PAA - Earnings call transcript Q4 2019 | Plains All American Pipeline, L.P.

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Operator

Good day everyone. Welcome to the PAA and PAGP Fourth Quarter and Full 2019 Earnings Call. Today's conference is being recorded.

At this time, I like to turn the conference over to Roy Lamoreaux, Vice President of Investor Relations. Please go ahead, sir.

Roy Lamoreaux

Kelly. you, Thank welcome full-year and All fourth American's Good earnings to conference and XXXX call. quarter afternoon, Plains Today's slide presentation and is posted in the of website Events Investor our at plainsallamerican.com. section Relations News

and important regarding includes contains consolidating information sheet PAGP. balance measures. X Slide condensed forward-looking statements The non-GAAP disclosures appendix for financial

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

and Goebel, are Chandler, senior Pefanis, Harry President President Operating Additionally, Executive Vice Chris of Commercial; and management the Commercial with Jeremy and along portion President, Executive Officer; our Vice call. other available Chief Officer of today's Q&A Chief members for team

With the turn that, will Willie. now call over I to

Willie Chiang

quarter provide of Good well and you consistent expectations initiatives. XXXX and program a thank our recap our we our XXXX afternoon, and asset quick XXXX of guidance today. and for we in portfolio our Roy. of furnished This the preliminary a guidance including the everyone provided for as sales, XXXX November. plans is that reported and our that results for I’ll XXXX financial future, exceeded us Thanks, review overview as capital that an fourth guidance operating with joining optimization performance, and afternoon we

focused XXXX. Our in Supply competitive environment or and billion X.XX our executing results market for positioning more adjusted performance favorable in EBITDA was the during conditions our S&L and Logistics year in with fee-based a significant in-line on XXXX in S&L were partnership XXXX capture segment market and segment.

This capacity. U.S. commenced utilization allowed by and Gulf of S&L strong or long-haul projects. at pipeline we us key lines Coast profitability the maintained meaningful year Throughout levels on highlighted reliability high to with running capture operation

competitive also in areas, and long-term legacy aligning positioning our projects number strengthen industry a ourselves partners. strategic with We while of that advanced sanctioned

positioning as improve advanced strengthen operational, we also financial continuing multiple our operating enter and to our addition commercial, initiatives to to XXXX. and In safety performance, we

represented certain exceeded generated on compared XXXX, XXXX X of We materially line through for goals market cases and exceeded the on further of X, growth year. and and Slide outlined highlighted we expected details Slide each results our fee the in we As which in based we achieved of capture also was guidance our S&L opportunities that to with segment. in X%, that

issuing and in As generated our expectations beginning the stronger of a well we unit helping portion without fund as our the results, coverage equity. result, and exceeded leverage meaningfully equity per the as substantial year reduction program capital distribution

our day goals improvement by rates goal injury a segment perspective, an our by environmental XXXX, in barrels for safety operating measured improvements reportable towards measured federally employee reportable zero both grew by operational volumes million over total excellence as a exceeding our performance our while objective transportation made From as or and we XX% steady XX% releases.

and a approximately are over safety ago than metrics safety time XX% better these environmental Notably, culture performance significantly years strengthened that and period. three demonstrating

S&L segment plus Our for comes our industry to as to additional time, and we earnings minus as billion EBITDA guidance have we shared level is XXXX adjusted service. revert some lower or a expect into X.XXX infrastructure

segment, approximately on million increase our our guidance million a asset XXX minus our XX a segments, partially facilities XX sales. based decrease EBITDA of shown with by for due a As expected increase plus billion adjusted our in offset year-over-year X, XXXX primarily X.X Slide or million segment, reflects in to fee transportation net

million. excluding investing be XXXX followed in approximately million. meaningful currently X.X to XXX XX investment for S&L a XXXX segment billion financing. Our respect about and capital in total capital We expansion for our With program, project reduction our combined, estimate we XXXX XXXX by billion, XXXX is guidance to expect X.X approximately to

could there venture between the capital that XXXX and hauls. timing and investment note be joint depending would XXXX of some shift project on I

and without our we equity of portion expansion XXXX the capital fund issuing intend equity. to Importantly, XXXX

capital Looking in and forward, be we our XXXX do further to not have any program XXXX. material commitments capital organic reduced expect we growth beyond

program, progress to projects, with our a continue to November our respect described key on we appendix. With our advance of the earnings provided capital is expectations consistent each call, which recap in generally in

cash up EBITDA Importantly, change a expect we benefit and projects capital the of step reduce ramping our as the we free investments in in XXXX. flow growth organic these improvement begins

consistent rate Red our mid-XXXX points by hurdle XXX of weighted JV, pipeline we the commitments cost basis project to to the long-term Oak supported basis with returns sanctioned to respect average up capital. in targeted XXX With our above expect generate volume and point

mid-XXXX We its in and continue to cash overall work similar return begin expect to to we projects Red enhance ramp other profile. the flow to Oak

returns, opportunistic X, and remains summarized As commitments optimization forming sales, as making joint as on strategic our long-term Slide key asset industry part of non-core bolt-on enhance strategy, portfolio partners a strategic to well secure of including acquisitions. and ventures

we’ve past the years, joint assets selling expanding Over in generated ventures. than X strategic more and billion forming non-core three

our investments. completed grade in million asset XXX We XXXX, while or sales with In quarter of XXXX. base business in portfolio, in fourth XX we continue high optimize the approximately asset to funding million strategic

$XXX we divestiture a advanced XXXX several materially and We other have asset opportunities million target. established also sales for

interest in in and signed our advanced Angeles expected negotiation. for stages target been assets terminal our is in XX% a of crude closing agreements second this other Saddlehorn, of of half recently sales definitive is in Los which transactions have XXXX closed and Included

sales We additional strategic XXXX opportunities also sale pursue asset to continue JVs potential asset and our beyond target.

dedication as our completed Energy, which with with transaction and Felix Crude strategy Connector our connects Wink $XXX existing recently million Alpha agreement X, gathering extension involved South systems. bolt-on of gathering line a modification and system into of in long-term an a oil Slide optimization in Felix’s a Also, shown that crude we and portfolio on acquisition

area and backed generating on a by mid-teens a return. in is producer quality the active system high well optimize on program The pull our with a We positioned through to are acreage. gathering system realizing system, this unlevered an and core benefits located

we Our the million flow operating XXXX. of in asset will the acquisition, roughly XXXX projected of sales XXX this expect impact be which cash from targeted our flow guidance offset includes cash benefit

me over the to let call that, With turn Al.

Al Swanson

Willie. Thanks

During quarter review our non-cash I and I’ll full-year my recap liquidity positioning. portion the related one current fourth additional item. leverage to related results, of address share comments capitalization our XXXX accounting call, and financial and will also metrics, our

of exceeded $XX was of was our an earnings of would has I our XXXX S&L been fourth benefit our into seasonal of adjusted in XXX NGL quarter includes performance of and business. continuation by million of or in and over strong the driven $XX Our million. this our a expectations performance acceleration EBITDA be to originally taken million and not expected million that XXXX in to minus guidance plus this $XX S&L generated shift timing account segment

the facility Fee-based to cost ahead and Cactus $XXX was million segment. and expectations adjusted slightly increased performance quarter for strong in activity our on EBITDA of of lower our due II pipeline

benefit movements systems, bridge broader on shown II consistent This being with tax Cactus expectations, lower Slide transportation river and Permian area on X in pipeline our partially service volume movements was basin quarter. from on to As segment our long-haul our and and full-quarter down of due on basin, systems. results the primarily by long-haul our a red offset were prior growth

DCF common income we XX%, noted, of adjusted diluted common our XXXX XX% basis, reported respectively. EBITDA per adjusted beginning $X.XX full-year $X.XX, a and of as unit On unit guidance $X.XX, which per of XX%, the Willie of year exceeded billion, net by

our included guidance unit several capital was DCF per maintenance totaled $XXX $XX and Our projects million. consisted XXXX and DCF of which million, of expected approximately than one-time in that investments approximately higher

maintenance $XXX is forecast Our XXXX capital million.

targeted improvement metrics and reported relative approximately year-end committed to prior XXXX, liquidity $X.X shown our billion. As X financial Slide in on to at of we significant years

our As program. business, we in our XXXX capital and expansion ratios metrics our compress we our fee-based earnings leverage as to and expect to growth despite complete increase financial to our S&L multi-year normalized guidance, look we

of debt. targeted proceeds, a to distributable structure, expect cash with capital flow, fund we financing through XXXX sales Consistent long-term and our asset combination excess

higher the shift acquisition, associated the is preliminary program as CapEx shared incremental XXXX. with $XX million with a in timing we XXXX Our capital capital November coupled than a of from result minor guidance Felix

capital our which currently investments time. with free reductions beyond, program, flow benefit cash growth indicated, completing our cash we capital capital should our in underway primarily our expansion during expect investment. benefit from investment, further multi-year flow improve combined over XXXX and metrics leverage our meaningful Willie As capital impact and positively Lower

will XXXX as do incorporate intend continue in-service provide production adjusted November. we and and competitive our XXXX until provide timing later guidance enter not to new monitor into Consistent in we we past capacity will and year, the trends, preliminary forecast projects, when service we activity, dynamics completion but drilling preliminary practice, in pipeline EBITDA that our to information of with guidance

that quarter for asset would the Before approximately call which a as $XXX turning mention LA expect and selected we adjusted in held I be results. back million, the our item will to over a of treated as recognize first a reclassify charge sale of terminals to our non-cash XXXX, Willie, in

back that, Willie. call With I will the over turn to

Willie Chiang

Thanks, Al.

commercial execution strategic years. and we complete of environment, to feel and the two substantially a more capital operating that a advanced which next our We position for us strong program, for marked multi-year progressed financial XXXX So, we initiatives Plains. year competitive expect we over

in those us XXXX We leverage and additional which achieving progress to provide our targeted will our financial if asset support beyond after target, for incremental sales return additional shareholders. also continue flexibility completed, leverage reduction to potential metrics

work and our results. publicly I'd in acknowledge of XXXX our the like all employees of to hard dedication

takeaways during summary focused our call organization. conference and goals gaining XX. remain XXXX efforts optimize on continuing achieving shown key look collective to our A May. Slide call forward providing efficiencies in Slide Our outlined in today's We our additional of across to an on on progress our on our update is XX portfolio from as

turn With over call that, the to Roy. I'll

Roy Lamoreaux

Willie. Thanks.

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

plan Magill questions. address available to be evening to Brett and and additional this Additionally, I tomorrow

ready for Ann, now we're call to Kelly open questions. the

Operator

Thank you. with today from JP We'll [Operator Tonet Morgan. first Instructions] Jeremy hear

Willie Chiang

Jeremy. Hi,

Jeremy Tonet

if or needed of economics with EBITDA little you to helpful. around off is a here color talking on I color Felix this those if you're provide the that there type see you that could when can was you Just auction any now? to a basis what be more not. have stated in just start stand-alone it process acquisition additional there, hitting would synergies And want does Hi. want or provide and

Jeremy Goebel

at asset the was came the quite some but it's been for an Sure. guys did Felix an back and It the We've through looked it like opportunity tied and time. around us, known integration – auctioned, that's It's provide to felt we us. synergy the originally system.

activity we're take having we're cash with component, to the high a near-term rig pull and meet with – that through at system substantial flow the returns. mid-level constant So, profile and now a PDP able

rest don't beyond We it anything extra that, upside. of need is the

with most we're ones you an excited passed and that level And the good when return today we came back opportunity the of profile stick a and model programs, we have see. fits we originally So, like deal thresholds on us the on the to meet we once that us the that's have, the hockey it it's about. system activity to saw that's a again, not it's

Jeremy Tonet

helpful. very That's

Willie Chiang

That our That was Jeremy. our, Jeremy, was Jeremy.

Jeremy Goebel

besides package, larger on [just time for first a part. The was included deferred] assets was first driver what passing the it the other primary around,

Jeremy Tonet

Thank had if you numbers to And just guidance. with provided this previously. to follow up I with thing regards could you. see That's the helpful. Good

about there color provide what put out prices kind with Has weakness the some you conversations oil Just of wondering you seeing first if guys kind get could now feeling expectations a and your it for here? color changed seeing. much or Just right as of a from guidance I producers any whole. the your any that with guess you provide to you when for basin wanted are can

Al Swanson

rather weeks, the tensions stay same today, to our us it to global recently the We with there obviously, in lot about. was two of of led but of down, is dialog producers November, and sentiment trip round producers but is that similar Sure. went with because up the everybody's production a kind growth a the sentiment November, forecast, we Permian than that there very today, was it most come that constant in then in was talked and the what and discussions back last

last I horizontal largely XX rigs think the added Permian. the in have month, additional been to

during expectation it than moderated our higher slightly but from So, is it's still year. to the forecast was, consistent

So, close to XXX,XXX There growth. substantial is day of barrels a opportunities.

seeing those block, activity to continue I concentration core of core think it producers. see dedications so in well-capitalized the will with with acreage what we're is a

throughout So, have-nots there'll haves be and this.

we some think day barrels up, more flat, Permian U.S., XXX,XXX some close the see I in have broadly the down, of will a but growth.

that see of pouring activity. we So,

thing, Now producer flat a to different prices along, a and budgeting barrel. between but fall $XX that could all be we $XX, expect $XX that

Jeremy Tonet

That's it very me. That's Thanks. helpful. from

Willie Chiang

Thanks Jeremy.

Operator

Gershuni next with UBS. from Shneur We'll hear

Shneur Gershuni

Good afternoon, everyone.

Just a follow-up on...

Willie Chiang

Shneur. Hi,

Shneur Gershuni

Hi.

my the If that to $XXX,XXX a questions. tracking better XQ you I bit I Just on just than that on pretty just clarification. for ask before that versus two to follow-up question, last you I heard experts low that? expectation XQ to $XXX,XXX to it correctly, remember just little Did exit. say industry correctly, clarify was of I that want had

Willie Chiang

basis, higher XXX horizontal then end So, simply you now. on rigs activity horizontal was said constant the is that had you I towards XXX a have it's right? tracking What rigs,

would materially had it but constant on end, it's expectations So, activity than toward different a just before, the higher simply be basis. not we

Shneur Gershuni

Okay. And That totally makes guidance two with just the to first questions clarification here, here. quick sense.

an sensitivity excluded guidance? the clarify asset through for million that to And also, risk During $XX able to call, reduce the Have changed you sales from talked been you that that can Has all? you environment. all budgeting activity? or at you're the last at contracting are included some whether about competitive

Al Swanson

AI. not Fee-based. Shneur, you this could No, see, the did is X.X billion we adjust as

so be half, it so materially million you the this a year, cash That's That's offsets roughly our roughly are will change in the included, in why the The XX in a view no for some And that see on early on number. flat year, estimate. so acquisition sales we flow see basis. XXX million asset change. the the offsets. The second not did Felix you of our sales

Shneur Gershuni

gas there volumes thinking question. we're high-storage your rate about business natural days? – Is the business? gas there that final opportunities there? we opportunity one seeing, continued are Facilities high are improvement storage potentially for for the given can and of And outperform, about follow-up PNG When that natural unfortunate a segment thinking Okay. the levels these sort see to the old Is of that more levels

Willie Chiang

the So, we're been rushing bit. we've activity highly activity gas time. facilities. natural A look particularly of increase the R&D seeing due storage you and our lot over at contracted. rates a been When is XXXX, own They've it to at up

that So, materially only levels component to PNG the activity probably storage of it, the ebb assets. fee upside going of sort flow, isn't sort change activity the be but in XXXX. of and would in The

Shneur Gershuni

Thank Really much. there. very appreciate you the Perfect. Alright. colors

Willie Chiang

Shneur. Thanks

Operator

Christine We'll Barclays. move next to at Cho

Christine Cho

partner to thinking in you Red strategic on you are about that do everyone. we cash for that commentary assets then When your not are we flow? are JVs, exactly another think non-core? currently consider or And sales, existing Hi, what with the asset for open generating And yet projects are service Oak?

Willie Chiang

Clearly, the far seen playbook is JVs. Willie. as Christine, strategic as this you've

about it asset around includes that. asset absolutely other projects it on And leave the sure think sales, at in of we think efficiently as we is I'll non-core partners some in potentially Canada. as in we just we've additional additional are making it of up can got some positions sales, ownership when our I some So, of

Christine Cho

guide, year-on-year, come XXXX volumes to the the over per but barrel EBITDA continues your Okay. then just moving And to obviously up down.

this also Or on So, lowering of a if a role? long-haul get lower-margin could more of color see did function a tariff just on, existing play short-haul volumes? to intra-basin pipes wanted gathering more we is just

Willie Chiang

take that? Al, why you don't

Al Swanson

different pipes tariffs. – of the are a business say mean, mix have things. kind pipes some I'll that of and certain a have of Most range lower combination volumes several just have $X.XX in it's that really growing and I that it's on $X to $X.XX would Christine, Yes. we tariffs I plus.

are growing intra-basin Permian business the so of generally big part right? it. tariff, mix Clearly, lower movements And is a

one also So, and pipes, Rockies created our interest. back part became consolidated of some around we year, then And prior BridgeTex had Early EBITDA this a where you it. investment had is and pipes. look when some sales that's noise. some it at what's involving we a joint year, the Also, that undivided higher a like and driving some Capline, there equity noise of

bit little all combination a them. three of it's of of So,

Christine Cho

Okay. Helpful. Thank you.

Operator

And Spiro from Credit we'll Suisse, from hear Dounis.

Spiro Dounis

points Hi, good peers on some around contracting afternoon market. rates, one everyone. Maybe up the provided some picking long-haul of data your contracting week last of Permian

those extending rates and to side about seeing of kind there's you're curious if per also that shippers appetite $X.XX or any range, of some blending Just approach in contracts. barrel and your on $X.XX

Willie Chiang

Let me take – Jeremy, you don’t Jeremy why that?

Jeremy Goebel

Jeremy. at of first profile. contract recently is What that time, is our looking If constantly extended look originates This if volume, available but periods but for a have depends sure, Hi. estimate, barrel projects it that sanctioned peer space, or I our the and on the We're it contracted the say to of is reasonable from. materially for there constantly would optimize. any and where – depends term to the I we'll on is speak market, can't that

when actively they going to program, for profile. do, at over and We'll the also barrels consider have the the we that, that to next and basin, years, position optimize the manage but to when our so ability move and have We're back further not we're roll-offs we'll meaningful several the look and origin contract would but destination extending you in blending to looking constantly will matter from look time. those

Spiro Dounis

broadly, CapEx levels? in over few even coming that strictly looking you those encouraging is next discipline spend free Got pressure way to few about that over re-contracting grow certainly not next or the are to goal Do need more at we And how grow that think minimum flow capital maybe you a it. maybe That's guys you helpful. And to it from years, then perspective, really to CapEx just to some years? order cash the see on think down and should of offset EBITDA?

Al Swanson

returns This invest significant or short XXX volume call. contracts and as target. think is subject had have we try capital – to competitive of mandate Al. last other our have a don't pressures, cost unlevered we We declines etc, minimum of do returns a absolute just but of the an the to investment Clearly, on have them of tenures that to don't I to some to target to offset commented we're growth, contracts amount we capital. kind a spots. don't to XXX have We

We just pipes the think where being now for long-haul and right of the will bar we're there the one XXXX. that us of will a in in to larger a that We put meaningfully below of the infrastructure chart down. and step kind requirement that set is migrate expecting opportunity situation less some create to build deployed CapEx our the on the [XXX] result kind show

opportunities always effort we add – and our between conscious of our end more Spiro, debottleneck etc. And increase projects target We production the to versus discipline our capital cost to add think this return I we've will – a have assets is of range – difference and at to also capital. of of the would higher cost give extend around Willie. to continue the higher

So, we've that pretty been pushing hard.

Spiro Dounis

Understood. you, gentlemen. Thank

Operator

hear from Stanley Keith Wolfe We'll now with Research.

Keith Stanley

dividend. to on wanted the ask I Hi.

last ago, or to beyond that for X% plus had targeting year plan still be and step the I to talked forward you year. determined? have year a after potentially been or minus this Is up the might looking more, think maybe growth

Willie Chiang

It's add? – if with we you ourselves, time, our about changed jumping here April-May. what April try guidance we any talked of discuss consistent have be Keith, to haven't to we we last on do anything what and might Al, Yes, do in policy. distribution forward ahead

Al Swanson

guidance Yes, the minus – our or clearly, a be that decision hasn't changed will X%, plus for more public but months. from have we few

Keith Stanley

returns. acquisition, leverage need achieved separate, for this, you for if by to then say hockey then did related, would Felix, an target? Okay. somewhat sales I you Can missed Apologies expect it's is profile get to and get be XXXX? likely when capital not somewhat And it there planning or to the And expected to a that it next stick you're your asset is now the you system? more with the year, said

Jeremy Goebel

that. the will a part to year. This I'll growth, the The There about turn that's ratable lot on the that now inventory on and asset component over public Al. of program of system substantial is, to the that lot Jeremy. The through and had of upstream take has and PDP built it there's first of Felix wells five-rig component. a uncompleted come is

will then, and And next couple the occur by growth assume So, of the is a of this there years, April basically flat. of lot only ramp then modest year. over

looks acquisition and April the very what consistent under on through based lot year. ramp occurs of upstream, So, that the this like, just that was a we're that with

dedicated addition, of more contracting the pipe purchaser, barrels first the years. into for now In to our claims was are over XX

basically pretty the like that. and cash system stay of sure a first us for profile. things it's stays now downstream Plains, things our didn't further gives the into those economics And we the and extended those like So, by term system, put we've on shot connectivity all it our in barrels ratable and contract acquisition of tariffs that ensuring with flow making

Al Swanson

leverage, on the end the April be did of kind we do of inside of our With financial will we last expect it we regards part – year. announced XXXX we second be policy expect when we not range the in would by nor to target of

leverage speak. our excess a targeted made S&L, lowered be by we without range recall, you it and half turn to to As so

granted of we're period a much S&L entering lower Now results.

call we XX the XX announced ago, – to or – months didn't months to now. we it don't when expect we expect So,

not we, I and this or slightly us can like that, increase that, to under nor year this take just say, into back then will We it we several that year, base accelerate year, outside Clearly, for to things there's down but it expect of expect did our work ago. to actually transactions achieve do leverage. years it a see plan, leverage that

Jeremy Goebel

for modest some because I the into capital part for of after is the further question system, going that, There our regards address has upfront asset to PAA was the Jeremy long-term standards one is your production capital. integrate the minimal to profile. backbone meet capital system capital again. needed to the forward. capacities and related the There it's This maintenance to didn't but requirements

Al Swanson

And is Keith, billion the for increase incorporated in the we $X.X that target XXXX.

And versus a so, that's little had raised that bit before. what what we up

Keith Stanley

Got it. Great, thank much. very you. you Thank

Operator

Tristan Richardson SunTrust has with question. our next

Tristan Richardson

I Good on guys. the gathering transaction and the all background contracting. Hi, the afternoon. appreciate

You talked about this to environment, there was a this footprint is using your this capabilities on share. effort a gathering grow and opportunistic, or more in it seems basin It in you but the concerted S&L of and was reactive? to to came to compete utilized like for long the keep was haul one

Jeremy Goebel

is, standpoint standpoint, have we a the that with go location a was a Jeremy. one standpoint, a is food and necessarily of that from buy alignment producer don't contractual additional to opportunistic gathering This quality from more systems. us an This standpoint. from and function from extremely out This well an fit

So, this is higher long-term most of that I of will we Delaware as the feel part there so deepest, like some attributes be think developed. Basin, pressure the probably the asset asset sits in

lot this liquidity have other fits of places low-cost be we largely and ours. need that that those done we're point sure a and and make at connectivity can we someone enhancing in else's capital, footprint everything at midland Our not of to

this anything. anyway, was really optimize, to more one than we're opportunistic So, going

Willie Chiang

Tristan, And volumes. actually had we

this an know think provide the opportunity to fee-based had we extend and our this just I the was more existing but contract a already, business. probably secure long-term of contract part you

Tristan Richardson

as previously, And impact earlier you of guys years, or or the quick about about of multi-year million in is there then, there or guess the sort up. that on helpful. impact think – we just That's question a a a I that follow otherwise? figure XXXX to Is the about of that. $XX talked notion further appreciate that higher commentary aspect a I lower

Al Swanson

We November. guidance preliminary is This plan in to provide or guidance Al. XXXX

year. as mentioned remarks, and things I later of had now there number that and monitor, in provide So, is prepared this a the clearly, we'll then update between

Willie Chiang

This is Willie again.

where are If ever now, in we well as trying regulatory, happen, elections as global you there's forecast to we not about far more in what only than demand. as might probably but variables as control, think what right

there'll as think be resolution we some passed more I let lot by. So, a months

Jeremy Goebel

and in to of Willie not is just XXXX aspect both systems. reiterate, the Jeremy, contract up is Al roll-off there this vast until majority meaningful our brought I one But that earlier,

lot the get, smaller nature. are of a year, So, we next headwinds some in they but

we high have contracted that capacity, of period a capacity but spot do so shrunk. XXXX. impacted, have in Obviously, So, be will some of margins

to a of roll we there material not like a have So, had roll expect it's be every that off, year our but contract on off, will we but contracts as assets. protection lot

Tristan Richardson

guys. Very you Thank helpful.

Operator

from Lapides Goldman next hear We'll Michael with Sachs.

Michael Lapides

Hi, guys.

positioning? take-away don't about capacity. it's actually assets, going surplus Just or volume-wise pipelines relative you have think be your general across you're your How curious, positioned strength thinking like of versus where positioned to looks do to be a may industries quite kind about the kind in are of pipeline market that Permian your competitive participants competitive your and kind what the of

Willie Chiang

our and can in. about a of spent start others I'll We lot time Permian position. Well, jump talking

Permian, if other related also So, really to tone it your but over in, question built regions decades. assets for was sets the our the we've that operate the we

We've And gathering. business, of mix. our it's haul. got lot flexibility We've a an got tanks. got integrated intra-basin so, storage with we long think asset about We've

multiple access So, think our flow assurance, if it's to card, segregation, quality calling about markets. we

regions us very in see the about on that's that really and for points. projects the similar think you do get projects to model we in, why strategic business think enhance multiple further position. other access all and differentiator us And the us building we a it's aggregation, the to trying operate connectivity that if Permian So, we've help and you got that

Michael Lapides

talk is Wink about percentage for contracted terms contract Red you to both status Can what Oak the and of also Got it. in Webster?

Jeremy Goebel

targeting We the Webster optimize of the going Jeremy. we strategic that are, partnerships or to both higher that's projects contracted of five we is look to it. unutilized, and end status This don't in disclose anything partners are can whatever. to what to we're rate obviously return Wink expect those publicly through hit but thresholds, say our has

who brought So, you of in going a through in Red bringing and in return parties to we long bringing for partners. additional we're thresholds, barrels, can a continue our and brought time. lot to met that barrels, to look to Oak optimize understand additional we be expect full

So, we're what upon by improve threshold. any our finished base to already not stretch hits

Michael Lapides

guys. Got it. Thanks, Much appreciated.

Operator

Pearce with We'll Simmons Energy. next Hammond to move

Pearce Hammond

taking some about [this Jeremy, for were questions. year you the my are Permian, oil afternoon, from a XXX,XXX thanks meaning year earlier or of calendar XXXX] when Good over XXXX? barrels clarification talking from and you calendar growth My just this questions. a were over XXXX you first is talking XXXX day

Jeremy Goebel

exit It Pearce. exit, to was

Pearce Hammond

Thank And as of between disconnect is? for of, The divestitures? how my private million do as see out market seeing, question. it do Are a you. far you how valuations $XXX divestitures, then, trade versus the Okay. public think And you where follow-up there companies you kind strong multiples?

Jeremy Goebel

is right. Jeremy, Pearce, So, asset this dependent, it's

counterparties Willie and going of necessarily. beat seen identifying end to up And might of you to up we flowing missed that a strategic the of end billion footprint lot our good assets And that might have assets and by trades, parties, in their we're end We're haven't sold and we $X are sales. you've different outright that you in have the a do that. these optimize this. to value ones a cash look lot natural think that we at I assets and

who a do. business That's to are assets need. that to sell marketing opportunistic We've look going all facilities be And what not don't core. counterparties and in – pipeline, basically one look pipeline and we have to to necessarily and we're fit

So, accomplishments. part is want don't this We I think selecting. activity of without

counterparties. to selling natural we're So, that toward have deals work going

Pearce Hammond

Jeremy. Thank you,

Jeremy Goebel

Yes.

Operator

has And Becca Followill with question. U.S. Capital Advisors next our

Becca Followill

questions you. Thank been answered. My have and asked

Operator

move Ann We'll with you. Thank next to Jean Salisbury Bernstein.

Jean Ann Salisbury

Hi.

to that at follow-up again happy blend extend. your pressure out take of right lot a pay and now? Just existing don't right Spiro's answer of level of earlier pay your shippers willing with Permian, a the basically the Is feel spot the question on firm what you're and about up that you're capacity saying to or Jeremy are interpretation

Jeremy Goebel

to always what this term Jean Jeremy. portfolio. for can Yes, and Ann, that's If this is, our happy – shippers. we a have, point, we to do we'll we're right something, our with extend continue but at win-win optimize look

done Cactus I work and have well what us. their Cactus and opportunities, our like shippers I, to think with II with they really

and and we'll And do going to don't need anything differently look to to we're any for pressure than continue but works so, doing do a more it, feel compelled we're us, is today. if we their end there it and on

Willie Chiang

increase to very, Jean his versus of that and have. Ann, the have trying in Jeremy active And spot amount team we term been very

the things like blend additional acreage dedications, of So, extend. and some

So, we've Permian. able made term a the of lot of progress increase we move in in amount to barrels that being the

Jean Ann Salisbury

ones, then can may, that the on you very open any And quick share Definitely, two great. update Western Corridor just there if I was season?

Willie Chiang

Jeremy?

Jeremy Goebel

the We next call. update, haven't We're all here update. provided formal and provide We'll up our on an wrap talk to and looking probably with a partners that so. do shortly will

Jean Ann Salisbury

on I saw clarify the if would S&L? their on quickly don't oil your just to Okay, long-haul, in be the perfect. on Felix I them part your the from then uplift out lease? want acquisition, flows think a contract that taking I captured in And long-haul just

Willie Chiang

transportation pipeline that more If in is benefit to would that We this be look additional as outside of there a at S&L, deal. this.

make work. need don't from acquisition benefit we think this I any S&L to

Jean Ann Salisbury

Thank you. Okay.

Willie Chiang

Jean Thank you, Ann.

Operator

hear America, Ujjwal from of we'll next Bank Pradhan. From

Ujjwal Pradhan

first everyone. question is evening, on buybacks. Good My

us meeting buyback considering a And update You hurdle on value your presented the last today, implement unit had quickly, before you thoughts previously units stated where target prices if could the buyback? call. you on buyback the a leverage is a the are? in compelling given Can

Al Swanson

kind committed This will have I'll With that our program capital allocation, we a shareholders. asset a approach we long how our of thinking Al. create value of capital clearly, we respect we've to, to the to think take is run over shot. meaningful strategic building that

do focus. that, that's is priority we – second So, that's And got leverage one. to our

is prioritization And versus the two first our so, of those share where price play share the today implementing doesn't buyback really objectives. have our with

We were the could reality dialogue to fund position, do as increase do of program wanted so, way was pretty if to our but we a in year, do our would we've want to implement didn't earlier mentioned leverage and with a did we that this of Board. – that like, is, comment is on we're so it that as feel capital. in expecting quickly leverage had one move Again, I friendly. we a We the questions, to see we

And so, implement to therefore, that our sure leverage try make will be program. repurchase a priority we to line is in a before

Ujjwal Pradhan

per And prices? in barrel able the sensitivity EBITDA for share second fee-based you. Thank to you XXXX, WTI changes to in your are question,

Al Swanson

what? Barrel prices on sorry. I'm

Ujjwal Pradhan

prices? oil WTI

Al Swanson

it – an I Al. exposure. commodity meaningful is It's at indirect commodity We exposure. of more somebody price a can don't have and direct price take shot this

rigs a that big for truck earlier would So, through you do we of less and potentially of we're I delay volumes think, drop thing, consumer off, a our prices but have some after type oil – obviously, flowing fleet. We and one systems. heard fell dramatically diesel if see our PLA of us

exposure, a we more what leave but significant would So, indirect with not exposure. you direct an is of

oil say if company to see from what meaningful flow would all. our $XX, in you fell $XX at So, saying] a we cash prices is change [us that, won't

Willie Chiang

It's on more or or continue to binary a not. decision drill of not whether producers

Ujjwal Pradhan

Thank it. you. Got

Operator

Moreen Gabe And Mizuho our next has Securities question. with

Gabe Moreen

complementary your to questions wanted view you CapEx over plus speak on Hi, to a out year of out, that's or at growth level gathering projects? in follow-up million, sort everyone. just XXXX, look CapEx. The of of $XXX much be can of CapEx? you kind wondering, might just you in And the in just that good if that to that in minus that maybe as year how sort maybe baseline what need spend guess, I on Permian of afternoon, I'm intra-basin I initial

Willie Chiang

to you this? Chris, want take

Chris Chandler

this certainly and like Chandler. Sure. in to large Oak investing is in Wink Yes. Gabe, XXXX, We're things Chris some XXXX Diamond/Capline. projects Webster, and Red

about capital projects. long-haul over projects well those will construction more And and and pipes, toward large, If see those hook-ups think less, in really roll do you start-up. off, be XX evolving investment time the our when type next we months, and gathering

to strategy or connected business. capital forecasted into wells new that that really they not We've Are already the that? It level a existing and producers utilize gathering take. base on shared tighter our Do are infrastructure depends around new new into illustration lower meaningfully in as But require shared slide have a XXXX, package that. and that certainly our and think others connections? today, expect rough areas XXXX drilling we of capital I gives they in

Gabe Moreen

that Thanks, I terminal California. Chris. And kind of appreciate follow-up. then there in sale is my

that time you've California of confidence this you think Can in regulatory your around? level terminal into sale attempted I sale before, issues. talk a ran it some and about closing in

Jeremy Goebel

HSR, for don't same question. Jeremy. had Thanks We the in we and HSR concerns. the to we had regulatory This see Hi. respect the is PPUC We prior last receive concerns approvals don't issues we but have with time divestiture. still

Gabe Moreen

Thanks, Jeremy.

Operator

with next our Juvane BMO question. Danilo And has

Danilo Juvane

afternoon. good ones quick and Thanks, for me. Couple of

the this year, curious to preliminary unchanged guidance earnings effectively from outlook. as your S&L On accelerated why remains

Willie Chiang

Harry, you want take to that?

Harry Pefanis

No.

quarter, Just been when more the our anticipated quarter had we months into successful look first more in the strategies first few have we than and a ago.

accelerated So, earning earnings in created well, year. some we this and capacity additional of the

Danilo Juvane

you guide this that the from and potential comment there Got any see? year? ruling so a may it. is, on risks And you year liquid Any on impacts tax the for FERC allowance can my follow-up forth on

Willie Chiang

indexing anticipated... question think was just any and your FERC on I

Harry Pefanis

to the decide think, mid-XXXX. to I into they mean, on go won't – decides till effect change FERC whatever anything do, if it, I

XXXX it FERC what implementation and us impact will to they said method, the with industry clearly really impact sure index with guidance. So, no but have XXXX. to would try no changing comments is do be logical to that make no plan update on There before, them we've it's on of with from there what would a work

Danilo Juvane

questions. you. my are Those Great. Thank

Willie Chiang

call. more I we'll out one think or one – close then participant, the question Kelly, then Hi, we'll and take more

Operator

Barclays. Okay. will That be with from Harry Mateer

Harry Mateer

part that could Is you the case? market guys focus indicated you more given one think afternoon preferred good to toolkit it's debt just the guys. likely market? Al, year. previously for sales on the asset of your still funding do, be you the straight planning you'll are the that Hi, Or do

Al Swanson

that, do look Yes, not because it's a we a of we get good a about. and – streamlining had basket market that tool works we business it's think said at pretty feel We manage think sales do tool. well. in attractive. to we we tool think pretty But to do structure, meantime, our thinking cap like asset tool the that that primary as we left. we're kind clearly, being We some and the It we is got we've need the if a was ultimately where as

not toolkit. monitor, it's we'll list the step our first but – something on it's So, tool

Willie Chiang

trying in, think do brings we Willie. partner trying adds we're another of is to that we're you this which adds lot asset When about Harry, right, volume, a is a to with the Hi. do what footprint synergies. have, do what transaction,

And lose about so we think many do that that. preferred, opportunity to you a in cases

financials. trying with Hope always than we're we do So, strategics more usually that to on helps? are

Harry Mateer

Got it. Yes. you. Thank

Willie Chiang

look to you thank our on for taking May. we joining and call appreciate and very much in updating the We time Okay. you us forward today, you

Al Swanson

Thank you.

Operator

conclude conference And today’s again. you that for us. will joining Thank

Plains All American Pipeline (PAA) 4 Feb 202019 Q4 Earnings call transcript