MMP - Earnings call transcript Q1 2019 | Magellan Midstream Partners, L.P.

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Operator

Greetings, and welcome to the first quarter Magellan Midstream Partners earnings call. [Operator Instructions].

As a reminder, this conference is being recorded today, Wednesday, May 1, 2019. It's my pleasure now to turn the conference over to Mike Mears, Chief Executive Officer. Please go ahead, sir

Michael Mears

you financial us results. thank Magellan's to and quarter first afternoon, for today joining discuss Good

by Exchange Before outcomes but that on could making defined impact management different. get our could will Securities we started, the performance be be forward-looking I'll current judgments the statements materially factors are future Such actual statements Commission. remind regarding you the based and that as Magellan, of

SEC in line review form the EPU and our results. market before risk guidance quarter. opinions off filings financial Magellan's your the and it discussed with $X.XX in with first our kicked XXXX for about reported the should own may You first We other with today factors performance. appear glance, and At our solid information that earnings were future quarter results

outlook before turn expansion financial XXXX specifics on larger questions. to Aaron over call call Magellan's first for and Then However, mark-to-market after from we I'll including on to favorable sales, our pipeline market review sales. asset the environment. commodity gains we over on the commodity the the of apples-to-apples price our projects and discuss quarter year. to volumes a basis, latest oil about asset to higher adjustments X% to guidance to and expected now results I'll our benefit primarily our detail, due the for business originally more by favorable gain an normalizing exceeded than crude status more in commodity Milford more more opening the expect your back for be Further,

Aaron Milford

Mike. you, Thank

to margin including flow. distributable During today's and references certain financial non-GAAP metrics, I operating comments, be will cash making

diluted quarter million exhibits diluted that lower GAAP unit income than $XXX.X metrics a included or per on the first per net our their first of reported basis, morning, this reconcile quarter for of have slightly unit which the nearest these we million $XXX.X $X.XX $X.XX release XXXX. reported to or We measure. Earlier to earnings was

in the the earnings Excluding unit per impact was of diluted adjusted quarter, futures current activity contract $X.XX. mark-to-market

unit reduce, XXXX, per per cash quarter basis. $XX.X suggested to of recognized on first million represents further of first of the per million our higher quarter the calculated unit and XXXX further quarter $X.XX related record. of $X.XX, earnings you in XXXX adjusted than the first considerably exceeded asset was as downward If for million a this unit sales by of the $XXX.X of Distributable similar earnings a gains for the in guidance quarterly flow the of reported $XXX $X.XX

Before I DCF move year. gains recognized on treatment and our to segment the during discuss quarter quarter, performance to would like of $XX.X million the of the nature first discussing for this asset the for I

as on dispositions is relate our them or losses activities to to approach nature. general assets in ongoing as they Our both the from exclude gains and impairments to well not of noncash are DCF business unless

of gain we current provided interest of our on occurred quarter we million total the of the our which of in the of in related the the $XX.X to income associated settlement recognized attached DCF BridgeTex, This XXXX. indemnity obligation additional the this $XX have release, a notice reported DCF This with interest. excluded an morning's the is quarter in earnings sale You'll million additional of to amount gain in excluded third statement. to from gain portion schedule to relates buyer the

in this is recognized The year, from the exclusion the of recognized we pipeline original the original settlement to our the period gain outcome million quarter consistent had the essentially in Basin first gain obligation. of assets This DCF. of $XX.X crude is this this current gains discontinued With that remaining gain certain last DCF the sale of of pending of was the related of included the The of obligation been year. project. result Delaware of a quarter portion the in gain deferred with reported treatment this the prior current

fourth to of related that and in we we types highlighted These consider of this but these $X business. part approximately the project, recognized may development You details XXXX, press impact was simply which activities ongoing for million sale to wanted we project of project write-off the rated to we quarter our now million avoid are the that treating as the for our incurred them quarter, discuss schedules, consistently, release products the losses segment. financial move in hopefully negative activities segment on for performance included on an potential our of the recall DCF, discussing spend all in I'll to development of including to with time to bit in had be DCF I any activities period. gains the starting quarter's a confusion. are gain assets refined the $XX.X this and By of related

products the in million first period Our to segment of million XXXX for same operating $XXX.X XXXX. refined margin the $XXX.X compared of in generated quarter

we noted commodity margin traded in impact contracts hedge to our resulted our the of operating of used mark-to-market in periods As exposure. futures primarily from our exchange decline earnings between evaluations release, this

million our South to lower system. than system. This by mid-year much refined core terminals and our the products first X% decreased first to on being gains. current was result essentially million, X.X% a the Volumes first elevated pension our timing by fee-based revenue at XXXX to a causes a of of from our to is to the due a related financial which operational quarter the on rates barrel last offsetting from periods first and decreased of lower correction. XXXX lower spending as Our Operating rates quarter the of was refined tariff period. volumes average $X.X and rates. pool year's overall. results transportation product increase compared flat offset quarter. refined Transportation between last Product of product quarter all valuation increased due distillate by system. but between in completing million a our volumes, volume quarter Further, declined contribution decrease XXXX $X.X South other quarter higher integrity average Within which higher about this of driven in demand by products July expenses system, Texas volumes. Average Texas Texas system core higher the of South well periods mark-to-market our as impacts volumes on the result decline gasoline increased of our in In in tariff tariff with XXXX, were periods Texas the between rate lower work, per our aggregate, volumes to was as of margin lower as $XX.X more slight supply generated move system compared tariff of push XXXX terminaling a markets, mostly South year of activities almost increase

Our cash periods. margins quarter for between current increased the

few discuss lower. expect Michael the to prices margins balance in trending As stronger and the trending costs of persist we these are year a butane higher for moments, gasoline are generally as

statistics, due oil Corpus look and for on oil growing over higher a significant will million our the splitter reported in pipeline the operating systems. average terminals first For oil than million at crude to with was of the Transportation of rate fees volumes the approximately and higher from million contributions $XX.X $XXX.X year. higher last Christi revenue quarter margin associated tariff wholly-owned joint you our increased venture assets. volumes by segment, When at terminal, crude note you decline marine $XX.X our crude higher Seabrook

rate tariff much compared about in earned around higher we've volume long-haul the from As Longhorn. distribution increasing in our earns barrel per talked Houston tariff the this on average from which results tariffs of past, contribution system, to an decline $X.XX

to impacted first on Additionally, also Pipeline our contract lower effective System renewals, compared October last became resulting earned quarter our XXXX. from in average rate year, of average which of tariffs Longhorn the negatively

the as volumes Further, as as overall BridgeTex So other quarter overall, system transportation increased Longhorn year, our we the received increases. distribution distribution Increasing our on volumes increased, of and volumes, this distribution by also as pipelines saw higher Seabrook of demand total on for Houston Houston driven from system. for the were on as well a Houston especially higher first result revenue sources. system volumes

compared For the Pipeline approximately barrels day averaged per XXXX. per XXX,XXX Longhorn barrels XXX,XXX day of on to our quarter, volumes quarter first the in

initial guidance that our XXXX average barrels Longhorn per anticipated that recall XXX,XXX the may for would about You year. day

recall We now levels that we of volumes market above not may second differential the also to and move the through between expect You our at Houston beyond year. would Midland sport that first we tariffs quarter. the spot remain this did quarter forecast

of maintenance half to to and discussion contractual during XXXX. XXX,XXX an $XX.X to barrels a as related step-up annualized we the Corpus increased currently in per the barrels lower barrels day slightly in were expect expenses second of barrels per our higher the XXX,XXX operating first volumes to planned quarter continue compared the my for Saddlehorn Longhorn volumes interest. as higher approximately of on to result, per and Volumes of Segment no Longhorn, XXXX. XXX,XXX Seabrook of earnings to of Saddlehorn averaged as barrels our current BridgeTex to to our XXXX XXX,XXX ventures, expenses of recognized joint XX,XXX day were the a the quarter result average as ventures million spot around Equity fees BridgeTex volumes through the quarter periods. in higher earnings joint assuming we uncommitted day higher quarter. venture venture, second offset well BridgeTex almost averaged arrangement. by XXXX XX,XXX joint per approximately shipments to during the first basis related quarter on As paid volumes the year. Similar increased per Pipeline as from spot our result of tariff Saddlehorn the result volumes September between activity per day increased Seabrook compared splitter. first joint earnings Christi for expect about day lower higher barrels joint ownership as well various new from during a our a in approximately the committed We approximately primarily day which from

is than day annualized result, no shipments day on February. guidance for average higher second barrels of year This the provided in barrels per XXX,XXX As we the the year. per to a now spot day expect assumed original basis back about BridgeTex our barrels an assuming for XXX,XXX half XX,XXX in the per

and and driver of Texas between quarter these Longhorn market continue will both key to XXXX. in second differentials BridgeTex, the the of a of For strength financial performance West Houston during systems be the the beyond and

the XXX,XXX about per about our compared For ahead XXX,XXX day demand And to given segment quarter. tanks of out the performance, Saddlehorn, million barrels barrels for for as our operating guidance is generated increase discussion for were fewer million our our annual XXXX Finishing day cost. we of was volume quarter were expectations segment maintenance. expenses we $X.X in per Marine of first average record per lower my and which as initial of Revenues an quarterly XXX,XXX volume our quarter had be of expect reduced increasing capacity, barrels of maintenance also up current quarter, from Operating a a segment. margin day. for uncommitted higher the this to $XX.X result

and quarter, the current that activities. Hurricane have note venture MVP it recognized came our Also in first timing period Harvey. insurance not in Pasadena not due contribution startup income online the while proceeds in first joint also simply we significant from that related a did impacts as to to expected note terminal to during quarter received You'll was the other of

by million to year's Now $XX is last to million expense higher noncash to to early net long-term cost borrowing amortization project variances the G&A of the Depreciation, -- XXXX. to average essentially write-down a rate. retirement the other debt from amount, increased XXXX flat periods. lower quarter. and moving our by to related was depreciation between expense additional and increase Of cost lower $X expense related which $X to $X.X impact million and DCF. interest borrowing amortization this first and impairment cost, quarter compared notes. negatively about of development of This lower Interest of million $X.X due related was offset weighted July income average is was million balance higher, primarily

outstanding, rate interest during X.X% balance average pension $XX the Long-term XX billion. quarter, was including our of at outstanding debt billion, was weighted million $X.X Our debt, paper was commercial March and first expense average valuation approximately had $X.X about as period, of result $XX a a million declined and pension hand. between cash million of correction. Other of we as period a $X.X on higher the including expense XXXX result

sheet Moving briefly and metrics to balance liquidity.

X.Xx the for end the approximately of leverage quarter. compliance Our ratio was at purposes

in the gain, transaction, is ratio be quarter would approximately which the the this impacted leverage However, Xx. gain this occurred third BridgeTex ratio of by our Ignoring XXXX. from

to totaling also continue our program. We $X maintain facility commercial a which paper billion, backstops credit

We also to to guidance we'll to back continue growth for of with Mike without of that Xx need equity. excess the well able our year slate as be call long-standing our projects exceeding over maximum a issue to some anticipate not growth of cash target to fund leverage expect updated now ratio I'll the our our and discuss balance do the as projects underway. current turn and debt of

Michael Mears

you, Thank Aaron.

newly created Chief Aaron community position investment Officer of Magellan, may effective for the As be aware, today. been Operating to promoted has the

exceptional in responsibilities CFO. wraps continue as new overall for he may of add to for the in a favorable COO environment, too know role, you up first more essentially Replacing have tremendous this He's pricing key Aaron guidance million annual value will an number results job capacity well. Aaron $XX commodity CFO Holman, has confident done call our we billion. to as contributor Based is today's in who our $X.XX increased been Jeff So already his our quarter Magellan, as on of his during many years. earnings treasurer serving I'm a and a by XXXX to as DCF as

quarter on only. initial As BridgeTex the Aaron spot our first during mentioned, the pipelines assumes the for already year and Longhorn guidance shipments had

to differential through quarter. conservative a basis continue While forecast estimating widened, approach has now that we outlook to uncommitted and the for the for between guidance, Midland volumes near-term and the Houston volumes second take assumes will try our

spot reminder, that environment expected per estimate and commodity million the quarter activities. uncommitted these both Longhorn a BridgeTex. rates our improved on As benefit is the based for about uncommitted from blending is to $XX benefit The we butane also volumes

phase we year. with million operational X.XXx, service With progress to cash represents X% the million X blending venture was per forward time as of gasoline-to-butane of excess progress. average expected continue year, be gallon. our the second Last expect annual our the remainder at this terminal of flow which in put our storage. has the for X tanks Earlier on the XXXX, we marine the XXXX. largest this related with approximately hedged butane and part on XXXX projects, year, to with about based year, began of price coverage with of for ratio early are is distributions margin hedges indicated to we $X.XX during of target in of generated similar XXXX. curve beginning the During capital, XX% X billion the of discussed $XXX projects well. we with the Phase and of built to the storage, had expansion goal this and progressing for year, now still a pipe for expect quarter, With about joint X, infrastructure volumes Since the guidance now January, that dock in new at to for the levels blending construction we generate XXXX place $X.XX our differential of business. become of that of by that in Pasadena The full barrels our barrels construction healthy another for closer increased, first for million our currently margins DCF stated $X.XX of regards to excellent increasing make half our of reinvest year, the to we on

end operational commitments seek by the phase We we to and customer XXXX, potential of additional continue second of expect to for build-outs. Pasadena future become the

pipeline Texas on Texas activities day. begin expansion. pipeline Moving our mid-XXXX is we West to we our with West completion, for operations our products pipe target construction late Texas, on current refined production underway for Significant begin well expansion August. month, this nearing new projects still for Based products the later on activity East this to in operational construction is is expect also underway schedule, refined expect pipeline. and Pipe Houston-to-Hearne to entire in the

positive over expansion. West recently X have Texas We developments had regards to with

received mid-XXXX. build which in is service secondly, also Midland, have we have commitments expected in new we sufficient First, terminal significant to And to be products a refined new a commitment to in share received West Texas. market

XXXX, does we expansion the While from additional to XXXX for projects. market necessarily meaningful underway, spend commitment, demonstrate take-or-pay not complete the it on in million this these firm we $XXX $X.X the a progress new share of upside currently in billion agreement attractive expect this project. projects with expect Based potential to is an represent

be PGC we made the a dynamic may the ago public longer no estimates our project joint Permian. proceed. in the late is stand-alone initially expansion that it Permian, venture aware, environment statement March believe to announced months you that As of unlikely include spending indicating the and out the will within We X pipeline capital due competitive

continue firmly is While this Magellan's unfortunate, the development success. to is capital long-term of the we discipline foundation believe

projects, have remain well of what can fuel beyond an other I totaling you expressed as active marine still oil new potential expansion variety infrastructure of to to excess $XXX growth evaluating cover concern opportunities, next projects XXXX. investors a Some will and million wave we very that assure crude of Magellan's refined opportunities.

but many next can backlog hopefully contains high-return a we scale, also discuss months. are that few of number over opportunities Our we the projects, evaluating smaller project large-scale

the pipeline of open Voyager to May. the the Regarding project, end proposed extended season we recently

for evaluation ultimate Cushing and based flexibility customers interest, Midland to industry the Voyager Midland time now potential desired origin is origin the that for delivery Coast. Gulf from is Houston finalize under potential now a is feedback providing their to addition on also both to In -- more project

certain, for our longer-term And at this of we about spending projects say of prepared optimistic course, moment, continue under we at the EBITDA time. construction this exact comprise will new for generating returns which investments. our multiple cannot remarks. concludes we Xx Xx future And our to number remain that standard target While growth opportunities to

So operator, for we can turn over now it questions.

Operator

first [Operator Jeremy Instructions]. And JPMorgan. is question from Tonet, our

Jeremy Tonet

expand its concerned far going Is that Permian takeaway initial more there as little as not its of is as see other new what bit there? in a into hoping project Voyager any you you could kind in kind as the that place? Or provide was stepping future? do thoughts far could proceed see far coming as of we project I of another kind you with. like to in PGC could look that outlook form. a Or as the

Michael Mears

line would is the the lead PGC Midland to interest now or alternative concept. project, our multiple fairly option And that from to is was we've origin able right And we've to just sufficient it that heard Well, significant a we're be for we've will What out and hopeful the feedback we're optimistic option was project what were commitments Midland between to Voyager is difference heard, Houston obtain the contemplated, and between PGC we that and we're been market Voyager. from proceed, developing Cushing only. as Midland attractive. now combined Cushing marketing as which the origin of

Jeremy Tonet

of to fruition? here? to something Or will seems with if Voyage a Is maybe there it that a seems be project kind that room there is Magellan for you contemplate this competitor joint kind similar. venture a be of comes somewhat developing And own

Michael Mears

we're our we're than has I happy do mean, think if we the indicated, and alone, commitments. I've Well, achieve in But more before solutions. it very can capital-efficient this practice interested to past said I

end or pipeline in interested Cushing basin from the state either overbuilt. out not of are where We an is capacity

we'll that. opportunity there is if entertain a JV, venture sense, joint that makes So

Jeremy Tonet

come like the one That's that will Permian over it seems seems pipes of just on year, with there's helpful. and going and debottlenecking significantly the the be a here. And have? coming in or online you environment? into a lot there year scenario, spreads would next be and lower how get would In your the to with have -- balance Or of look stick last really kind It there what you of type to guys of what to would tariffs describe pipeline volumes that you compete your of strategy you competition. to that this in kind

Michael Mears

going competitive Well, sit to hands not we're in environment. our a on

things Marketing And option. so handful if the but We've to we're our tariffs intend through compete at, another even is looking option. got decline. our margins we lowering one barrels is pipeline a of

Operator

is question from next Suisse. with Spiro the And Dounis Crédit

Spiro Dounis

of I'm fill $XXX to maybe worth maybe Just think would first, on million CapEx much could of you is much start XXXX, near 'XX we I about long-term projects. million as backlog going off of over that how describe specifically how backfilling $XXX to and and the as that guess, term that start around oriented?

Michael Mears

part not but giving what so amount add to there's over Well, million, are projects easy we ought or your and a a number, question's to X-plus specific months of line. backlog. $XXX the full to the confident meaningful the know next close because be the capital amount without feel first there's able capital. commit And that to of finish of you to relatively answer to It's that meaningful we the pretty we

negotiations. Some we're of looking in it's we're to projects active and discussions tell. And the hard very larger at,

agreements in it years. the X lot may those reach Just we on some of month from could or take projects, projects could or agreement developing next a or on we reach it of experience X.X never

now, hard it's about we're large right at. say, projects So of we're really them. very but some optimistic very but looking any interesting talk them can't scale about there's to I Unfortunately,

Spiro Dounis

inflationary And really a around, X-part I second it. CapEx concerns. Got one, it's one guess,

coming I labor pipeline cost. Permian I land peers of around of substantially. acquisition building out your think, mentioned and said pressure on was saw up and think the go And a one the those pretty costs yesterday

front, I if keep pipelines? to, to future same. current same to as project but guess, own for your that a to it you budget at relates it some time these the same you're that budget, build guess, seeing pressures? curious was projects the that I CapEx the one, add as so, the surprise what able bit out go number returns And you're And And means

find able you're if the current in curious budget? Just to savings

Michael Mears

Well, material current little other earlier But between the is that a projects or in curve, really we the look large-scale the expansion mean, can't it's I of West our projects budget Pasadena say we've which if pipeline, true. those build-out budget no, all at Texas you Houston-to-Hearne discontinued saw savings are obviously. the projects in today. we expansion, our than on

so we're And our feel like costs. we managing

course, what estimate. Of a far executing then estimate on And X-part upfront good -- it's of you're process that you feel pretty it's we the so large-scale on and projects. all with our our process

is pretty And projects as at got accurate that, a of look requirement continue we be good we going possible as and forward, track the so that. upfront to on execute record the think obviously, estimate. we've we'll to as on And

Operator

the next Wolfe Stanley, from Research. And Keith is question

Keith Stanley

with Voyager, capacity up larger how for the project? portion have the the Midland that on pipeline would Following origin of

Michael Mears

Well, currently, we're contemplating a XX-inch pipe.

XXX,XXX-barrel capacity range. So up the a could a day be pipe fully XX-inch you in the maximum on if powered have it

Keith Stanley

not sure separately, And I'm this I Okay. if heard then, right.

that Texas the Can details for mentioned you just work how that is on would a agreement now? You contracted share market and more West some how project pipeline. give

Michael Mears

agreement to you Well, market your or into a their an a in a a share portion share market of party market is all that with enter agreement commits would typically pipeline. particular

not on their product consume market determine There's they don't variable there their to that the no is. any if market market market. want So in share share obligation part or that to have what is they

details to pretty but how any moving counterparty good barrels I feel the it can't be And agreement we give that more counterparty, that's term. is that under on long So going works. this

Keith Stanley

guess, on that's project? returns your Okay. in and what And as just I you're as contracted percentage now thinking the that far pipeline view updates, of

Michael Mears

on have throw a contracted. to the percentage-wise a percentage the highly that's capacity don't numbers I I the quote specific high contracted. out It's amount. It's hate there. contracted here very of

range. that so incremental somewhere that of things multiple. XX% the XX% was types that and if be would in level these Xx EBITDA to And probably contracted a And improving to multiple,

Operator

question from Jenkins, James. next the Raymond Justin is And

Justin Jenkins

mentioned Mike, what time capacity looks maybe environment through mentioned be us and start that there. release Aaron, table Can that, that you to unfold to you in improving expansion. want Saddlehorn. that I guess, potential market the walk you I And the on the like? could seems a

Michael Mears

Well, the regarding favorable the expansion. earlier you that of reasons We predict. we're very clearly, counterparties conditions we are that, as again, And them we're production. timing the in one those on access Saddlehorn market I for stated now. negotiations the to tell to to question, are is mean, Wyoming And for concluded, primary Saddlehorn hard right think negotiations I the of very the we're I in for have optimistic but support with going can is underway. get

Saddlehorn. the Basin. and out I think in supportive together cost case think may River next on but the expansion the optimistic, It's that incremental dynamics market that have capacity months, a best lowest of scenario, could DJ out we of of there couple the something Powder the in we be put but are very of an

it. got in we've interest So significant

Justin Jenkins

mostly expansion? would And presumably that be horsepower

Michael Mears

Yes. It would be all horsepower expansion.

Justin Jenkins

Okay.

part. cash date flow start-up ramp-up about project the that the on the think from we of should is original that And how for Houston-to-Hearne. first here? is Is is comes East question the August Second that contemplated start-up, maybe then the

Michael Mears

may contracts the when in. That that. from kick with those we then be we're month X-year contracts a project to have contracted, start -- that as originally slipped all date It's not a original probably ready soon schedule, significant X so. for But the start-up supporting it okay we'll which or month go, as does contracts if time slip over

pretty volume that see expect would lot And once of significant ramp a not with so pipe's to function step we service. ramp put into

Operator

Barclays. from our Theresa Chen And with question next is

Theresa Chen

congratulations and Aaron to want on to your roles. I Jeff say First, new

few months of connectivity in taking mentioned wanting your the updated footprint both the on infrastructure, view a What's on to additional your water your In had build-out Corpus terms expand of and perhaps Mike, ago, area that? the there. you

Michael Mears

we're that, Christi. that in in still but still We're there actively I talk to about them make working and yet, interested number very angles in of we're still Unfortunately, happen. can interested none Corpus of are

Theresa Chen

headed because online out, the earnings? about any of million have And If capacity as discussion be be interim that then. of lot to the there's not could X KMCC factored all constraints in sort online of of pipe them beneficial you come towards in now incremental nearly the dock until barrels will a that been get of capacity on barrels area by year, Double backed end Eagle your through from incremental volumes

Michael Mears

that guidance. of that We guidance. any our that, but have not built haven't any built potential some our of There's certainly for we into into

Theresa Chen

the into spot visibility terms or in of is assumption shipments your maybe any may you And that spot it. will your quarter regardless what in have remain the that thus visibility assumptions extent pricing through for forward and curves your locked their second of your will barrel have and just confidence Got quarter? have wide the you estimate move second on do current pipes, beyond customers Or on spot the dip during might the Permian differentials?

Michael Mears

current programs wide our is be as the quarter. on new is driven or more what may running not of stay a and used until by the that quarter. to the through that expectation to Our visibility And the methods have based hedging by assumption will the that really spot the shippers up dip the the expectation second not lock builds barrels where product that third they're in. going public to It's statements current and differential that's

Theresa Chen

original your for million there? the $XXX Got West was to included for Texas, expansion it. new that comments commitments CapEx in terminal in sufficient getting refined And of the products lastly, relation pipe the in about

Michael Mears

come terminal. project. after No. to expansion in entirely we that, to have an Odessa. did strong justified us we We the And interest and and ask Midland brand-new a had parties It's

a Midland, through land pipeline Our through. pipeline for to runs different runs the parcel had of we year Midland purpose right in a and actually where purchased last Odessa

So build to we commitments we and do so those terminal we it, Midland justify incremental are after received pipeline. well-situated to the the in

Theresa Chen

Got it. And do of you going have an much terminal the how estimate to is cost?

Michael Mears

million. $XX roughly It's

Operator

[Operator question with Zak next from Instructions]. Mirek The is Citigroup.

Mirek Zak

down? cost repurposed on the help underutilized keep [provide] existing your on quick Voyager, in all follow-up Or pipe if do Just to new to this line would area you the Midland you be origin in this line any that could have a the own? on XX-inch be went

Michael Mears

still Well, evaluating that we're option.

part of line as refined have Texas Midland. products our existing are expansion, West substantial our We we to looping portions refined of products

those So of idle as part we're evaluating Voyager. using pieces

any decisions also. of pipes we've a additional opportunities that idle we're of evaluating with Interestingly, build. haven't we're but made that final those versus We that, exploring discovered on pieces new some

there's Texas So the some to the them of Voyager. project of to be development be incremental West looping support out coming going one and may

Mirek Zak

basin potential Okay. driving the opportunities more less whether regions rather downstream focusing Permian in or potential assets acquisition around or And show assets can you front, maybe outside into? to more few you're are the you? the that latest you're your not within, to asset be in a valuations through the Got competitive seeing the more than attractive of And it. on complement more types may looking valuations regions Permian on than opportunities comment

Michael Mears

have is say that a not dropped. the can Permian few I All the of months, our in that least you're there in last been is valuations at hadn't sense the but right transactions lot

mean, other I those from in the expectations we optimism candid, levels we we basins. in high, and M&A. aren't at in acceptable drop to term Permian be is the are look. assets at to in we so mean, the continue that building any And to least very not but look both I near continue to going our But prices think are to growth

Operator

question with Jefferies. is your And Sighinolfi from Chris

Christopher Sighinolfi

you strategy. asked just hoping appreciate the color all there. ask to been results. I the growth about in have I was referenced questions related to of couple the Lots things

both for maybe think are I Aaron.

income what's of sort what's the statement occurred based, is. that the is on maybe indicates what would why between is block, some it clarification of in bit and on DD&A Just cash depreciation what and approach like that the in just first, DCF the income it statement delta the a

Aaron Milford

Sure.

my there's in a So portion. comments,

in at So or in noncash line, time The our some if down there the if impairments. look cash certainly cost to used project item activities there's a will line to you that don't to fruition or DD&A we typical of is an business show also will it includes whatever have cost, primarily will be it the seeing. from up line. development asset, But that also to the everyone writing for DD&A be majority come that time

my total. that the within cash comments DCF it's million about cash-related relates in is that it that the the highlight tried to this income between difference So to in I and statement small component. quarter, component a $X

right you're indeed thing, and on that's difference in what the the So keying is.

Christopher Sighinolfi

Okay.

the -- So join is I late. touch something I that did and Aaron, apologize, call a

it's do that missed I I But... if repetitive, and So apologize for that.

Aaron Milford

No, that's right. all

Christopher Sighinolfi

the But it outsized we're quarter something an to event in normal? is you just you elsewhere otherwise and in reoccurring Or that something is that back of year? it sort XQ, forecast is expect? of The nature first occurred this what that

Aaron Milford

But so on. I not were going event show notice that same. project things of think this it going will will be working unique mean, specific to related where was to you're it. is a I something those the be to our up treatment and a typically, it's we minimal really

will it the But component. that in expect a same don't driver quarter, be that we be reflect would could it item this to So of line continue. there the of sort cash

Christopher Sighinolfi

in this to fear well, my gain addressed is that tethered you project. recurring And the sounds Understood. asset included to like as the Okay. regard you DCF, but it's it sale with

or describe just exactly my is? own continued some I wondering as You was nature. that on clarity additional in for what ongoing purposes

Aaron Milford

question. good a It's

related So ongoing in a we've there projects, what doing basis and our organically. mind, at to do grown developing the developing are It's going on we're something doing and look how an we to that's costs projects. process that, we of part of be significant when

expenses, occur have and if worth and I opposite expense. we have that that do, doesn't we where that's that develop we say, them. of efficiently And quarter, than some some we an forward to project got what that what for project sort to as to assets going we are you're there in Occasionally, can maybe going happened the more you've and recognize someone this the see and that's project, move to paid of unwind a do Sometimes, would here. you're else what

the there made forward that, we move if time decided with we at not picture decision. to at in that future total had the no Pipeline you when on particular, Delaware So value look were certain the that costs

write-down to So in related million we fourth took the of $X quarter around that. a

value use sort assets of some all everything them. quarter and still resulted wind some into we that assets the was in someone when there did up, sold there's this to And gain. first While extended we had else could those that that sitting

and as ongoing if going it for DCF different interest businesses seller So don't look expect it's put across an we than, it quarters our We if projects. sometimes, in is, together, That's for not it saying what part it but won't. do sense, to Most in and forward, of trying you don't, completeness, any that them if optimize will move develop why DCF. the But a but sold of we the part it's the to ongoing we of impact nature very benefit won't being in of we're when to it pretty include hence not And time did if the makes that And we're mind what And we're BridgeTex. they communicate instance, at trying well. our just well not they to to net assets. our be describe do, out. will to a evens DCF. when of they find continue you way from situation, we

put related related and oil So in DCF of crude our In it it that's put behind why. as BridgeTex. in the sale activities the we one Basin to DCF we didn't instance, and Delaware logic to it

Michael Mears

development too, your project for is for certainly gain. Yes, sell a real a That's the intent specific selling with think probably a And likelihood not maybe that we're before not that and I common. future question of the in answer the likely. start going they're gain development we to them don't little just projects to a clear done

occurrence. anticipate wouldn't we So that regular to be a

Christopher Sighinolfi

Yes.

precisely it question, uncommon the of that's it prompted think I was the for. nature was that the color but looking that I

and you, new thank guys. So role. good in the luck Aaron, Thanks,

Operator

are gentlemen, those closing all back you turn have. questions Mr. the I to Mears, we for call the And will remarks. over

Michael Mears

All your Have afternoon. right. and support time Well, of today, continued thank you, we good appreciate Magellan. your everyone, for a

Operator

of disconnect and day, And for great your that for our your and ladies We gentlemen, participation. line. today. thank call have you Everyone, you your concludes rest may a

Magellan Midstream Partners (MMP) 1 May 192019 Q1 Earnings call transcript