MMP - Earnings call transcript Q3 2019 | Magellan Midstream Partners, L.P.

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Operator

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

As a reminder, this conference is being recorded, Thursday, October 31, 2019.

I would now like to turn the conference over to Mike Mears, Chief Executive Officer. Please go ahead.

Michael Mears

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

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

opinions discussed and review should the own Magellan's You form our SEC with the and information risk performance. filings in other your about future factors

With financial its favorable results the morning, we Magellan positive reported continued XXXX. this trend for

quarter expectations for $X.XX us by significantly year third Our XX%, increase to earnings exceeded the for the allowing or unit our once quarter guidance our again. per

Holman, detail. our in larger opening outlook of now to financial results expansion I'll quarter Then for to status before review discuss I'll call XXXX CFO, the turn our more third our project back over your be to to the latest questions. call and Jeff the our

Jeffrey Holman

Thank you, Mike.

comments During financial and flow. today, certain distributive cash operating non-GAAP references metrics, including to margin my be making I'll

of to or earnings on diluted included third exhibits morning, per elevated to interest basis net reported due metrics XX% $XXX measures. Earlier compared our nearest XXXX. unit have release this we to these on that $X.XX quarter $XXX.X third was of the income income $XXX.X to $X.XX We million per million their million reconcile GAAP third diluted sale quarter a in our XXXX unit net or in Please recall quarter gain BridgeTex. that

per quarter were limited unit. or third million earnings $X.XX gain, that XXXX Excluding partner $XXX.X

higher earnings the the third our also which activity, quarter from driven $X.XX. cash quarter mark-to-market by exceeded $XXX.X million impact our primarily XXXX, than for diluted the of quarter was for results third $X.XX, was $XX flow products XXXX strong of refined Distributable million, guidance business. quarter unit Excluding per adjusted

XXXX impact quarter revenue average and our higher with operating margin million, terminals of increase $XX.X now Volumes as due of well to our starting and in El year, products solid movements, generated $XXX.X the higher were our slightly of Refined an the were Paso rate connection I of East driven million higher in we by offset million segments products of over the associated turn, refined performance discuss the favorably the increased of products each higher favorable tariff quarter XXXX, refined period. current partially the start-up our operating demand third $XX.X of our impacted Rates recent as of segment. will across increase of primarily with which X.X% as rates. system short-haul by this volumes the segment Transportation as for in to shipments by well pipeline in the calls project. decrease. the implemented July average overall Houston-to-Hearne near

was statistics than I in particularly system. volatile our supply the our shows the overall gasoline impact more that our earnings the our volumes both and Texas, push accompanies XXXX might demand South mix both these volatility and system, product aviation throughput for of of the financial that also note volumes the release which The in portion decline demand in compared experienced on to fuel more shorter system, show XXXX, the periods. unchanged these decline products haul year-to-date refined essentially reflect Texas rest movements, schedule gasoline and increase excluding as of -- between a South more aviation as in on Texas the movement South

hedge margin futures mostly expenses sales increased property primarily current quarter refined future lower integrity to Operating on XXXX, used noncash as due were taxes. lower compared lower slightly segment period million is the higher higher in to to offset Product period. butane well gains the in $XX.X products third for current costs product as the by as contracts spending we

Moving segment. oil crude now our to

Cushing was of $X.X than as operating new increased tanks $XXX.X as dock quarter venture a third margin revenue Seabrook the at and well fees capabilities quarter million, million result Third storage of XXXX. the in at transportation XXXX. joint Christi higher higher of $X.X associated largely and Corpus our million terminal and Crude terminals of as August export addition following with oil terminal,

our of volumes transportation in to system, due with oil increases the higher mentioned most crude volumes Our in from Seabrook higher the previously period part increased the on current Houston significantly resulting activity. also distribution

than Lower was tariffs periods. volumes, rates in we As of which average primary decrease distribution average longer for as in shipments, have the our contributed of increasing Houston Pipeline at Longhorn reported wholly driver share between result decline renewals of the rate move on the seen last lower assets. year crude of a our System also haul the October in we rate XXXX, Longhorn earned throughout oil owned average to contract the

per August. the a barrels compared per for record on for volumes July Longhorn we day monthly XXX,XXX two XXXX, volumes third for demand highest And August day barrels shipments averaged on spot XXX,XXX and over through Volumes continued in little Longhorn. as quarter to saw represented

As the Midland online quarter, in August. Houston anticipated, new narrowing the out between the of and basin price came during capacity late differential

full tariffs activities. capacity operate and Longhorn at due in incentive continue our to own September marketing However, to

our marketing are the our in activities accompany margin commodity financials, schedules financial these the consolidated statistics are associated from reflected eliminated from on quoted release. earnings as that the crude and operating profits volumes Our

the forecasted as a of per and result expect Longhorn throughput tariffs, approximately of day. these activities we on incentive to and for is XXX,XXX utilized barrels XXXX whole a As for fully XXXX remain remainder line marketing our the

fees million, the favorable lower decreased product partially for and oil which dock operating to accruals expenses and storage by paid more Seabrook. due expenses, environmental crude to Operating $X.X segment overages additional reduced offset

co-owner's quarter. the as expense Crude in the agreement million venture affiliate, of was XXXX discussed derivative operating driven the joint by last valuation unrealized oil higher basis period, other $X.X we mark-to-market the within

lower Crude recently new joint BridgeTex volumes well in the uncommitted per a barrels with oil periods, averaged oil to XXX,XXX per approximately in incentive from our connection higher equity quarter expansion of Saddlehorn now million earnings last as as Saddlehorn in day XXX,XXX increases of from offset per announced as crude approximately a compared received between volume higher, day. on were earnings Saddlehorn other day for the And as quarter commitments third XXXX equity of earnings equity decreased pipeline ventures. approximately result as $X.X whole primary expect barrels the XX,XXX average volumes tariffs. year. we barrels of Saddlehorn

year BridgeTex BridgeTex's XXX,XXX volumes offset by Seabrook offset XXX,XXX same per interest barrels barrels day at the our compared Seabrook of Higher volumes will equity to previously. XXXX were day by These earnings. per driven average approximately lower in period lower the period. by also noted increases higher earnings the more increased, ownership approximately in last than

and for narrowing Consistent with between reduced Longhorn, BridgeTex on Midland shipments spot Houston our has stop demand the differential at remarks from our published spot regarding barrels tariffs.

per However, BridgeTex well we on are on at driven line, as the to from such average volume primarily tools earned the for using to of throughput time. commitments project the line, by BridgeTex the new tariffs movements, barrels Based optimize currently day. the these rate as the we on about utilization XXX,XXX incentive XXXX be with prevailing differential

segment. discussion wrap-up of to by our performance the Finally,

million asset due the which Our an is spending. more current primarily contract XXXX as $X.X Marine of being operating were over These tankage $X.X integrity work. Revenues of million increase segment margins million of to period. higher, generated available well current $XX.X in the quarter, accruals property higher offset storage partially for were to about due higher as higher timing period tax maintenance by the revenues in the

segment Marine other Harvey. by $X.X insurance as damage proceeds we million, from on Hurricane addition, was In recognized higher income sustained

quarter. was Net $X.X due growth and $X.X expense quarter, a of the unchanged Moving million debt between lower slightly interest periods, lower basically to G&A now expense average million primarily higher was to current in business. rate. employee to Depreciation, other due while last variances primarily our to and increased driven XXXX, headcount in impairment the by amortization outstanding expense average year's lower interest

billion. debt outstanding during was $X.X and weighted was Our third quarter the X.X% average our approximately rate average

As third $X.XX sale XXXX the $XXX BridgeTex in as hand. interest XXXX long-term of on of disposition proportion the was reflected of period debt million assets billion, was quarter already mentioned. of Gain on our as $XXX.X in lower September XX, with cash million

balance the and liquidity. to sheet briefly metrics Moving

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

issue fund to expect debt equity. while without need to slate limit of with retained our of any continue our leverage projects growth to flow cash all within long-standing Xx We current staying and excess well

currently maintain terms over as well million, of which of to facility XXX-day both of $X billion liquidity, undrawn. capacity facility, with we our multi-year continue In as $XXX are credit

update working an for guidance to the I as are projects to of will give the well back growth some our now over year we Mike turn the balance of the as call discuss on. on

Michael Mears

Jeff. you, Thank

on XXXX by based strong our of better-than-expected for results earlier, remainder we for have $XX year. $X.XX increased third to third results, continued billion. The quarter the the guidance results million increased as mentioned our guidance annual includes from as well projected quarter solid DCF As our the

on rates ago consistent during to has the fourth our full differential demand to types. Midland decline the rate spot spot Houston with we narrowed pipelines As Jeff below significantly tariff and level quarter noted a both a as and basis few guidance, expect the the for well between minutes at previous Longhorn BridgeTex and transportation for

through to to our volume environment. pipelines initiatives committed incentive a the move expect However, differential lower utilization pipelines recent we in tariff strategies these above optimize marketing both levels of from crude oil and do

very We hedged. roughly stood of For XX% average our commodity activities, our activity fourth outlook expect we per gallon still with to last of blending our where for similar net butane margins quarter $X.XX XXXX quarter. about is

$X.XX Looking XXXX locked hedges margin quarters spring ahead approximately per in with our to gallon. we've of of year, three around next

raised Last plan week, XXXX. which increase for consistent unit, our to annual distribution distribution to by $X.XX we per with our X% is our quarterly

than of we XXXX guidance XXXX updated $X.XX annual ratio X.XXx, $XXX our flow coverage for of now year. which results cash full more the of DCF expect the year With excess in million billion,

to ratio distribution, maintain period competitive pressure the One of our long-haul rate a oil Permian a and that especially increased we safety as pipelines crude ensures Basin. coverage ability of for our enter objectives in of quarterly cash is

And products to expansion new our capital, we on commercial Houston-to-Hearne the has progress during refined system for meet Moving Most some make Magellan's served one mid-September. in to markets is construction system. Texas notably, gasoline to quite Texas and to for projects. on for diesel step fuel time. and constraint began operations our demand East we in us pipeline pipeline capacity for this continue by significant increase our been our Midcontinent project in

of as obtained been has well. and West Texas the still which we with next is strategy high excellent for step making remains of The construction this are mid-XXXX of gear start-ups right-of-way system, majority expected. pipeline The expansion progress our vast in

out nearing seek during we is with dock X terminal with facility marine infrastructure and discussions venture storage of the joint Upon in players the barrels December. Pasadena expected and new commitments this to will next completion, completion one-half and further supporting our of additional phase pipeline have this be build site. and second in-service remain out industry The built to of million to

and Progress crude continues plans are early start-up. to for XXXX XXXX, online we Seabrook's morning's storage come an to barrels of expected for at this build in additional Seabrook, export oil capabilities storage announce early which and XXX,XXX another

XXX,XXX-barrel of And since take-or-pay forward with full is commitments. to long-term our announced supported per which by last Saddlehorn call, move day course, expansion plans its

storage of expansion little is and capacity and capability. will achieved by to available $XXX million the reminder, a As to Saddlehorn incremental in late per a The day expected be new XXXX. in barrels adding total XXX,XXX be over cost pumping will

of progress XXXX of The in expect now XXXX million projects. million we to by the estimates last spending construction to has complete billion $X $XXX the in underway, on increased our expansion XXXX we and provided. slate current projects $XXX from Based estimate spend

the late were million to increase About the new spending to Saddlehorn that the already to talked to to and contracted crude commitments added projects new about few Texas enhancements for the that number the accommodate relates projects reminder also storage expected in include the XXXX products attractive Seabrook recently other Basin in additional that previously launched. $XXX due timing year, shifted new with of a we've simply occur connections pipeline pipeline. refined We've and Permian to oil but long-term new A projects. and of our expansions, West of

potential Beyond well of projects growth, identifying capital on excess for $XXX we review. in remain future million opportunities still these focused additional of growth under with organic projects,

projects pipeline further optimization the of potential examples open significant crude expansion pipelines and under Some additional our oil season projects development supply include to with Texas commence West an of to refined a soon. our products

and company capital Magellan, discipline to for a in is light competitive priority from marketplace. top the As is expect you've a of critical come our especially attribute, current

the close update project a us successful Voyager of what only to status be open project. we I than in season with that the capital-efficient of it also solution develop be our more we proposed. on became to August, After provide will could apparent was the a wanted this if originally brief

on actively require that project working includes months with multiple contemplated we significant will have components capital was been progress. originally a negotiated over this have past We the of and the been with parties, made designed, is certain currently that have fraction The multiple value-adding and counterparties. few

reach developments. can't more guarantee be optimistic these FID, will still we successful significantly will we that While are the new that project with we

remarks. concludes now our prepared That

operator, the So we open can for questions. line

Operator

[Operator Instructions].

Jeremy from Tonet JPMorgan. Our with question first comes

Jeremy Tonet

it while And where to this in is, in uniquely that, employ of many way are The in like really really Magellan they where near has marketplace a could you a position MLPs not recently. lot up flexibility meaningful on topic buybacks been buybacks a the seems have more is act positioned, in picking term. actually the

And think that. about wondering, so I was capital you as if far your as update how allocation us and philosophy could you just

Michael Mears

our fairly capital think next go evaluate evaluate look what as don't well-balanced. kind as for cash to we back buying going a that we that. we're I at opposed not year But year, use are pairing before for to I've publicly frequently. excess plan of said today, forward, to our cash And to this they're we're mean do We, that. here you Well, up have of equity. I our and sit we with if forecasts continue excess

buying higher to we do -- not probably buy in likely That's would in not say for do. So if at you environment, would never equity. a But in at away opposed level going mean point do be would this it. back I any changed, time, we're to take least point most unless this something have to I is this leveraging the order to I'm back we But and that's essentially not we frequent thing to here, that. to think under the from evaluation don't we equity. plans

Jeremy Tonet

of falls out that mean, much it the in Maybe at peers guess, leverage past. I than building point, on just points asset I is And was something MMP's lower seems that there. consideration sales kind like most under

a if two MMP time, at how to far those think undervalued you items wondering it. growth think by So value that into get as uptick projects, off that capturing And you X on -- wondering factor how calculations big price relative certain right as also about that unit and when bat. about you your I'm Does as into same as can play Xx well the if you're targeting you to the view the amount, intrinsic very gap buybacks?

Michael Mears

on regards we've at or Well, to mentioned other handle first part that the assets, we to components our assessments to what sense thought that experts with to value program and question, parties comment us. let that. individual make of obviously, had value a we is. to buybacks. to going it's equity or whether do frequently more might before assets with we still was. and true of we haven't I'm I'll what But as authorized evaluate portfolio selling than If whether have the we the might regards look or assets your to value make of our would intrinsic not one, not today

so strength. is talk a than don't really for we don't Part because actionable we a we're do We into a if words, it put other counterparty we've It We a to the fall it to problem we if is about have need determined not sell of think don't of if there that doing category. test market, from unless on it that position choose test that assets to would we don't the value In to can would assess reason do unusual the transaction. process can. we assets. fix. typically an potential more be market, to that And openly us be

we a process, like. probability not don't we is And to transact if so you get that significant there we the at numbers end, a were conduct if would

about know. a I why something, an advance. would proceeds, And then to case-by-case don't have on we there would would in we agreement if talk can that's let those And we tell a of discussion so discuss on do sell like obviously, use that you basis. to you and we to be the just

Operator

SunTrust. with comes question next Richardson Tristan from Our

Tristan Richardson

Just discussions from curious, advancing and your a on on potentially. on in Voyager comments taking different

current clarify, a then right? does that Could project. your You noted Is And to include value-enhancing with of associated project? would what enhance components. not XXXX sense also to Voyager give this us outlook capital several any value you your potential just

Michael Mears

That's your question. correct. me And let the correct on part of second that's --

Voyager. details more outlook items include capital project competitive project. market the that. very, into are you really a are XXXX clarity And get think on of Voyager hesitant Our I anything advances, there those right to now. if I'm the doesn't it's the as But, for be very into that will incorporating what know, we

you that's already that to factor So this not pursuing the say capital primary the biggest capital-efficient talk going the to of is now the That's those ground. factor of competitive. in spent reduction involves as not the dramatic competitive probably I in amount needs -- might a that's make I'd using that's course rather substantial items. make about probably, project this that made in be more solution, happen, well, this to assume which will pipe

but we're talk elements other to prepared about important, now. those right very are not The

Tristan Richardson

about your or for gathering And what to look crude around as you're about then Curious talked Should you optimizations could projects infrastructure? business. Helpful. like. opportunities closer wellhead think those we activities Great. evaluating that supply the project

Michael Mears

the of all into origins. specific we're that into what again, security will, specifically if of our us definition, our right wellhead. to I elaborate current But talking by I market there, want about successful, of the pipelines. the too to we're on Again, now. just closer But And pipelines the supply given get talking into competitive of nature you're It's improve cost don't that further. projects Yes. But don't there about our what upstream and the right. is puts that are supply lower to of want

Tristan Richardson

And me. just for then Understood. one last

about derivative marketing -- a of that shipments. your kind understand better. talked kind think Or just agreement? Just of basis help interstate facilitate us about curious efforts to Should as about you little we that

Michael Mears

others That's got one. using. tool. one of -- them. we're That's We've that one that But are that is

Operator

Our next question Stanley comes with Research. from Keith Wolfe

Keith Stanley

on pipeline, Voyager, just at or clarification. projects? whether entities is with Or new follow-up still already looking possibly greenfield? involve it say, can a partnering you're for a project, When could capital-efficient a I more that announced clarify you One it pipeline have repurposed

Michael Mears

the That's project to It's than a but with I Cushing -- go same. going I'm does service the to And Houston. think that. loaded is of to from any nature don't partners, question. it going the working further provide I involve

Keith Stanley

Separate Okay. question.

soon this something potentially You you season another could in we mentioned this you the of at of to Can products give mean West similar just might color looking entail project what smaller? open I expansion? that are terms Or project. Houston-to-Hearne and at expansion you size for East there? look doing this Texas refined the -- an potentially is Or more any

Michael Mears

material still It's a it's that. than It's smaller than project, but that. smaller

Operator

with Shneur Gershuni from UBS. next question Our comes

Shneur Gershuni

DRA much that it? use an the how away takes about. last you you over the have you wondering perspective? of what if be going bit. from system the Enterprise talk this couple about cost about and shift run that the change DRA CapEx that sort if your enhance can of had kind a volume talk project it would DRA. occur little want to I'd mentioned to of about used metric years that was don't to would weren't talking wondering, high maybe what's I'm And from you I the offset OpEx thought And I to

Michael Mears

incremental pipe of the substantial a pipeline. moves full DRA almost I you amount that use a Well, of as suspect And does with DRA. increase we the up cost the of has as significantly capacity everyone would use

DRA. it's XX% I pipe -- -- to the talk to the with unusual So pipe I typically, capacity out get guess yes, of on of don't specifically, to our and want capacity XX%-plus about not use but increases a kind increases through ordinary of

be put So to you I spend can and it just entire pipes, in amount refined year-to-date. system, The our context. maybe of be would about pipe give products million $XX across DRA pipeline wouldn't is oil too, this crude so number another on total -- our it just

context a So there. that maybe you gives little

barrels barrels. flip a the of where have that your if pipe the side throughput not space The moving your environment, crude are competitive in well, first declines, you the highest is say, on you're oil cost that

the on -- your of So pipe also. operating dramatically the drop your cost barrels remaining

you you to that on market get least improvement pipe, had DRA. we've if use to you your until moving you're do at some existing pipe number But your to the margin barrels sort is DRA full, I on -- there of maximize mean reduce the these economics less if thing. So have now, of keep the barrels you up and if if

Shneur Gershuni

think quickly DRA you barrels like a mean basin as but essentially? X lot and the about there's the out of of I of -- keep lot Permian, maybe overbuild it the a because can of spreads DRA also is I of it million of more holistically is DRA come across of mean, there's that something peaking normalized? been off-line concern system. use And sort so capacity capacity even can will sort XXX,XXX about on kind of pipelines be of a

Michael Mears

cost, using using then, unreasonable, the stop to position quantify drop. is of an a capture barrel not. XX% mean everybody -- a or if margin first it. it, And not still using their all, in that's can if I'm variable probably incremental I can't would incentive the And has they the use obviously. that DRA, yes, I is is pipeline I Well, not takeaway in higher at capacity tell is have you know total But than but incentive everyone what But though use it to they it. an everybody XX% doing, to everybody if still else every don't to whether it. basin

don't -- the overbuilt, DRA usage they that just is it's still everybody going barrels back competitive a a cut those everybody can order People would because capacity in think secure are I situation match of takeaway the to is to to DRA, their if production. require So it's to be going where environment. on It's trying incremental very get them.

Shneur Gershuni

Okay. -- Have too. pattern the market? same there any holding as shifts? we is here. That in is gears kind to little do of mark facilities you the makes the we're where you're kind hit just I Or shifting talk hit Are that mean, well, system. of wondering products sense. building Maybe refined a been you sort think see across bit in can been? kind export have you seeing if I you general more how your was wanting of about it flows waterborne your of obviously,

kind wondering Just the demand you're water? seeing the if at refined products of pickup for

Michael Mears

facilities. We I are There's seeing. own their interested. the But we parties we're mean, haven't assets seen, and I still building on that's big haven't interest step-up for months, a last refined X the people water. -- other to seen X in very mean incremental products what in

demand on you products Texas Midcontinent refined think our demand don't I is the legacy systems, systems, to throughput to expect the our wouldn't for on refined is systems, our very declining. go can I pipeline products tell the So stable. that I water

take total on In refinery necessarily you out you out In rather again are they're flat those refined products, If growth not quarter, I fact, -- a by just up are because push than our total South from were volumes, projects demand mean, third if all at essentially X%. take which year-to-date, from you take and the I ratable the year-to-date. a out, results driven. look if Texas we the we

very refined stable in -- pipeline it's the our product systems. in So demand

know answers question So that or I don't your not. if

Shneur Gershuni

some does. -- just that were think is X months you Or that somebody question. a that else's sale it kind There concluded, I of no. review X still potentially And process ago Yes, to media final definitely Has prior about one it question? ongoing? of No, you're reports Yes. evaluating said you'd constant or assets.

Michael Mears

we Well, really be any said we comment I don't processes or running. may may as on earlier, not we

it's not I'm processes question. tell may to unnecessarily will point, we on it conscious to that decision expectations again, evaluate. you on differ a set talk our about going because So actively And the market's that I going do the what with really we if you urgency we're process, in testing as no mind a to as market to approach the don't we outcome. one transact actually when like conduct if to But

So I but apologize where your for not answering we're that's at. question directly,

Operator

Our from comes Praneeth Satish with next question Wells Fargo.

Praneeth Satish

the in spread I talk baseline consider of level like is you wondering profitability should if about operations. big was all are go marketing based? your as how assume I just we there to And then marketing crude a should more out you we guess time? profits could do envision this Or well? that become we as

Michael Mears

that's are be can going speaking, to differential generally mean marketing the fluctuate. -- margins Well, so I they based.

answering As that is contracts, we we to contract able the own this in do that. are let by on will our prefer pipeline secure would start business attempting we marketing market the as big this the how of can long to what still not We being me space, But get, pipe. rather term, absence far diligently and do. to on

contracts, that's mean, not if our that, a large securing make get in large, business. business goal. but I could is goal unsuccessful marketing So not It we're the given to our

Praneeth Satish

the -- component it Because better you've to to than sounds the it. Got typical it. project. target? Or And range? If assume it redesigned within brownfield then some like your X the on there's return fall it Voyager to new just Xx is advances, that should does X we got Xx EBITDA some

Michael Mears

fall the low to of end contracted the If to it importantly, But it's that. we X at return. range, more hopefully in likely be advance, going that Xx would at

Operator

comes Our America. with Walker next question Bank Derek of from

Derek Walker

follow products refined to just up of some the dynamics. Mike, on

gasoline referenced of you out dynamics some and provide volatility, that on formal you're playing XXXX? mentioned remarks for color and this But of those of think I rest into and sort the aviation. you the sort see can short-haul you how think some year just you I either

Michael Mears

volatility the more Well, what to we're and from a runs we talking of or that have up the Texas Houston been I City is pipe, which small clarity is the South Ship pipes, pipe think for talking Channel section essentially. our about on the call Texas that's

options are to the gasoline the in that very choose can month on Texas where the ship product significant on they can jet sourced out be they the less opposite. and and take variable, next pipe, month City, to that do pipes the mix those choose ship So by of other amount remembering got to in X options they've can in refiners fuel, product and a they water that the

there's opportunity matter, pipe. actual the and and that the there on mix. the unpredictability volatility put be. can product put So that that they less volume And to what will on happens If an there be to on do might on considerable for be unpredictability water, more

It's volatility So numbers is. our affects it's volume. typically It because low rate, but it's where the that's high volume. high

out. that's it perspective, per big it's why perspective, volume a skew can we financial from it a barrel. from number. a So call But our And rate not

Derek Walker

more that any XXX,XXX for was Mike, think you maybe BridgeTex. XXX,XXX for from the have I bit kind about clarification. -- the Can number you average in? incentive year just little talk XQ that a Does appreciate that. assume rate think incentive contribution for you and the Longhorn referenced I baked And you rates? in the one for if of a that

Michael Mears

Yes.

Derek Walker

seeing? have that assume you more less can just Can bit Is sort you maybe you elaborate of a than on I what give -- been -- little it's that?

Michael Mears

Well, uncommitted going away. today, essentially but it's BridgeTex, full a is you of middle mean, be don't could happen don't of the expect in month. I end the through And know which way uncertain. pipeline with you until sit long nominations, on we as have this as full, the to still Longhorn on be year. volume really a There's you know, it space chance environment, until the here to we our December happen what's

tougher. is that predicting So

can I as put on as it. about So color that's much a

Operator

comes question Jefferies. next with Sighinolfi Chris Our from

Christopher Sighinolfi

I just had two questions.

clarification pipelines up, of we this to First, to the that a you conference the MEIC as business, know the opportunity wondering I'm that spreads. your pipes the of remains side that solely draw me. also other buttress of this going curious, any that concern? some to I'm that Is I about not that as Or which network just is an decline destined But marketing a other that to maybe narrowing Citi I for element on their if are there's follow locations? happens is of in ensure -- own with full. at for question competitors talked there's systems are for just guess, Houston, Houston into

Michael Mears

system. distribution move network Longhorn our extent barrels to value the but that on secure we marketing barrels we through out Houston our move originate of also part arm that's through BridgeTex, do, proposition. that our If we then on Well, go they the to and the would move and which barrels can pipe, through

the lot So yes, distribution a to the other the that's which I But off regards Not mean Longhorn of system and pipes. part volumes from too, absolutely. are -- barriers other BridgeTex, moves with of it.

Christopher Sighinolfi

higher growth X.Xx and pin just guess think rate Okay. to then, I for year, think of rate mean, And what want trying still we've and year. about to of consistently mentioned which it off next seen I then I or remarks anything roll we a margin in yield? that in when your like the we should maybe nature very But And I'm terms competitive should releases increased think what blending perhaps. that might as -- just operate. as we the relating I suspect, performance the it uncertain prepared think initially coming growth yield from marketing maybe I the X.XXx the you in process about number guess, remains not you clarify. strong the or you factors somewhat this of together markets several think review times introduction to about that. coverage separately, And the it, FERC biased will just of to you we But that distribution distribution note the better a butane I all in index into

Michael Mears

you going which be it's that announced to or But we be as should lead up to years not up the create -- that And to factored going will will year. not. the -- oil be clear, when I you haven't is highly probably in to mean, analysis determined our can't even of bias haven't and be to look for I that our crude we to I anyone the couple year into and so Well, the for answer question matter, will we internally at I'm it's competitive, guidance. don't volatility for space, so it guidance what distribution whether in next particular, as surprise next we -- earnings. next no tell

Operator

further are your now to remarks. I questions this will Mears, Please closing Mr. no at presentation you. your continue turn call there back the with time. or

Michael Mears

in you Magellan, Thank have your a Halloween. for today. and thank time Well, Happy for you your interest

Operator

your thank the and conclude does lines. participation, We please for That that disconnect conference you you call for ask today. your we

Magellan Midstream Partners (MMP) 31 Oct 192019 Q3 Earnings call transcript