PAA - Earnings call transcript Q2 2020 | Plains All American Pipeline, L.P.

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Operator

Good day, and welcome to the PAA and PAGP Second Quarter 2020 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Roy Lamoreaux. Please go ahead, sir.

Roy Lamoreaux

Thank you, Dan, good afternoon, and welcome to Plains All American second quarter earnings conference call. following posted our Investor an website will be is Event News audio presentation also of today. section at available slide on Relations the and replay Today's call our plainsallamerican.com, where this investor section include the today's we package which other and IR kit to our of post Later earnings evening, reference to transcript website, our will plan materials. and presentation. provided on of today's Important are disclosures Slide measures regarding non-GAAP financial forward-looking statements X appendix. materials consolidating balance PAGP for located Condensed the and other are in reference sheet call by Swanson, Chief Vice Officer. Today's hosted Executive Officer; President Financial and be Chiang, Chairman will Willie Chief and Executive Al and

Additionally, Willie. Chief turn Operating Harry Q&A and Officer; call Accounting With other members Officer; Officer; Senior senior Commercial; Commercial Chief Executive Executive call. that, Goebel, I'll Herbold, Chris President, along team the Vice with Chandler, Pefanis, for President our are available Jeremy and session to of and and Vice management today's President President of the Chris Chief Vice over

Willie Chiang

to field, you a new Thanks your of in working protocols adapted like seems Good to that organization for what our for families environment can. and the are additional and for and that PAA, hope I afternoon in us. normal all you Roy. social has us. distancing safe joining everyone, At remotely COVID thank those

and reflect relative the second our results XXX Logistics key our for we X. both rate, continue and our in summary year-to-date injury years discuss safety wanted metrics. five in an where take I moments call and our I and quarter safely, our increasing to million. slightly during measured context his better and projects are through This I'm having to we on EBITDA total than reliably, program. full we to that to are call segments, reflected recordable are our best Slide performance of reported costs, operate ago and team, metrics guidance. provide fee-based and our A year on were May. We adjusted very we achieving flow favorable free proud Supply detail in progress as of Al reducing optimizing highlight revised environmental performance half These section. is further cash results of capital safety our key as levels as guidance discuss of we afternoon executing and to updated furnished few profitability and today's will want of overview a to greater in also our

are That illustrated We industry. continue to term, to fundamentals constructive. environment unprecedented in energy as on being Slide dynamic said, the believe near be our X that for term long continues a and this

in the oil previously storage risk gradually that bring market back response ability to began destruction in online earnings in quarter amount to structured levels improved maximums, shutting limiting in producers anticipated, and prices the As producers responded refinery in supported American contango while to production significant induced aggressively to first levels previously The crude shut-in weeks tempered by North production, and following May, of June. of steep utilization storage of call testing builds demand increase. the COVID our mitigating

However, currently and of decline XX% count XXXX the horizontal U.S. approximately peak continue XX Lower sits rig levels. to

recovery and to pace expect COVID better of factors be the in completions slowly expectations expectation highlight to the to comes the of would geopolitical production term continue market that potential the uncertainty, our recover trough through is Permian the online end We we shut-in production earlier due continue I near X.X back resurgence approximately a this million slightly multiple barrels current will than that influenced demand May continue. to year as to dynamic year Our year. some end, from by in forecast day, developments. the and including

the remains ultimately estimates growth in production the sustainable term demand X. the of longer various of near-term by Slide of U.S. needs a the a uncertainty, energy recovery we recovery critical, a energy, our the outlook Basin Permian the constructive remain function - constructive is supports and in illustrated pace Despite third-party our believe demand. view positioning as of our and timing world to business. reflected positive demand return long-term global Our and for We

increased contributing increase. or this Al As further EBITDA detail, minus to all plus or $X.X discuss guidance segments by adjusted in billion will X% to we afternoon, the our million XX with XXXX three

position. enhancing squarely operating the of are free our free increasing after financial on generating focused expectation our and cash with We flow flow dividend and meaningful cash

You which disclosure comment on. quarter's will also flow new free note in update, this cash a Al will

addition increasing as program CapEx second reduced is capital further note million. our $XXX XXXX our down XXXX that EBITDA, adjusted for by and year, we meaningfully guidance our to investment the service. would In the in we half additional key coming and I projects in of put an have complete

invested we In we of expansion as in capital our complete investments to Diamond/Capline half year. investment, the XXX Wink in and XXXX, expect approximately first the As million we approximately invest Webster estimate we million and approximately XXX XXX half capital XXXX, reflected expansion Slide the of projects. million in X, currently in the to on second of

focus Hills are the of Project quarter. the that appendix, Marten in on levels across returns in updates into XX We our projects I production service We investment outlined capital terminal to the following. improve smaller expansion XX during Slide plus, connect we Canada placed expect on further and and system. our lower as highlight

and to continues become James are And expected systems on are full the agreements The to The progress. the for be Our service, entered expansions Red remain River, throughput The JVs half to late both by in effective. JV be JV service partial projects XXXX, the on Saddlehorn expected early second in projects track of with quarter expected service potential to now service to the is Wink budget Diamond second in with end. St. Webster XXXX. which Capline in XXXX. and year of

includes and With year respect Slide business. advance XXX continue on year-to-date, summarized to optimize asset to portfolio we million optimization, our for expected approximately a portfolio contracted in asset our closed close or end. to before which X, As we have streamline million sales to XXX initiatives

We benefit in extend is updated of to our and or XXXX. additional this which our of our some the May, business. continue challenging achieve of to million across million progress track current to environment million efficiencies to we into result more likely we to streamline will advance a higher XX to-date, for XXXX. With our end could be more in the our of Based to In achieve of the to continue and divestiture are XXX drive cost aspects all guidance. XXX in of business, opportunities, savings respect on we estimated process reflected range, which on optimizing

of portion endure we to to years, We reduce our also savings continue in our cost structure. expect as significant future a

With Additionally, XXX to the our XXXX remains call I'll unchanged Al. guidance million. over that, for turn at maintenance capital

Al Swanson

Willie. Thanks

During my and portion the second metrics. recap review quarter XXXX of current our our capitalization call, results, liquidity discuss and leverage I'll our guidance

and Slide shipper due basis producer X, second Transportation differentials declines. segment EBITDA the fee-based and timing in but shown of line deficiency impact quarter, shut-in, generally our the adjusted generated we results expectations, sequential tight of year-over-year of with in to regional As reflect on quarterly were the payments $XXX million.

collect deficiency to second quarter second expect the shipper the half payments XXXX. in We of

terminals. deficiency than primarily to multiyear the result throughput sequentially, second a expected sales basis, a results Logistics the margin a Mid-Continent of in the exceeded of shut-in despite was offset expectations shortages, operational line the costing, Supply first third with and XXXX our quarter inventory NGL $X higher opportunities Second timing impact payment as savings of quarters. and segment quarter dip exceeded of favorable as due asset the cost our quarter, at certain well as in comparative asset On segment typical and results impact down and received expectations, of more NGL as margins driven and second sales. seasonal in that million the and occurs impact of volume of the contango-based Facilities

I discussion is a on X. which Now, XXXX shift will guidance, Slide of reflected our to

plus mentioned, our in guidance increase reflects guidance is X% three revised XXXX and provided adjusted $XX Willie May or above in EBITDA minus $X.X our As million billion, segments. of all or an

from down our quarter reflecting the by For deficiencies. in our With margins of operating segment, are contributing also to our reducing half, the anticipated on MVC throughput contango a have on anticipated MVC improved the well captured expected I'll quarters X%, for system crude segment, quarter that focus to second of the deficiency the average costs. volumes, second higher our of oil the half as expected tariff continued as rate the timing our second billing second payments respect shipper impact of we have and year reflecting views the deficiencies revised and updated as Unit to cycles and rates benefit to guidance higher well earnings plus our stronger increase Transportation average average the reflects shift the note to-date, actual performance related than between current to S&L guidance daily NGL margins. tariff as XXXX. a incorporates opportunities relative volumes

liquidity, a our key of metrics to XX. provided Slide on summary Moving capitalization and is

almost Supply Our from Logistics of reported trailing $XXX results of million. ratio EBITDA benefited XX-month long-term debt and X.X to times adjusted

debt XX-year X.X%, reducing our our we X.X thus the end option As the maturity June, to XXXX the ratio initial the normalized leverage at adjusted reflecting on slide, focus call In above par noted completed which times offering the be on via a million fourth slightly EBITDA of would if be $XXX quarter. guidance the our used our level, leverage million S&L repay leverage. February XXXX using $XXX will underpinning high target during

our $X.X have at our committed end In other total We no was liquidity quarter near-term maturities. - billion. current

we future. access markets do not to capital for the As a the foreseeable expect result,

call, reduce distributions flow will in objective to the improving be earlier used be free Willie debt it the will a cash to As key extent and term. exceeds near the stated in reduced our is -

with with $XXX through that, changes a over beyond. on balance positive investment cash the our in working free the the Willie. was of flow for to year a to hedged inventory XX, flow call Slide the after first shown back free generation XXXX cash of benefit $XXX storage, capital our With we months six flow turn and million. distributions and the short-term combined associated Absent is and capital cash free negative expect million, cash into year lower As I'll

Willie Chiang

Al. Thanks

to population challenging execution remains revised and lead want ultimately what quest our needs, demand remain one and remain dynamic recovery. constructive May, largest North of call, global and North term energy intensely to focused expect reinforce, that Permian years discussed the I on to we and we As long as very be expectations living in are better We in energy producing with a the the the track we Ultimately most environment. we as articulated American during throughout on the for come. that will regions, the the in and will demand growth conditions American world drive energy on economic

key crude believe we're Given well the integrated more and and in position, of we Permian over nature facility by underpinned dedicated large infrastructure critical in significant North million our basins dedications, commitments American which volume our time. X.X acreage is than very positioned system

we're future. cash reaching to our to to our the flow well company streamline These us free a us improve further leverage targets. positions Additionally, cash for right unitholders our and business the after leverage taking return generation, steps reduce our actions lower make stronger costs, and

operate look our open responsible our to the for on as turn safe, sharing the outlined XX. additional call remain do thank their work, our to is long and quarter updates forward today's our workforce for their With focused Slide a term. want hard from takeaways continues back reliable summary all of questions, operations and November. over I Roy. on world. of third I'll and members PAA call I managing our commitment we'll team and laser to up socially business dedication, distant We earnings Before for the in to in call call that, on acknowledge A

Roy Lamoreaux

Willie. Thanks

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

now our the be of balance the we're Additionally, the to to IR Dan, and plan available this open week call team to for evening address in questions. ready additional questions.

Operator

proceed yourself We'll question. with in Instructions] queue. our please Caller question your identify and take [Operator first

Shneur Gershuni

to is This an - fairly is all start Shneur this just earnings kind Hopefully had gave a year. last I when on you a - ominous well. guidance bigger rate guess so of and up-to-date. picture. you were forth, last the Permian here, and rig like UBS. call, off for bit When exit would to Maybe know as view the Gershuni, counts you bottoming little bit little points off, Interesting I start a for

crude that talk last looking like little us wondering your of the you - call this crews the goalpost was of you're you be differentials, increase up can at. it moved that come you indicator, are in call a wondering completion just if we I reversals, of to sort counts, today? like You've something in wondering what the are input watching with can to with are looking or from perspective? signpost waiting Just breakeven at the was bit of sort the view? E&P you're share leading efficiencies kind an things what sustainable as shutting for are saw rig Could if you I with a key

Willie Chiang

some his this. the we are Permian pretty about at. close his expectations then much, Jeremy? start, me is slope when of pretty right other curve that Jeremy it's you thought well everything insights now cover, is happened that and you let curve, The looking difference where as observations as of can Shneur, guidance on on we give else. the the Goebel I the and on quickly speaking, will think the Generally think we're which specifically, potential things Jeremy recovery to how and it

Jeremy Goebel

Shneur Jeremy hi, Goebel. it's

a basically came happened out frac of but and we the shut-ins very So quickly. holiday, curtailments

May, of rebalancing second So June. we're the end of towards half

storage, just lack about those you there's but get declines, either steeper, of you produced or were barrels think barrels into curtailment components, because those quicker. natural And it, completions. didn't about went lost So those of was barrels it if recovered think because three it of

producers the production. getting system, across So we now see starting into stabilize to

declines. than rate volumes or There I'd going exit movements barrels quicker recoveries, our but you're a think to we came say XXX,XXX back curtailments now, thought, day. plus some experience in I minus So was between.

people slowly, of DUC. inventory So back you're to getting are I going to work think significant a but have

the completions. complex we're watch going But we and the of rigs. all maintenance to So producers until is and production see I everyone prices. stabilize upstream general, towards end see capital to manage in think We're year to production by going maintain higher you looking the articulated

going So, in as to think we volume I articulated what everyone's as to we that saw is May and their and stabilizing, volatility be, system, our opposed plans June. across see the

Harry Pefanis

Yes.

thing... other the So

Willie Chiang

Harry. ahead, Go

Harry Pefanis

It or oil Yes, assumptions of this plus really all on this stabilized is are based stay It's want the bit based other seems thing of type is, the crude kind minus pricing. range, here. a to price. in $XX those in but on all

Willie Chiang

filling what's would difference, Yes, I shutting the think of which of more nature would producer avoid the thought we were this created - because able a may have we which across knee-jerk happen is a severe system, proactive big in up reaction have storage, to been than the what of happened.

did what are So has the where problem. the proactive think a they helped of prices the producers oil nature price and avoid of oil crude the containment helped kind or the - helped - proactive and I the that crude

Shneur Gershuni

scaled just bit XXXX a things less you of previously costing have than there trying question to terms what of again for ways Maybe putting $XXX or reduction. you've less beyond and are - little is of are terms back wanted in changing you're thought? kind focus CapEx and and causing in just do same on the in if - the well? less just things nothing follow-up you're in Is an as is terms XXXX output million So as this or and and what place $XXX for of you just impact I'm to assets things and finding specifically some understand that really projects to just a million

Willie Chiang

got Clearly, Shneur, Well we're we've and how over flow. on, we've CapEx we spend, said is any start on I'll again, and precious intense an And spending CapEx. over got avoid our cash focus on and again. focused laser we improving spend

It’s that must term internal CapEx, and an regrets use. no have We we right. do

really I'll above. ask Chandler of answer to little it's to a all question, the comment. bit So But your Chris

Chris Chandler

optimize Yes, improve for efficiency projects. Chris and We're thanks is on Chandler. to execution, Willie. ways looking scope always This our

optimizing or finally, the have We've And upstream some the in destination to scope projects course, deferred might including several material labor XXXX over projects of been or material our Wink larger more We able Diamond/Capline. equipment origin with be have or we efficiently projects number tanks at Webster And things we're to This cost beyond or like deflation. and of the tanks timeframe. in slowdown in size development, Canada execute also without the time till paying facilities. of successful complete paying seen and to expedite of work.

really a mentioned down Willie like So it's bring continue a to of our efforts to number of combination spend. capital

Willie Chiang

XXXX a Shneur, just bit XXXX. we CapEx million maybe little And guided $XXX in of beyond about to

is bit third and over Webster Capline Just Wink and little of a to on a that our Diamond project.

really and of think that on you to plus. think spend when to expectations capital about what our going XXXX, So in about sets we're up to able you lower be us it XXXX

Shneur Gershuni

of a jump guys. questions, I makes but the back in ton have the appreciate more that day. great safe some and Perfect, color, queue. I'll Have sense. Really a

Willie Chiang

Thanks, Shneur.

Operator

questioner we'll caller, yourself please again our in queue. ahead. your next proceed with question. go Please And identify And and take

Jeremy Tonet

This is from Tonet Jeremy JPMorgan.

how and feeling in could. term just S&L and contracting, kind up that out? off the if played get into dynamic maybe much that was the did you start and contracting that results. just opportunities How side, translated a for in contango I There how facilities in shorter of significant secure long-term to to up showed and a side showed versus to the want Just your you quarter of see want trying

Willie Chiang

cover can for that Harry think I Jeremy, you.

Harry Pefanis

S&L that's muted the - because in the we of couple captured - from that things. Yes it facilities. of probably on so side, contango and on a And looks the all not - perspective,

under all we to from of one, so First storage had weren't we available. fully the all that able contango had producers, utilize deliveries we

were term the basis. a on a put Secondly, lot of positions

we short looking longer were one-month at So, rather just doing term than position. positions,

So of are of basis. muted it in And component you'll see third was cost in across that then a some future average Canada months. sort the of it, weighted on that's inventories particularly come the

not cost within profits quarter. that probably the be actually that out average balance quarter the in the occurred year. So all works will the They way spread the were generated mechanism just of weighted over the

the is - we've thought the that in for we been tied they that capture been and all not anticipating guidance So year, differentials robust we won't do earlier the as are to spreads they - in the as of reflected the those be the balance balance, to for have able only offsetting that that might year. would be those historically

Jeremy Tonet

want guidance a then to guess. And I into get the more, bit just little

the versus down what guidance think the little said, Transportation you a I last up. went bit volume but EBITDA went

now are wondering if drive of short just different So pieces long kind the movements different in what then to of versus haul. kind basins that moving for it's haul

can you different would how of kind be change that a basins the just guide If in for helpful? the last, versus this give flavor us

Willie Chiang

Jeremy?

Jeremy Goebel

Part Jeremy. of was Jeremy. the got MVC. Thanks, that got but is is, lower This and you volumes, the reduction you've

go lower more will volumes. up the EBITDA So with strongly

think talked the the basin. the stay in if as June, May correct the expect barrels should We about - of We to itself and you pricing that year within course over issues about the suggested it. because

to Midland containment, went in for the Coast. Midland produced. in storage take marketers stayed the from other to So were to went no under it of in barrel ship shorts they or or care and directions They as left sense into made a it Gulf

will but that show volumes and up, reflect EBITDA So won't show the up. will itself

up. movements, the more that that of about produced volume on it's side, I shows the would On we a for movement. that's if it's for That's way EBITDA reflect were the natural but think guidance lower will Transportation gathering it sheer paid

Jeremy Tonet

of to it you to the complete value it up together? make type just then, quarter come in do what show all MVC Maybe next to kind of dollar expect

Willie Chiang

of the ballpark to in QX It's million XX - QX.

Operator

Caller, in your queue. with our please proceed yourself question. We'll next identify question and take

Keith Stanley

Keith Stanley at Wolfe Research.

production you end said year confirm, that just to to right your is sense you'd kind I more 'XX 'XX does back in I $XX first, DUC year or expect Jeremy, So come Permian. require versus best inventory? think rigs the well of now? on end leaning wanted that And flatter

Jeremy Goebel

Keith, Jeremy. this is

would largely that For on a flattish case rely DUC inventory. be

at impact. months when eight case, it - you rig at For is the where six show way a see volume months the up before we to look

in any it So improvement in first part of as year. the view is activity a of more next happen to We mid-next unlikely year.

growth. as lot three substantial wells a the to you the rigs, the the we're to plus looking is that an slight to So specifically to inventory in of you at uncompleted immediately drilling completed. over uncompleted you months weren't scenarios had mass months inventory about to XXX - to rig, XXX think way The roughly it of flattish - Permian, XXX ramped wells two we're plus down to those had rigs to but

there don't to of production. anticipated is forecasting So necessarily there capacity process drilling of of impact there. going to see because go an now, you pad a close rig months some through the that's to drive before in some create and it's noise going as impact for that's production. in think We candidly growth. six they an - is But But surge

very a and you later growth. flat start in the case, the with probably rigs, So early production likely rigs down bringing we in towards or need year that of XXXX can next hold you have think for end today to would you the

Keith Stanley

square. second question, I'm then to trying just And

versus down, kind a on system volume your Basin now wide on color Midland for Is that to versus little sounds went function just your in the the more guidance So it year? like a margin of any basin outlook better the of guys last your the Permian Delaware or volume being but you the is a wide exposed little call.

Willie Chiang

though impacts be it on its guidance. our can look to barrel revenue I'd right way is that us The at

be could that So three touched times.

any So movement, it's amplified.

be. we that where and So feel I'd in about it will positioned, forecasting. assets strongly volumes where say they're changes our

side of is long-haul noise the MVCs. that on lot I the from a think

is on the predominantly that's think gathering. where it I

of in well our have are connections. assets We're lot seeing healthy and and Delaware gathering Basin Western very We Northern a system Delaware, too. Midland the activity holding in

driven I by haul is think largely MVCs. long this and

Keith Stanley

Got Okay. That makes Thank it. sense. you.

Willie Chiang

it's the of piece gathering not So business. the

Operator

next proceed question. take and our yourself with please question. We'll identify your Caller

Ujjwal Pradhan

of is This Ujjwal America. Bank Pradhan,

your Firstly, accretion maybe Permian, just the of update past. - if in on position an double exit the wanted the in seeing gathering and in perhaps that your get bridge to some exit high you referenced update in you're had what the and you're a digit to to decline outlook

Some of your Permian crude gathering peers made outlook. have noted have their some and improvement in volumes some in Midland since May to revisions positive

So provide, can that? appreciate you anything would

Willie Chiang

So kind our want our you Ujjwal, shape specific Jeremy there if do have anything covered don't I of outlook volume the I or… think, - Jeremy, that to to else is of anything and you the add know. know curve.

Jeremy Goebel

specific don't end the asset throughout tell holding like call, I we the I'd activity in know are Jeremy. - things is this We the But and gathering of the to give year. feel guidance. previous good Ujjwal, say we about

quality think and I ours where not guidance gathering - - and reflects, volume the assets, put to well we be, any acreage the think out disadvantaged see I we're to to underneath our relative of we anyone. we've as

Texas asset mentioned Willie New acres acreage we've X.X As we dedications, guidance. feel facility that give strongly don't we and million specific between and earlier over got and Mexico, between just

Ujjwal Pradhan

volume provide those long-haul are on of close recovery It how color of below - the what to on - segment of current comments under bulk side, of Maybe the you like, - some on sort declines, how clarify the able to a to are of your to volumes MVC. the we close sounds where the - of declines EBITDA here. mostly if if of but the trying update the volume Transportation you would just sort the circumstance drivers get bulk be MVCs how also it's are levels? And sense

Jeremy Goebel

basin Jeremy. is our changes say long-haul would for the most in in this the that the system part. reflect changes I Ujjwal

U.S. ramp of and It the we the declines X.X into That's there, last saw reflect on lot or I'd our to up that in Yes. it support assets. call close barrels of in some May from has March a the be what come going decline we a You like we're for out quarter. CSD looks onshore you day that. million volumes quarter to forecasting The saw - percent see this of proxy through shape to on basin it. next say in

Ujjwal Pradhan

one, if I quick a may. And

initiatives you able range have number year. Just quantified higher you XXX million around of the towards to cost on end - that some the Are provide savings and this the some are of savings color and readable had be you we on expect type much what specific and beyond? what XXXX that made, initiatives in how some were they to of can the

Willie Chiang

little a but a you years. give insight, that following can expect Chris more do into we carryover portion to of have good

do some a lower you - to are here want of some efforts across really through do give company things things. number you structure get whether insight… organization, Our want different how do Chris, cost we you have our the things, it be systems, and efficiencies

Chris Chandler

costs. Chandler. maintenance operations seen We've re-optimized we've at up the of across this all our We've savings and some we're examples. stepped all personnel our Ujjwal, of reductions I'll categories. hiring, vacancies placing internally. organization cost around for you and give We've that tempered The really almost delivered Chris our is expected really years next two with activities operation. any employees and looked redeployed those in

to entertainment you So in yet delay We've to reduction would and year in as service expenses, to of of utilize seen contango for and regulatory a until and integrity example, been we're large next year, tanks expect. we've earlier that within take travel going still requirements. course, out requirements able the storage

looked lower And even at our chain materials technical really then busy focusing cost projects savings have ways pumps, supply drag very same both the pump our finally, resources between themselves operating has of the competitively of Our horsepower there. and organization number same stations seen and on been the reducing to trade-off and systems bidding through pipelines optimize agents and expansion are on the we to services, run our operate significant and a throughput we which finding and we've volume. internally

And success. and Willie in very it's think that like So carry XXXX as to we beyond category, - even be it's volumes into we're recover. really to we're and going every good seeing some able said,

Willie Chiang

we do things - not value. team we've articulated organization, going initiatives the can. of a but as possibly is how it's number us our pushing that we Chris We One Thanks. really a continuous them, And challenged how really forward we And because selling on keep to hasn't let we on effort. got we're pressed of become dollar a as streamline our number of this do down.

Operator

in question queue. take next We'll our please Caller, go ahead.

Pearce Hammond

question. Dominion, Thanks on. appreciate divestitures current with remarks divestitures recent market? my This to optimize of on streamline for in the prepared attractive your comments Plains for to additional Hathaway Energy. is further valuations I Pearce in Hammond your transaction are with Willie I the light and taking Do you Berkshire through you Simmons opportunities And divestitures? wanted and the see get do think perspective in the

Willie Chiang

the that the win-win-win looking we're for to what than employees - is, assets maximize answer is the to the a to makes right. - over us it If asset for a can value. we to get for others So doesn't, the our to at more strive seller the see and that business to buyer, us, to - and always sense what it's it worth if

ventures not synergies, strategies where one with have those But I joint that been synergies. absolutely we're the made can't I you we're comment number to but your been middle on strategic some commercial any you just we're of about optimize try capital efficiency, more that of So opportunities - on. sales, only answer to capital share things. to asset of cost can working in currently transactions a resolution either question, our a to synergies, looking of at give we've because

to do opportunity our to going obviously we identified a anything help us that pretty, then that that, nothing if there in got in play. do things to to value that unlock something an are do, transactions, - those now. it's to So the is larger ever the do company, we're is we will there if on. And broader. want are We've And which think in drives pretty able path we

cognizant but what that of always But what transactionable, I on also makes far Berkshire can't focusing can As as - we're very sense, do. we're we the what's and deal, on things comment really very, that. open,

Pearce Hammond

Willie. you, Thank Okay.

Jeremy Goebel

Pearce, that the set the term of fit would bring still I health and be B for buyer. to this back buyers credit I a to unique state is think specific market unique loan the needs some Jeremy. Berkshire that's there transaction in a in asset just to it.

I strategics lot the of think on a right now. the are shelf,

all that's for transactions. So necessarily a not proxy

mentioned, Willie them or it's - evaluating and constantly harvested we're returns specific and keep it assets generate As our exit. making

in anything for with constantly opportunities And box, parties. to third maximize so exit we're looking the value

assets with specific And trying we're buyers. to specific so pair

buyers the we And candidates we're waiting for healthy. We are give that want to so those were away. sale, specific things anything to think don't

Pearce Hammond

down, that follow-up, Jeremy. is shut your a be you, because net then DAPL assets? rail quick of Thank And would for if a benefit Plains

Jeremy Goebel

assets Jeremy. is. We Trend had Pearce, can Bakken this in that the North West from connect to Canada Regina.

So we from the pipeline side also the standpoint. and on and benefit rail S&L can an

Plains would everybody it we that how were So to We're I precedent. out. to is look But standpoint, happen. But regulatory a from but to there something plays candidly, in are there. asset watching see waiting this if think to - opportunities it maximize a as to value see

Pearce Hammond

you. Thank

Willie Chiang

just we're lot reasons, what close - is environment care with of. a make we because a different don't I'll precedent Pearce the on it's But of - and a safely to being of have certainly of know that's benefit but a it's I the with for details, and - not see something we're been to operate we shut for it an line it's that Yes. don't we don't operating certainly that years number We're uncertainty, don't one down it. thing Again, set. does partner, not watching on DAPL. a comment - that

there elsewhere, get And gives So hurricanes need if only move an see Jeremy's to of gives where lot to hate us the to and base to flexibility handle with asset - and if always is to but rules get interruption regulations there Corpus we Ship that's they have one. the barrels opportunities the have - Christi, the us having it confusing. were we optimization that DAPL we the interruptions go. Channel, assets far experience, there's not that as And point Houston as a

Operator

ahead. in our queue. next go please Caller, We'll question take

Michael Lapides

Sachs. from Michael Lapides Goldman

around step core lot and about Permian obviously earlier, asked M&A back the but portfolio, asset are a of a lot Capline a is Diamond, Somebody question look and obviously core question really and the I take kind the want the assets to you've you when and in ask like assets of other and of basins. of

necessarily How the in years XX the what that what months you the and outside three you term, of like to next of Capline, Cushing, kind about Gulf would or think longer but the look not the portfolio don't a to now, Coast. for scale have potentially seven in that months, the at five five, of necessarily do the company? optimal non-core or kind where Permian lot of XX So storage from and what

Willie Chiang

it's flexibility. understand we've with we we for - don't always what obviously wrong - to give a presence, in optimization sense us people make right - got, it folks. try they're Michael, how I try the have significant position, will seen that again, - we're In the question right not it. build help and probably find advantage think to a about available. existing that assets or we seen tough you the maybe us we because answer all values, - we around mean unlock with base I'll a with fundamental Well, projects clearly do do. assets for strategy capabilities home different you've may build you've to you assets Those our trying that but to where are areas for have, the answer want have We're the to if an to for the talking sell

the to us our obviously core sense it. us don't would with we there, at is continue you'll we see If map think that base. do build there on someone I core that consider can a a else asset base opportunity - an areas a something around to So look the for makes that - you in have core as

We also factor risk. We factor a lot of things. Cash flow into it.

of answer that on. hard a it's So But you our to give hopefully blueprint kind helps.

Operator

queue. Caller, next take question We go please ahead. our in

Jean Ann Salisbury

is flows going or crude would Corpus the second Cushing? Do And to of This Houston reduce Ann fall other expect exports off that share in versus from Permian versus you Salisbury to half? Jean U.S. the Bernstein.

Jeremy Goebel

we're now, Obviously, Jean Ann, differentials Jeremy. flows that. to is hi, Gulf seeing this strong will But Coast. the and into is absolute demand play Right volume of production down.

share March contains would on go as Relative balances. expect Wink standpoint and exports Corpus a to you has that comes to from been increasing Houston, Corpus and Webster So down.

move that a we'll But think big a to location and that. So is I going of things it. on there continue is demand few to have demand impact

Jean Ann Salisbury

Okay.

would that guess would you say I that starts be if less? export to So because necessarily it the export negative, so Corpus U.S. is heavy

Willie Chiang

standpoint, export the from as all are - just quality the seeing access normalization to a of be the matter because to across think necessarily to that who going we're They that they demand pipes available. demand has happens, an Houston Corpus the barrels. is a and MVCs are Not I standpoint, dock. many we're when physically from pull not from in between and seeing it's going can and simply don't there as barrels,

Jean Ann Salisbury

time? contracts And from now really or extend is the appetite any customers then and not is blend today there to

Jeremy Goebel

of would Jean Annualized again. is bit Jeremy been shock and has say between June. there March, a that May this and I April,

into things this lot to customers. it's longer all get We're and - But going - a thing - relationships on. what is what contracts doing term of in discussions of those lot doing but had is those discussions different customers, a little a we optimize across early. bankruptcies we field There assets. too with bit we extending our to As had the

contract with had those So being individuals. are discussions

of the part next long it, think discussions be wave that the of I will on haul for sure.

Operator

ahead. Caller, question in please next We'll go take queue. our

Tristan Richardson

the appreciate you the Tristan comments really Truist. guys on second gave Hey, Richardson half. with all

normally quick MVC seasonality Curious, directional Just I the second of the you little half, second versus around that bit estimate some of that seasonality. the more of share expected factors the you'd flat or suggest making normal think half deficiency than dynamic, higher XQ a part a question and/or payments something that timing see? what the one radical in XQ timing capture. the contango with Is

Willie Chiang

impact if anyone of two add the has covered you think Harry else as I them, timing and to MVC Tristan, I contango don't that? anything Yes know, to outlined.

Jeremy Goebel

This The quarter is always seasonality in versus the quarter. and thing the one fourth it's in NGL, third the Jeremy.

see you will So that. definitely

Tristan Richardson

Okay.

Harry Pefanis

the is at contangos mitigating For some this… of

Jeremy Goebel

actually and quarter third We've stronger fourth comfortable strong contango got margins in the in third and the too. quarter and quarter quarter fourth

Tristan Richardson

this contango on think the that size just all about with opportunity May, frame might there the of think in I general to total way saw, April, we were March, one way up created spread or opportunities just opportunities maybe is by that another a opportunities non-recurring disruption sort to June? of then spread disruption be all And

Willie Chiang

I'll make can jump a comment and in. others

earnings. consciously we is our things the to of do increase fee-based - One try fee-based our

So, if a some these. of might years, have we more you to capture went back number storage available of

keep anything? tanks or we've fee-based we it add try Our empty service you and that more is to If that Jeremy, makes out got. sense Harry for spread want can it, the for do to intention arbitrage. to or get of us assets basis now contango

Harry Pefanis

covers that all. I think No, it

Willie Chiang

in - than I but less didn't question it's it's the So answer been your past.

Tristan Richardson

Fair enough. Thank you.

Operator

next question our in Caller, queue. ahead. take please We'll go

Gabe Moreen

Moreen Mizuho. Gabe with

of Al, sort from if one contango of opportunities I on other, you questions in guess quick half comment year capital just other return, me working the or you're present assuming expecting back two the S&L can themselves? Just the no

Willie Chiang

Can I'm there, up you that you again ask broke sorry, Gabe?

Gabe Moreen

hear me Can you Sorry. better now?

Willie Chiang

Yes.

Gabe Moreen

to going present capital magnitude was the I themselves? Just of back in the whether opportunities no or half return of year, about contango other ask assuming working the S&L

Al Swanson

is Al. This

quarter clearly second that quarter margin into We that difficult decent amount into built play. quarter, As seasonal with and a first prices, NGL storage to come the forecast. second of contango to all build, capital working and is

we're forecast be - end free on relates of to it's can to our flow and that true we cash and the defining doing that swings. that and that. So priced period for We impact focus time won't clearly, guidance free forecasting be in the generating a said, that of it's at a prices one we'll it because flow. activity, going comes over four is all start of With very lot how working not cash a as capital for out margin it's reason that think quarters fairly then periods seasonality our

Gabe Moreen

in I - G&P Willie comment that's is of maybe the base year larger year of project. if XXXX capital on kind imply curious million, Does CapEx level spending on out, your you the that follow-up it if would characterize in, then you're that growth growth can one-third way? of And being your $XXX left just

Willie Chiang

but a don't want neighborhood, two it. specific would it's but way years I fair it's in I a - to numbers say out, right at because quote look

Operator

please We'll Caller, take our ahead. next go question in queue.

Colton Bean

TPH. Bean, Colton

Just to to over bit more the on it volumes you have of a all type possible some questions Is seen course of what the July? explicitly of to speak Transportation. follow-up around

Jeremy Goebel

the is Williston Goebel. - the Jeremy of July. this I majority Colton, seen would say vast gone where - Basin that outside curtailments, with of we've by

offset the have in in by we been to started August, June more. and additional we declines and we've see So July some completions now seen expect in

I about say talk curtailments and production But ramping going July forecasts So are or I'm behind that us. I assets. our the see to activity estimates. not exceeded would specific in

Colton Bean

million at like Understood. continue or needs less, flow decent It you free does to excess to cash - as look potentially capital a expected sounds it like grow. seem this average mean less. should is $XXX bit I

gaining valuation also So your cash that if event - ranking? that or you think does leverage a target, about equity allocating allocating unitholders factor to into capital is more priority your to reaching

Willie Chiang

Al.

Al Swanson

and/or leverage that those decisions whether excess are approach reduction, But to in priority, question. near more to expecting near forward. the to reduction. talk our using And leverage in where - that the on environment, allocate increases hit we're out a be share is in far what with focused I've looking leverage comments premature equity is for but have we'll We're debt then be we'll do will - take term, a bit how will in as a which And to think repurchases. we'll would clearly the S&L enough of about target, we it's ways, term our be In that. challenged we distribution mentioned exactly prepared it the going our holders, about be

Willie Chiang

at it's look is, we'll The other what all kind the of thing, does of carefully like, also future look right. fact a

that of little change certainty a the the bit. there if is future So a better may story

down is want leverage So it But want get lower messages bit a clearly, to get of levels. our to - to moving our don't we a the target. we

Colton Bean

the Appreciate it. Got detail.

Willie Chiang

think we for go that take I time and ahead more one Can we have please? question.

Operator

We'll take our Caller, ahead. question in last queue. please go

Ganesh Jois

and you intensity question that Jois announced Ganesh for view is of reduce have Goldman oil the to do term Quick decision decisions the react to from how production if its to would trend, you you morning Sachs. of becomes run This that BP long the capital a this the your business, how make? this some longer and

Willie Chiang

would to Well, volumes, - Ganesh I that. and us piece without position might lower lay - the you've seen in that. speaking And portfolio in doing. try I you what adapt is, Portfolio position, timing, of reduce is directionally, duration and to future. do But on to put intensity, doing think out And your we the a optimization on back volume actions think difficult do a take strategy where question, knowing our to are put capital to answer extent we're in we're again, just plays right. obviously it's what on company with we people to again, everything your flourished a what the focused how very do we

would help do appropriately a a into to And that some take so we more opportunity world. carbon service strategic go less there intensive is look CapEx line that input, would or some JVs. not to adjust and be different our In opportunities just a for programs cases may - maybe for an then we

we until better hard a kind that, articulate have would specific So to definition of it be strategy. of

Operator

This Q&A. over closing it for I to now remarks. concludes Willie the turn any will

Willie Chiang

soon. We hope forward again, thanks, for all and much. look you Listen, great. in. you we Well very everyone to to dialing talking safe, Thank you remain

Operator

gentlemen, you. and Thank today's this presentation. concludes Ladies

now disconnect. You may

Plains All American Pipeline (PAA) 4 Aug 202020 Q2 Earnings call transcript