility think options company financial commitments flexibility having should different what this future. want from message the for able you to but us be on do, On the don't going into this

Jeremy Bryan Tonet

one XXXX, it we've first front with to ratability half seen the just its the And normal point towards like half? past. the seasonality as across Great. clarify year S&L weighted sounds for the second It's on versus the in not

Harry N. Pefanis

the weakest are Well, no, its you just quarter, quarter year. to it's not Fourth curve on of market necessarily. I some if sort be compressed. at of is the probably mean, pipes the in look the pricing Permian, the in going and service quarter second and the of

curve a So there's going to be the differentials. to definitely Permian

at Canada, few year first of the months are they of look you are year. the If balance in wider than the differentials the the for

there's as the weigh other impacts contemplation market year. So obviously in some turnarounds I of the – next or market are might some the not that much as do

a weighted half So probably second it's more year bag, of to year. mixed the but the first the the half than of heavily it's

Jeremy Bryan Tonet

Thanks.

Willie C. W. Chiang

still our don't that to do said, see fourth the quarter on overlay Jeremy, of got But and that, forget, differential still you've NGLs. have a based crude NGL on Harry you'll seasonality some we between first seasonality portion And the as business.

Alan P. Swanson

is on excess the program And priorities expect but at balance our any point be back. using in Jeremy, those some did first S&L the Clearly, XXXX clearly sheet. I point S&L just answered, and increase, the maybe that to add follow-up on buy Willie our to I'd capital profits. mention one first future, with we focus will

Jeremy Bryan Tonet

color. the Understood. the I'll Thanks. queue. Appreciate get back in

Willie C. W. Chiang

Thanks.

Operator

Abrams next to We'll Morgan Stanley. with Tom go

Tom Abrams

looking on for comments at the end additional looking some of Thanks, with just there map that if partners that maybe the that all guys. line, – page may wondering out also looking all projects combining up additional are partners, of Was joint Permian and of the other to graph your your X for implied your Houston if pipes, venture?

Willie C. W. Chiang

why take you don't Jeremy, that?

Jeremy L. Goebel

we first Exxon say, with project Exxon foremost demand. supply, would I and an Yeah. looking at – attractive we're have

We liquidity have Lotus. from Plains and

project to honestly we'll comment foremost, we're as first for call, we've We the can't on on third-party have merging seen go the But really about projects, Plains speculative the and shippers our but look third-party and said opportunities. enough own. this advancing on as looking We looking make with always at shippers. we're historically, for We're at concepts you've time. project

Tom Abrams

wanted the follow-up I I'm or I coming And I Houston a – of of Corpus kind to don't into sorry, get it. the Got crude but lot a know ask not, about if area.

Magellan a in there a friends connection Houston St. more Your Corpus. talking crude from Is towards about to to need over get James?

Willie C. W. Chiang

Wait. Those are different two questions.

Harry N. Pefanis

The yes. differentials would tell you,

Tom Abrams

to think of in – trying are projects your that your the future. likely additional I'm

Harry N. Pefanis

Yeah.

the So, St. $X $X, I so – over mean, there's differential, is Houston's James. East and $X differentials, about $X.XX LLS demand WTI and clearly change in or

Jeremy L. Goebel

of run so some looking like grade-dependent the that the for St. And a would get most way efficient home in is barrels as be Canadian James, get to to are well, and that there.

about think the there's So them. we're two components projects, of both excited I to and

Tom Abrams

in sales jump and back I'll later. on back Great. Thanks. queue come asset

Willie C. W. Chiang

you. Thank

Operator

Gershuni next Shneur UBS. We'll to with to go

Shneur Z. Gershuni

Good afternoon.

Willie C. W. Chiang

Hi, Shneur.

Shneur Z. Gershuni

given we increase material benefit XXXX? EBITDA that are XXXX guys? much placed I of it and capital I'll as your you've in roll projects a parts, how FID'd into the How terms that not for but can how XXXX CapEx suite going, capital couple XX the future of differently, into is only see XXXX? it Just service being growth, on? current is will said to being of in only XXXX partially mean, invested a to impacts well keep into working and questions And much fee-based here, try of

Willie C. W. Chiang

to a talking I then. Shneur, there's between because don't road get and XXXX lot Willie. of this into is want now about

up aren't the number take I the Capline can a Diamond think that message around particularly here that teed currently is of sanctioned, and the reversal. projects we've you

full number I number that and get kicking II forward are pop takeaway a growth which Cactus in late a should with a in projects got think project queue the XXXX-plus have of we QX, drive be of in up to XXXX. in starting that we we've should the got we've for XXXX projects do the going

that no shortage we there's have. So growth projects of or

Shneur Z. Gershuni

color to a James sort projects could you still believe as Have Cactus Fair that – Wichita III. extension guess, of was talked Day developing? the enough. as you there, I are about all kind take give those in if were the just potentially, well a hopper, they And the follow-up at ideas Falls on Okay. the wondering you are I that. considering. some bullet your around pipe or other that St. you a – as way of in can I they of at theoretically Analyst sort us

Harry N. Pefanis

then a into – extend actually to to Red out Transfer pipeline the laid which alternatives, to we Longview, Wichita from and into and extend to Energy Cushing, Falls system could Baton River connect east has one two into Rouge. the system alternatively got tie Longview

we're still backburnered are being to resources would III projects the those advanced. Cactus our I given is, So say, allocating that project. actively fact Exxon the

Shneur Z. Gershuni

right. All

Willie C. W. Chiang

sorry, this Shneur. Yeah. is I'm another Willie. just –

thing of add. B. There's more a A to one lot from going talk new Just of to lines

how is One up with solution our do come strategies a shorter things, we take term certainly a and more our solution. cost-effective hopefully existing system of and the

of our other for us, make dots more may between to just same So, are existing sense. of of that new that connecting the complete announcements pipes projects, system some versus pieces if be the accomplish the there

Shneur Z. Gershuni

that the maybe color, ask about for back thank the in afterwards. No, queue, totally And makes jump pipeline the you sense. and Exxon I'll

Willie C. W. Chiang

Shneur. Thanks,

Operator

Cho go Barclays. Christine We'll to next with

Christine Cho

Hi, everyone.

reverse that with an your commercialize? years? For how Patoka or months extension Like, if and from were Memphis? would it agreement we in reversal, connection? to to from you time or reverse to Capline do talking tomorrow do the all parties, need you down is just time this Are need how do going the much to much be you And and

Willie C. W. Chiang

Harry.

Harry N. Pefanis

an XX-month XX months. today, we to started process. If XX- to it's closer No, probably

equipment. and pipeline purge to extension the a of line the bit need little of we We We some need from Memphis have Collierville. to

phases, bit North a in of not that be little something end be end though. will months. service can system the in a would placed system probably be in faster maybe it's accomplished on It longer XX-month south the So in timeframe. south could with timeline. It's – of the end the be reversed a

Christine Cho

south, talking when are South Okay. from like you what's you say Memphis or south? And

Harry N. Pefanis

It's South. Memphis Yeah.

Christine Cho

And is all down. part Okay. and – say the from then you north then way when Patoka the

Harry N. Pefanis

Correct.

Christine Cho

Okay.

Harry N. Pefanis

in carriers control. too all Patoka some Connecting not our need work at so it's

Christine Cho

then announced impact pipes have view? any – we happen, place we on MVCs your the or been in how for like keep S&L, with the Permian next Okay. that to how Are about long excess you moving full, protections in that that that haul the to how the your then does volumes with think of your running about the and how should to think like pipeline volumes mechanisms to have, there And skew? the over year? conversions the should – some guys in of them system on risk NGL should to extent Transportation And that crude

Harry N. Pefanis

service projects move our I on the forecasted year. are how think volumes our given is, come about reflects in relative the it all think guidance best way view next that to to

Christine Cho

Okay.

Willie C. W. Chiang

also we've them. don't chatted forget which you've different got we've dedication, be There's there's are of And Christine, tenures And you a dedicated as system. commitments, So minimum lot have volume got the contracts before which to or longer would our addressed. to right? tenured kinds commitments, longer acreage of

the in a falls number that So there's nothing of years. cliff off next

Harry N. Pefanis

our in legacy systems some – And that legacy common are we carrier have Yeah. just pipes.

not today. or today ship up can walk and You ship

reflects our our those happens view what on volumes. guidance So with

Christine Cho

you. Fair enough. Thank

Operator

Wells Blum next go with Fargo. Michael to We'll

Michael Blum

everybody. Hey, good evening,

with From know, Capline so light Patoka, barrels part heavy barrels, so I would you question don't one could those sooner? from that X, would Canada you the up come of reversal. be on be barrels source sort Line also Bakken that sync could just directly sweet have to Just sourcing from or

Harry N. Pefanis

as it carriers. Canadian the be why to on it than will I earlier are sources the of is probably Memphis could by dependent had – access south. timeframe Bakken longer that And it Well, by reversal a Canadian a from portion receive But connecting conceivably volume mentioned well. driven barrels. That's

Michael Blum

what position then QX I second Thank guidance for at know, effectively your you helpful. locked And other any basically is, S&L, words, question XXXX to the you to trying both is gives had years? Should we you. out In that's assume put wanted what change or for hedge get Okay. I'm to That's on XXXX? in? confidence the that in for there just either

Harry N. Pefanis

I always not market the unhedged that are hedge would our active position of and for say market, we portion, the our in it's last that was the obviously position reflects view same call. our and so guidance the it

Michael Blum

Thank Okay. you.

Operator

go with to Bernstein. Ann Jean next We'll Salisbury

Jean Ann Salisbury

Hi.

a Just ones couple for of me. quick

out that fourth I be just think It guidance coming that out, a you which you I said BridgeTex, for XXXX came out guess, I from from the would for was? guess million of spell kind high. quarter. the just $XX you of XXXX had seems of what little guidance estimate Can it

Alan P. Swanson

pipe If to full, close you just walked with is The through constraints. BridgeTex. logistical the math, principally was the $XX obviously million

BridgeTex billion it. of $X.XX out. principally $X.XX billion, that's to vast the take coming The you the majority If

right. So you numbers the had

Jean Ann Salisbury

that. at estimate from be, forward which an a the more to then had way Cushing will get in is pretty Permian basin you. on the Gulf pricing seems for give the higher kind of think be and the the Cushing the to risk for path curve. much a Permian, are Okay. how like Can doesn't differential flow once us direct there actually maybe more won't a to once go goal? you Cushing A be of of like all a little draw than pipelines barrels on to Thank expectation then the will it And long-term I that bit

Willie C. W. Chiang

a to is down, and at what Harry are unless this think That's on really happens Cushing These depends what but That's Jeannie risk, it's a better barrels it's number it. Jean, question and put to on has hard the tough hard. this is to barrels a go Willie. Willie. arbitrage answer, definitely I is, answer really as because

Harry N. Pefanis

at for there's Basin Permian Mid-Continent pull barrels volume. a risk, the but from are There certain

have you to Cushing, moved. the Midland significant Permian look still historically, a there premium – been volume back been If and has just times when has been

Basin Permian definitely the pinpoint it's exactly, crude. but So there's to Mid-Continent refiners on in rely hard that

Unknown Speaker

also have... we And

Jean Ann Salisbury

Okay.

Unknown Speaker

ourselves ...contracts hedge of for well. that for that movement, some movement we and as

Harry N. Pefanis

Correct.

Jean Ann Salisbury

for Thanks lot. That's me. Great. all a

Operator

We'll with Holt Colton & go Bean Pickering, next Company. Tudor, to

Colton Bean

Afternoon.

So, like there to there? on River of with or the any that spreader up looking barrels that some tied quarter-over-quarter, moving just S&L volumes Canadian Milk light is they ticked portion clarity and Aurora, to capture and

Harry N. Pefanis

volumes Canadian Canadian. production not our in it's to The drip so mainly impacts Canada, in that are volume tied

Colton Bean

us around it. does of PRB an Saddlehorn And then XXX, give extension And a that I around process that pending Prop extension? potential thoughts to your just XX growth? impact on Got guess, can – you thought capture the update

Harry N. Pefanis

have a that out pipeline into We Powder volumes can River of already source Saddlehorn.

Colton Bean

it. the would capacity you is the River pipeline? a go I Saddlehorn do Powder to need if increase to there primarily anything to repurpose Got maybe ahead, to And were to proposition be mean,

Harry N. Pefanis

shippers, well. – so River there couldn't it – there's do the are But could be committed Powder capability Saddlehorn be some enhancements we and have of that pipeline. into extending expanding totally has Saddlehorn as a accomplished at capacity Saddlehorn,

So...

Colton Bean

Got it.

Harry N. Pefanis

in do else that? we're the anything good some you position to of Powder add have increases want in pretty River. think ...we Jeremy, capture pinch to the you volume

Jeremy L. Goebel

No.

we think have multiple I options.

capacities. there's the existing longer that you area through term, could with loop on additional on So, possibility there's more create spot a and today, footprint barrels a to Saddlehorn with line segments pumps, move then to if from expand the basis. demand, But

we're to get And to honestly in pipelines some of capacity that as Powder our will relative I liquidity River, as in So demand, capital to think our enhance but and on those many the in from you our actively make just budgets our and demand customers contracting to barrels. area demand on market we're shots possible optimize terminal the spend Guernsey sure have watching depending we are, it. watching the capital we're system as

Colton Bean

Thank helpful. you. That's

Operator

We'll go Credit (XX:XX) next Suisse. to with

Unknown Speaker

going not you increase like on annually blueprint just Hey. get too with potential what increase. with to can mechanism any Don't distribution afternoon. want specifics, but can't of or or decide from the what you the and much you to looks provide like coming, here, the forward, of there? I start you increase sort first but want quarterly just increase I that looks how Good off say out us it realize on and whether

Willie C. W. Chiang

Al, why don't you take that?

Alan P. Swanson

denoted on all were thoughts that The numbers. specific slide. provide can't we clearly, And Yeah.

in did consider a small a change XXXX the combination recall, starting of would or comment just that step you we reduction, in of we both. make a kind If either – back August normal or we with made increases when

that haven't the We'll as of at made period approach. get clearly closer We time. look we any decisions to

need leaning was are equity to versus going a slide to minimize the maintaining operational flexibility, clearly, far which want specific and well. But capital we for markets. credit numbers basis, we basis now, supporting flexibility, a We quarterly as commercial annual the metrics more towards mid-BBB focus liquidity as and on sure to on make denoted as

all are could our is but And really tenets that's kind through payable we thought so we the those that of process, the quarter in May, share. all dial for first assuming it

Unknown Speaker

think just risk major fair. And No, around Okay. you a VLCCs. peers Seems crude curious your natural expansion a of a export there's of export where like But already Curious here you projects, your just a extension overbuild that's we've on if that. pipelines. really from on heard this to quarter maybe side. lot the guys tailored lot are to

Willie C. W. Chiang

a you – make can Chris follow maybe and I'd like up. then I'll Chandler, to comment,

Chris Chandler

Sure.

Willie C. W. Chiang

a what projects, we that is lot found our at When are trying that different at big, pipeline with Cactus of we've the in we docks. not look a to there been but VLCC And had expense. deepwater projects pipeline, takeaway interested are big shippers dock. only are looked different all Clearly combining These announced. significant

can And there and different to view us, being and is barrels a pipe So our Otherwise, we – that for see docks – can number get to we're is to that we plenty if may the we can watch coast of we what built of are going the get and there's should it's to all access flexibility a and happens. those. beneficial kind it's of get return participate. strong – have we the

Chris Chandler

way I'd to a that do we're area, closely Yeah. course, Willie The load we point believe continue of that going add mooring as export, efficient is exports or single like large It's, make of the an it's oil volume more sense one and forward grow. oil projects most crude crude only for do said, monitoring. thing to

Unknown Speaker

that everyone. Appreciate Great. color. Thanks,

Willie C. W. Chiang

Hey, to to to before just circle caller, I next clarify. the we want go back on

comes little that not like Milk We through a the through our system. is down Corridor volume pipelines River. cross-border come Milk are border across more but our seeing volume more Western It's into there volume, huge a in River

Next question.

Operator

America. with Bank Coleman of Dennis to next go We'll

Dennis P. Coleman

there Yes. bit the you questions. well. Obviously, of a Anything lack projects, talked the start assumed can terms you that in S&L terms just better that? I that Good little debottlenecking about coming plays guess, everyone. size should talked say some I into for you impacts guess, you've Thanks and of have evening a description, in of we competitors can are taking my there there a role the sort XXXX. you terms big I volume, from how talked as about? I to push if on with guess more. What in Canada about Al, and normalizing projects for of that of

Alan P. Swanson

down. likely XXXX. as Permian There it in a segment go built, but number that $XXX We're longer, year gets it do Yeah. XXXX million obviously, make recognizes going it for opportunities that for are is is less $XXX sized be little We trying a now million Canadian exceed make trying – million, some probably slowly just pipes us. modeling took yet. we're wouldn't at that's $XXX of We up started S&L What specific a anybody to $XXX may just million. try get sure these to for that to they and this out to there to think material put be the all sure the we S&L, little

make a want XXXX. sure you So at $XXX meaningful when to looking we would model you're reduction think from you'd million the

Dennis P. Coleman

Okay.

Alan P. Swanson

the run company. going how That's we're to

leverage, reduce us how to thinking and going a how assume far things. helping It's contribution nice we're we've we're distribution mind run projects, we're S&L it. of going amount company opportunity a fund the with about we're in to of thinking but XXXX, debt, for to As coverages, capture got modest as fairly

Dennis P. Coleman

a that's But Maybe ramp perhaps any That's it seemed give to the it was that continue up you switching. was quarter, comments helpful. – were James and volumes Great. St. that that very can comment in and that any there? just that rail. would There more expectation up crude by

Harry N. Pefanis

in we'll XXXX James. I demand at mean, strong see St. we continue think rail to

ease, time pipeline largely pipeline will by been accelerated at as steady it's likely the constraints had it's constraints. for rail lines we've think driven some, subside St. to And long just constraints. I a but the pipeline James, due business

Dennis P. Coleman

you do ramp? have So, continue that to excess capacity there? something Is it could

Harry N. Pefanis

have we yes, additional Oh, capacity.

Willie C. W. Chiang

been additional limiting course, to rail – access it. been need directed fixed cars XXXX rails. The that prices limit to of markets That's the has what's been point and, through been and have prices rail car the

Dennis P. Coleman

Okay.

Thank Okay. you.

Operator

next go Sachs. We'll to with Jerren Goldman Holder

Jerren Holder

Thanks. capacity and your the What is potential of the on latest Bakken takeaway to increase Canada?

Harry N. Pefanis

and the Out out of Canada? the Canadian Bakken Bakken or of

Jerren Holder

and Western Canada. Bakken

Harry N. Pefanis

Okay.

pipes is footprint the So mainly smaller not some our significant and It's takeaway. of Bakken. consists in rail

the the try parties not a we to of So, take going that have, advantage of obviously, significant be we but of and project infrastructure we're develops takeaway limited the Bakken. out one

Unknown Speaker

We two and Wascana more that on get we volumes we how on but do systems, cross-border limited. are are do the have working those fairly connections, Rangeland capacity two

Willie C. W. Chiang

in the could demand infrastructure where the would And higher higher demand Bakken. bidirectional if ideally Canadian if the Yeah. that you was had be into or there items pipeline you into Bakken move system be there a would infrastructure

Harry N. Pefanis

the bidirectional. the that's Wascana piece, being Rangeland in on piece, And

Jerren Holder

you on Are And that to this are at Yeah. there BridgeTex? follow-up to just Are point? are more? the Where outstanding any close guys sales. asset looking we following waiting do then

Willie C. W. Chiang

that Chris Chandler, one? why don't you take

Chris Chandler

is Jerren, Sure. Chris. this

and million goal. was XXXX sales, $XXX for have to in we exceeded goal that Our achieve asset

to fit. portfolio strategic sell something feel forward assets. don't as any warranted. changes additional pressure going But We valuation evaluate based will on we our there, If to we'll and provide updates continue

Jerren Holder

anything deals pending no closed like And that? yet that or haven't

Chris Chandler

correct. That's

Jerren Holder

you. Okay. Thank

Operator

Richardson We'll with SunTrust. next Tristan go to

Tristan Richardson

guys. Afternoon,

sort table set to Just Wink II? intrabasin give the McCamey the debottlenecking. your side update for Cactus you and on on you Can an of project as

Jeremy L. Goebel

projects. one Yeah. of multiple That's

We in of out the in And of in does Wink will lot on Western Wink basin this year as well, have Delaware within then last capacity next Midland be of the because is or that's in more first and the coming that year. system. the the need sometime of That our we But month it Wink. month on frees historical capacity online up Basin. production capacity there's a what importantly,

just on, having and a of us capacity, to debottlenecked. give will the help leg of first lot the it basin that keep So part

additional of us So it time, from on Cactus that don't even creates have II. if tariff Cactus at the barrels rest we

Willie C. W. Chiang

Tristan, this is Willie.

the I of on. of never Wink something think was should thinking to else. mind – piece, Jeremy McCamey You it had

Tristan Richardson

you. Thank Okay.

Willie C. W. Chiang

over Wink and McCamey. to Journey go Midland down then from to

it just flow you the easier it so And by from – taking basically makes hypotenuse the of triangle, the perspective.

Tristan Richardson

feasibility to of see quickly, in talk side XXXX on you on generally guide? some then you as where long respect Thank the these just tariff guide XXXX helpful. about you. come the the and hauls volumes And it's your in with tariff presumed have It's could preliminary fee-based as preliminary you volumes online,

Alan P. Swanson

to intend go the provide We volume to with until don't a EBITDA February.

provide that So, look then. we'll forward, detail

Tristan Richardson

Okay. Thanks, Al.

Operator

We'll Research. with go Wolfe to Stanley next Keith

Keith Stanley

evening. Good Hi.

a more Just seen wanted you've to acceleration few a pretty quite the clarify on the past Transportation than in QX, implies what quarters. segment bit guidance, strong

really the and there or a $XX more drivers it's about just Sunrise big in that like in system, or and it up to it's for up uptick other Is you're the So losing nice debottlenecking color like any the quarter. Transportation? causing looks million, think so $XX BridgeTex, then QX million third versus

Willie C. W. Chiang

as of comments, saw increase. Willie. But We in is for slight barrels a Yeah. the piece expectation is there it. Clearly, an This Sunrise to prepared – in completions clearly volumes production a lull pushing is in back. stated we volumes

definitely a in We come of the of piece. quarter, lot fourth expect to that's that a so growth component the

Keith Stanley

a level to Okay. forward? And you. coming million collateral debt. like then to looks back in assuming is that I'm And about hedge sustainable going it reduction just model $XXX a short-term that's

Alan P. Swanson

to between long-term cash of a bit is of had the with What quarter. I the say flips closing at end the and would do little the BridgeTex short-term

we which first what lot as nine year Clearly, in – to fourth more have hedged level, a versus our the the eight numbers So is for seen i.e., the metric, short-term same come expected. was understated margin. borrowed normal quarter, we inventory under back pretty we we say would a had could relative I months hedging have probably to we have to the margin what mentioned. is of But done what and

and you below out probably from that cash the nine is you or would months tell now would expect due the you in BridgeTex six I from that. to what what So came months that look timing if

Keith Stanley

was was Or early right? cash QX? October That received though, in it

Alan P. Swanson

in QX. It was Yeah.

Keith Stanley

you. Thank Okay.

Operator

with Wang Baird. Patrick to next go We'll

Patrick C. Wang

Thanks Hi. taking for Good my question. afternoon.

look resuming toward funding? picture preferred a stay into equity source how you As in distribution XXXX, or as the growth doesn't does of

Alan P. Swanson

Well, we're with principally today, look when will requirements is equity clearly CapEx you cash retained be our funded flow. our – portion what that the would year, view be of at next

for or XXXX agencies or We preferred. that would the capital our preferred have capital but any growth see grows room the program. we if Clearly, we basket in type our our rating left we preferred fund common today's would be program acquisitions valuation use in on as securities, hybrid raise not to to far thought as the look of for would units,

Patrick C. Wang

the XXXX, helpful. crude it. bigger about do And takeaway, like Permian. on of takeaway flaring how before new activity relief and That's you side? levels oil a when then Got think think looks will between the so about now It a gas come constraints you gas-induced in the picture that risk

Jeremy L. Goebel

a That bit on risk, of feel Jeremy. is We all the gas ahead fractionation the monitoring we're NGL is also There's side. above. but little like risk is probably fractionation a This risk.

continue I debottlenecking view going at to rate as to Harry completions until are I a of they and to think, to presumption infrastructure. predicated rigs out, volumes a of going is a think sight faster than much pointed they're on that our see line producers not run –

like other that towards of as completions ways the oil a of There's solutions next NGL. of a feel being are flaring and there takeaway. half we others, with move there So oil, interim But line some into ramp the is there's just second with one. to year sight NGL and gas

the I of them, attention So next view completion we're our but reflects all we year. our think paying for cadence of see guidance

Patrick C. Wang

All right. that Great. Thanks for detail.

Operator

next with Global to go Sibal We'll Sunil Securities. Seaport

Sunil K. Sibal

I on credit for and the go to XX. wanted to just back guys, clarity. thanks you out all Yes. Hi. Good laid afternoon, slide metrics that the

So that looking when you the rating that rating or you're for extreme with a on metrics rating I leverage looking out consistent there, you're from that numbers look lay the – at that that's target BBB right, correct? mid-BBB agencies

Alan P. Swanson

our our Yeah. the sure things past. You targets? they rating They we get but and adjusted years. have over look at agencies over last But mean instantaneous, kind of clearly, intent we be make But is view, recent the are. are they few where to leverage will consistent. how That performance our time, the But changed to, won't our we be has bar again. over mid-BBB

Sunil K. Sibal

minimum then about EBITDA nailed how And out kind that you do calculation, that or within level of much Is pretty a think it's like of contribution? S&L kind number?

Alan P. Swanson

how metrics? In leverage we think of

Sunil K. Sibal

Yes.

Alan P. Swanson

the we of to S&L because sit EBITDA generate part without in it's the of Yeah. I can't dial really of debt -trying there would that comment the or and recognize assume can't so going that sense. the of lower thinking back to normal the a S&L is to going that look, profitability, advise, to level. make any we've leverage, it our got in taking to revert won't S&L of in that our some into to include metrics is and No. drop is But more we XXXX, think the calculation is, you that in what clearly out, mean, is we'll numerator eliminate That the the so reality side right? debt

that hope on in And going so and we're decrease not it, I the with going but eyes it's have headlights going regard open to to exclude sense. to we're our the fact XXXX. makes

Sunil K. Sibal

at your then, Permian question. look to over next, for cascading Thanks a we next about from and you in two rolling of of sense that. off does. When follow-up years, it you one could MVCs tariff Yeah, to million three us – close X MVCs a then to Permian? four previous say, give or your barrels kind think And volumes of – a this two impact years of over the the in

Alan P. Swanson

on any the large supporting clearly MVCs supported mean, not a haul got do more gathering – substantial roll-off dedications I over that. long Yeah. No. few contracts on years. is our Clearly have next you by probably acreage on MVCs. of side material We when the our amount

Sunil K. Sibal

Thanks it. Okay. guys. Got

Alan P. Swanson

Yeah.

Operator

Ross to next go We'll Payne with Wells Fargo.

Willie C. W. Chiang

Ross. Hi,

Operator

unable were you. Payne, hear to Mr.

or checking try might mute You button up handset. picking your your

Willie C. W. Chiang

He have left... must

Operator

to the Capital on move with next we'll response, no go Scotto RBC We'll to caller. Markets. Elvira to Due next

Elvira Scotto

me Hey, A clarification quick project. JV the questions afternoon. on for good Exxon couple of

are So interest partners? for you additional just what clarify, JV wanted would ownership be? or Plains to looking shippers third-party And ultimately additional

Jeremy L. Goebel

but the and companies, that ownership, and So you we downstream companies to and ultimately often then all take can shippers upstream haven't equity. both pipelines imagine cases – commit disclosed whichever pipelines, on

it's So, in many both. cases,

we're project sheet. a talk quality, long-term judicious preserves partners to in for be balance a we looking it that really partner to the has good and and we're who want So long-term in

– would they'll in sense, so parties to parties cases. but And practically owners we're of and that candidly think shortlist many talking the make be that we shippers equity

Willie C. W. Chiang

Willie. Elvira, this is

that about you comment You than should think less our should consider – XX%. before. as made We've position meaningfully

Elvira Scotto

Especially to then bigger around context a your the And question with provide of on barrels the Capline reversal. Cushing. Cushing and more of little view term? Permian maybe Thanks. bypassing especially Great. Gulf its longer moving Canadian you picture in Can color a Coast and the potentially just relevance pipelines more Cushing, crude

Harry N. Pefanis

to barrels have you're that Over materially going look X million day Permian I think at, a through see coming volumes in. I changing. that When see we fewer don't you Cushing, moves

You're in going the local Mid-Continent. more production to have

very you when Much of move viable down what in Capline more small be of the to it's through that look Rockies have the system. Cushing, down pretty move is to connection, to production production going at more so through potentially the to going into Cushing Capline Canadian a relation hub. coming and to reversed You're system is production. a going Cushing could continue And total

Elvira Scotto

you for Okay. that. Thank

Harry N. Pefanis

your answer question? That

Elvira Scotto

much. Yeah, yeah, that's very helpful. Thank you very

Roy I. Lamoreaux

Hey, it the we're at of hour. top the like looks

cut you I are go we and on and think we're this you, questions. everybody, with you going But your Those at can point. individually and of to to – time circle you that ahead I those the back and thank being today, appreciate the Brett address in going questions queue, and we're remaining for off call.

Operator

you conference. for participation. This We your thank does conclude today's

You may now disconnect.

Plains All American Pipeline (PAA) 6 Nov 182018 Q3 Earnings call transcript