MMP - Earnings call transcript Q1 2020 | Magellan Midstream Partners, L.P.

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Operator

Greetings and welcome to the Magellan Midstream Partners’ First Quarter 2020 Earnings Conference Call.

During the presentation, all participants will be in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions].

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

Mike Mears

the and First for well Quarter for update latest Hello our trends to systems. pipeline as us discuss outlook on an including Magellan's financial XXXX, product thank you. demand joining on you today our refined Thank results as

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

to other You SEC should review past information challenges opinions I'd the over fuel operating the dedication discussed to supply your recognizing form before faced have our risk serve two about the factors the with we to communities to Their is employees ensure continuity the future response performance. safely and like they admirable. filings to from the own of Magellan's in and by tremendous months. our the

During environmental of internal our category. this remained work processes, were our have and disruption all significant fully operational safety in period almost facilities targets exceeded every normal and to of

a we mid-March. such effectively strategic to In as also sale terminal execute our closing on were addition, able on marine in objectives

$X.XX now higher by and generated per off quarter blending expenses unit. solid driven Turning to was lower our earnings. liquid we operating guidance first This started well margins. financial exceeded as our The year previous results by gas and primarily

a Saddlehorn February. sale a in of unit In in addition, the about XX% $X.XX result of gaining was the per interest

call your discuss latest the year opening before first Magellan's be outlook Our versus for ago results back now XXXX, CFO, I'll Jeff review will for financial Holman period, questions. our and to quarter the

Jeff Holman

Thank you, Mike.

distributable be I'll DCF. flow or and cash including As non-GAAP margin to metrics making certain operating financial usual, references

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

impact $X.XX. Excluding per diluted quarter $XXX.X activity to flow margin than of which unit for quarter Distributable the 'XX, lower quarter, million, adjusted the $XX.X of current the first exceeded due cash in $XXX of operating primarily our was the was the for our million from million earnings mark-to-market guides segment. lower crude $X.XX, quarter in oil reported

of presentation in opportunity report for everyone our let Before Crude segments; the more or segment Products Day the and in of marine remind take I just me March, our to Analyst we late performance Refined discussed two sales Oil, we following as discuss the businesses now detail, in terminal. that, our

marine included Refined terminal, joint segments Christi oil Pasadena our our segment. and Corpus is Terminal interest marine while our are in Park Galena terminal in Our now in venture our included Product crude our

of positive earned to revenue terminals short-haul July, and higher Product investments, primarily period, a segment that for of rates, more the mark-to-market Product favorably impacted lower were turning tariff impact Transportation segment our which about during the of adjustments increased period. rate. quarter Refined tariff higher by of first by current $X.X average an million million with million, $XX increase XXXX driven which our of increase on generated by resulting increase partially operating we hedges So, in $XXX.X the the offset X.X%, XXXX commodity of margin most XXXX, on first. the from Refined

restrictions our drilling of later higher on of of offset our result Volumes and pipeline, part both the volumes refined the activity incremental began reduced and barrels primarily as East a service virus-related which by Houston-to-Hearne partially on second half increased, also XXXX, impacts property in product the the $X.X hurricane increased the operating from the refined primarily current to benefited while the income period settlement. decreased Harvey for quarter, million insurance $X.X as period, expenses taxes XXXX to first segment million, in product related Operating due quarter. other between

Product primarily $XX the to margin inventory of which million compared and adjustments, year were mark-to-market period. the approximately first quarter increased due the valuation to timing quarter favorable million current XXXX, $XX.X in prior versus

the favorable quarter course, the period fractionated On margins purposes, mostly DCF are until and for the due we 'XX current DCF $X.X overages. to profit period, Of sales of those and in sold. product adjustments was out the approximately inventory a to adjust mark-to-market impact first basis, valuation million barrels favorable favorable and which margin related

quarter Powder XXXX, Springs approximately $XX.X this the mark-to-market position of versus marine X as terminal contributions begun as Phase joint Pasadena first from favorable to project in adjustments increased due million on that higher of hedge joint coming well of venture earnings online equity year. primarily product our venture first Refined at quarter as

segment. Moving now to oil crude

revenue of was million first transportation of terminals result a primarily operating lower quarter. First volumes Longhorn margin quarter decreased on quarter lower million, oil $X.X in $XXX.X current $XX and million spot Crude the as XXXX. than

Longhorn the barrel to overall barrel per rate. increased rate affiliates at from marketing average barrel XXX,XXX While day our per include any of third-party XXX,XXX movements earned our decreased period posted we throughput not the by periods, actually barrels slightly as did between shipped including spot current per day,

pursuant expectation committed ship Instead, agreement. our of revenue sell to our continues at rest XXXX anticipate Longhorn our Similarly, activities marketing curves. marketing oil commitment or we meaningful ship that and our in crude customers for price third-party the transportation with volume just own we the year. forecasting do spot forecast, forward their currently buy uncommitted to not not while the receiving nominations its given affiliate from are previous levels, any our assumes on barrels Consistent marketing

commitments committed their affiliates to on by Recall assumes those committed continue to and barrels XXXX. to our that, XXX,XXX be of on by committed including marketing day us. majority counterparties volumes backed our volumes about continue large The Longhorn averaged sell our our creditworthy in per counterparties revenues perform forecast

choose in lieu conceivable deficiencies Given of customers related price of the current it could committed the face the timing transporting affect we recognize environment, which could revenues. is commodity our volumes, to when the that of some

the receive would you payments for sufficiency cash activity when us commitments of unchanged. those timing to for impossible the such Any Although is however. predict remain

have And so, impact time. XXXX earnings deficiency this assumed any at not from significant of payments we

distribution expenses decreased to origin million, system. favorable from our Other basis segment well as that derivative period although agreement. the slightly the during of Permian in adjustment the that as of average movement Houston mark-to-market XXXX to valuation increased on agreement current now gains. system. the the period, about first result primarily quarter of of year-over-year, those operating unfavorable Volumes of Turning to due oil settlements unfavorable $X on in on rate our operating expenses increased Crude in as volumes destination mix was as differential lower resulted less million product $X payment that Houston a

favorable oil XXX,XXX XXXX that Crude day in more per tariffs with the XXX,XXX of result ownership Saddlehorn by equity a lower largest decreased in driver early barrels offset of of lower our XX% earnings quarter. $X.X average between combined that's of average periods. was than day, interest approximately and the volumes the earnings, million sales the impact period, lower percentage, following of higher impact The versus per barrels the

shift equity slightly while XXX,XXX joint volumes in day the earnings the per expenses, which the to between periods, first increased as XXXX at first due barrel tariff decreased also as lower spot in tariffs more quarter per shift sets used or saw XXXX than barrel XXX,XXX barrel for the rate movement in quarter BridgeTex of 'XX. average we under the opposed to period, slightly, day lower overall primarily barrels

uncommitted Consistent either remarks that the current differentials any of on for the anticipate with and our regarding forecast the BridgeTex not track or barrels Saddlehorn outlook or rest year, Longhorn, on and our production the remainder just of other we spot do customer the year, commitments. assumes volumes spot barrels for given

adjustments $X as activities to for oil Finally, segment earned Crude Longhorn a of oil offset the on marketing by about more cash which unfavorable primarily our than was quarter. affiliate product margin non-cash result Crude during margin inventories, million the our the to XXXX,

compared into $X.X to 'XX, versus same first to increased incentive and Moving of primarily G&A comparables. out largely depreciation to decreased Depreciation, to placed period service. on commencement to XXXX, of due million quarter. quarter due other recently the lower variances impairment expense $X.X the in year's amortization expense assets million, last

current period rate. partially to year expense interest lower due primarily early. $X.X due outstanding retire made prior offset was million average the to was Otherwise, in quarter, our XXXX a debt make Net lower the notes all in payments higher by

our Our the including quarter, average outstanding approximately X.X% first total At paper $X.X and debt outstanding. $X.XX billion, long-term debt was March rate bonds over volatile was zero XXst, billion. weighted-average commercial interest was during

of in sale gain less of disposition $X.X a the XXXX, in in Saddlehorn of was lower the the of in current the project. and of of BridgeTex sale a interest Gain our the basin on gains portion on we interest quarter Delaware the assets our the than in period BridgeTex the on pipeline discontinued first crude we realized XX% oil realized sale was year prior as million and

the price balance We total shortly Investor over quarter average capital million. to in Call. spend an of fourth briefly opportunistically sheet $X.X liquidity, and after a units $XXX at allocation, our metrics Moving per for began unit we unit million $XX.XX repurchasing little repurchased quarter of a

and As lockdown were oil the majority gas conducted prices the repurchases disclosed, vast to of the those prior of previously and measures. implementation

as and volume spending discussions the program, to of units. opportunities, repurchase excess legal and number repurchases on will of well as balance in expansion price noted the of a consistently have sheet unit market alternatives regulatory but price we our factors, time, our our of capital of trading requirements the conditions and expected consideration, As not limited including investment available, needs, cash depend

additional of the financial we unit for balance the last months, flexibility over prioritized sheet strength the events have and being. repurchases two time Given

end during purposes ratio quarter, unit Saddlehorn. on impact our times in for we compliance our a from quarter from and the marine is of sale at sale offset was the proceeds as repurchases XX% the leverage leverage by the of terminal X.X interest our received approximately the Our basically

we had our $X on the end In hand first a capacity facility, cash continue of at approximately million $XXX quarter. and multi-year maintain credit to of of with terms liquidity, of billion

will Mike turn now discuss our to I to for back I'll over call guidance the the year. updated

Mike Mears

for XXXX. the you year. This outlook to a $X.XXX prices. due time volatility now Jeff. we through We continued this of range believe demand to Thanks, billion regarding like and at pace product in for estimates $X billion I refined of the the walk is continued updated range revised a recovery DCF our appropriate uncertainty morning the to provided would commodity

beginning While the predictable. of levels historical of until refined trajectory a process reopen of the footprint these easily not of are recovery to demand length to product and the states more our number time the operating their returned within economies, markets are

related XXth, commodity in time. ago March to as a $XX month on For may that lower was decline of $XX those update estimates what you larger than of demand you virtual us million fuel are primarily for remainder for our a DCF million price roughly at year. environment current projected have we The joined expectations the even discussed to is than reduction for noticed investor the that as an the well aviation lower

the this a table of adjustments that you I understand so between $X.X are to Analysts in now can our a easily our we morning, you Day March the billion thinking when guidance to press would original DCF In that is included current original key table that just this the our related release assumptions shows with new table them. on our and XXth, can compare and with to like range going compared XXXX the that we world consistent about review how to two XXXX looks how of we're environment, guidance. discuss range, we the presented entered so

tenders, year. item, the for million So, the reductions which $XXX is starting and line of profits item million lower with $XXX that the blending to range first is for

with then half we and the business of what the which fractionation in of are that our and is price of low range, consistent zero the the low-end back assuming we in the remainder the reduction to our year, do we of March to applied commodity were second assuming with has that have On that tender. profits blending

since Most we related to the as see impact zero already of the on profit. you our been price change, assuming tenders frac business, can had blending was and

the price shows in On predicting. that the oil, of just It's just higher-end that assumed that $XX would the of of between what's that year, it crude range increase of possible not a variance we're showing the million. of the necessarily and over course numbers two those which $XX range, be,

range to reduction million in now If X% that for second reduction in refined go are demand It's and The I in normal in we XX% that the amounts assumptions $XX to listed in impact, of $XX table. diesel, quarter, keeping XXXX. range through the would gasoline but and remainder the product reduction before return million. July, is for declines distillate half we're in aviation, have XX% and at gasoline of then to those levels XX% we the aviation

Just a that's our data, to year-over-year benchmark behind give April. is you those actual for and a this actual on -- this April, for so is comparison assumptions,

loadings for XX% were month April. the gasoline down of Our

and April down Our XX%. down distillate improved is substantially. X X% If the the of which portion down is Gasoline just a last X% XX% our jet movements distillate was loadings numbers at days were our is for those April, year-over-year, much XX%. deliveries, of and last jet have smaller I down days down is look seven of

distillate on line the the are in have a assumptions, reduction a for we basis and item numbers, those associated that our in system, demand with drilling highlight on and I our if total separate serve. diesel in throughput reductions reductions we would

that's that of included All you. gave in the I just reductions

gave that's So, comprehensive just you. number a I

So drilling basins. for in April saw including the decline total, diesel. X% the was reductions What we and we're assuming in X% quarter instance, in on for

I total forward going been regards discussion some points the other forecast to for know regarding quarter. year-to-date product both data reductions, demand there's with and refined

of sense so was last product our give XX% refined reduction total of XX%. what experience days April has the you X April been, for those compare to reference a refined product against for you our our Just was and reduction points, total can

So markets of and bottom data not seen suggest as parts that as have upwards. serve starting the trajectory dramatic the other we've at would country, seen and clearly, we the reduction that, the we're

extent the that And with reduction or declines the on the in item forecast, we've end rate the end And XX% the low our the reduction separate we I mentioned reduction. associated for Basin reduced the changed We've assumption line that drilling somewhat a softened that, of year. rate volumes that, $XX entirely in a distillate in for year, on reductions. onto from assumptions high reduction these Permian for Moving of have a $XX decline. again, million other briefly the assumptions a generates later to a got million then XX%

changed. that In what the and would have that's has The March, projecting. on oil, on volumes no assumption reduced still we crude were projecting our volumes with we're systems cruel we not spot consistent

$XX million So, improved, reasons. that savings capture has that also is we've expense the to storage for then That $XX to decline has item year. $XX is of March remained And remainder revenue additional that able additional from other and the at been two forecast the million led a to range the for increase. has million. from One

billion All X of that our, total of forecast through X.XXX year. range to billion for our the

of on our well the to based level XXXX. feedback, So sensitivity current latest distribution at the as for maintain this remainder we intend analysis quarter DCF as investor cast

from them, clearly and during that remain unprecedented coverage especially economic the of to distribution healthy period utmost long-term heard uncertainty. distribution investors of of importance We have this the stability

$X.XX returns our distribution target coverage annualized the provide stabilize. once an We million continue cash more current and intend With of the per to amount XXXX distribution unit on distribution to products price times this in XXXX. do at refined time, levels basis, coverage X.X our latest sensitivity, for to but million times X.X financial about based range commodity guidance of $XXX $XX not beyond to historical above environment demand we DCF X.XX which to generates is excess on expect

supported during first projects $XXX at most any agreements. complete Regarding nearing not time, still XXXX expect of spending, the spend We completion XX% are spending we long-term our with expansion the projects that this already underway do are quarter. projects defer capital to about occurring to during to million expansion as of expect by and

operation expected Our or of to Texas largest and products West project to begin final quarter. in the is our stages expansion its third relates way which refined pipeline,

So refined current clearly and commodity from near-term significant the impacts products in as significantly discussed prices lower financial demand. we today, reductions expect

strength well proven our good term. for to successfully respond model as business the long industry to approach not Magellan's challenges, company to manage financial this term short and but position resilient However, only the

remarks. And that prepared our concludes

now operator, questions. So to the for we're ready over turn line

Operator

Instructions] [Operator Theresa Please The from comes of first go question you. Barclays. Thank Chen ahead.

Theresa Chen

the wanted that to about Mike, ask detail. you you guidance I out laid in

so just comprehensive. First, days of you last the we understand seven correctly, the numbers being April, give

volumes interpret the then there. Is impact drilling $XX to So, necessarily on negative comments? quarter, if million that your distillate even that pace to that of rest would $XX impact for reduced is the million be way the like the not the

Mike Mears

understood at pace, the I distillate sure continues assumption. our it current question. on distillate not assumption the I'm then will If be the

Theresa Chen

Right.

Mike Mears

the For question? your second that quarter, is

Theresa Chen

Right.

Mike Mears

that's Then answer. the

Theresa Chen

Okay.

question you with better the had about, other your population does data I other different or The had that talk the types density, has markets happening? do been this product -- the deterioration of user any why not than you demand some public why of serve to have refined end around or Can color points? about that's

Mike Mears

tell Yes, have of a there's obviously mean, to our I what we think I take you any don't our but things data into to assumptions, empirical consideration. go number I are. thoughts can support

in and all in generally other think important the were restrictions one Midwest less one places, that's the that, lockdown the of severe maybe than I most is Central item. of they First were

that rural consequence mass in The further of no significant item where locations. to people the to second need There's is their supplies markets. is get significant than distances really in these travel transit areas is, there basic other any

economic the you than are a think impacted we I gasoline softened From that kinds standpoint on from thing of to think in agricultural demand clearly, environment. for current by instance. one the we're that, diesel to But probably elsewhere impacted may those demand national same demand, just by do drivers has demand, and significant been lot of have as about mitigation things that coast is we the So, seen phrase regards not true the activity. our area with the is have is less which

Theresa Chen

of any you back assume everything's in And a you numbers, there are built the sense permanent pre-COVID recovery levels? to into that assuming is bounces do when or destruction these guidance demand

Mike Mears

jet with in the levels demand the exception of assumptions to the drop sometime pre-COVID These assumed mid-third quarter. returns fuel

Jeff Holman

Except separate. which is drilling side the for around

Mike Mears

the drilling demand Yes, yes. regards good with to Jeff brought a except up point basis. in distillate

Theresa Chen

just XX reductions And me, is sustainable? from how each you costs then from XX Can reductions talk Are about much just in storage lastly revenue. to and cost benefits bucket? those

Mike Mears

say, Well, the to on portion would storage reductions, are place reductions about I reductions of those A programs we there. costs end have the And cost multiyear in those that range, costs low over believe sustainable. are of we process period. in large fact, a evenly and split increase

we yes, that So, think sustainable. number's do

Operator

Our next ahead. Richardson question Please comes from SunTrust. go Tristan of

Tristan Richardson

really again, follow around detail, to the last Just and just last seven days. on all the the appreciate up particularly question even

laid thinking year out look a As XXXX recovery of towards sensitivities? you five you that number? conceptually kind three when of of you're should an kind these back thinking again, it normalized, recovery actual terms type as of more sensitivity, you at levels average about Or type the is say what assumed is Is that it we volumes. -- year, about think in the of

Mike Mears

Well, quarter. this level, essentially go third soon the XXXX as assumption back as a sometime we to

have online forecast. got that's a come that a higher coming standpoint, that than But number that that's are, we're the or into from that there's to a because base increase assumption online that even built fact, growth of the In we've projects volume. chance

Jeff Holman

with be. know stays on to number what model we if which mentioning don't that And that's, it's worth probably tried down aviation the exact that We to number something exactly going is other as given pivotal there's, as gas amount potential try jet we not But there's on move. of rather small the the than upside vacations drive is twice. XX%, people on is products to

necessarily hard of this. things outcomes going built know negatives. but think to assuming not are we any are we We exactly how believe to in. all by stretch, any out We're don't look have come not the But that when it's of I that

Tristan Richardson

just then maybe our more the that side, one follow this the op of quick or item and generally from as margin just And earnings on we're products terminals Pasadena up refined bridge? were to things a the formerly reconciling assets in just contribution clarifying just quarter

Mike Mears

contributions ready hand total We we this up I phase the don't have the have two as Marine started the Pasadena that from quarter. mentioned of amount from to did some terminals.

-- a So, it wasn't some this up started there full it was but quarter. quarter,

right intention was some there into an moved don't now, separately we terminals So, contribution really report refined say continuing products. I'd the from that. of marine have to first,

Operator

you. Thank

of Keith next Research. Wolfe go Our comes from ahead. Please question Stanley

Keith Stanley

start I could a little wanted to maybe somewhere different.

believe the have I filings So, Form X at this been made, point. largely

have guys you now data calculation. XXXX the the seen that thinking cost for next into so, And index goes

with So how any the data, tax the key XXXX income yourselves putting are next five out aside, FERC the I input for guess, do preliminary the on both in shaping you issue, how have just years? costs and a views deals for obviously that's industry because

Mike Mears

Well, mean, we most but the surely preliminary know for because our and we There shook that. I have still for some you answer not filing, have the a industry on are I asked did on is pipelines file don't pipelines an data for of how that time. relevant large extension. that made what's us out

is so consultant date of data we're that processing from and that we through have data the the that And in industry is the AOPL analyzing report speak. less that XXth, and was a on We of having as weeks a have I the don't The representing than collating all two filing actually midst yet. filed.

have for a you on that preliminary number yet. don't I So,

Keith Stanley

was, $XXX on here. million that arise $XX? and hear then, was And million transparent Did impact if oil forward the from current based more clarifications some Okay. million on would Did $XXX very $XXX the assumptions Mike, I just you terms correctly? say million to commodities $XXX another sorry,

Mike Mears

directionally that's accurate, correct. think I Yes,

Keith Stanley

expansion December? even expansion? volume year-over-year say West to drilling, the, the the Or with when you assuming prior that is that project flat Texas then December And on for on Okay. you incremental West before holding August question, Texas gasoline might distillate see August, similar that sorry, volumes volumes is you're on the assuming aside and

Mike Mears

It's place the that we Texas have West layer that. of expansion commitments would then Once just base. in kick that on top the is in

that's in base the just So, a volume. reduction

Operator

Thank you.

Gabe Mizuho go Please Our next from from Moreen Securities. question comes ahead.

Gabe Moreen

Magellan on afternoon. blending. my is, or little just And I Hey, that of customers, have LPG is goes supply. guess had I about to good supply. there a you discretionary? I and I if way going talk, of that sense? question something butane historically getting guess Can could margin make and deal question a the bit think I forward, you regardless a makes multi-pronged know a around for it And that butane then great to logistics confidence a pricing to given really is where that's so has butane all just talk access priced beauty in do you you serve relationship Can guess supply? invested I the outlook and

Mike Mears

If whatsoever. we Well, margin is any won't blend We to no we would from blend. activities available, with supply have not blending do obligation first require that us to associated have question, on the don't contracts your it. gasoline

obligated not it made do there's we're to if no, doing in So, not be it. to money

since this to us. don't in to question, highlight don't sides, should up. to we the emphasize bring to butane asked And want concerned for the not I not supply, really but you are regards part your access a I a up question, I'll forecast your second of because, want that's it With concern with I mention, necessarily

Again, depressed be fall for doing we're as planning profits. we we'll no us the continually and not may blending we're have buy but as opportunities. assumes There single butane upside in in, actively any, forecast and that I recognize not opportunities associated certainly prices that markets that. This we operate some find but said, to market speak. And margins, evaluating maybe every at those there's and for in in we forecast with

Operator

Thank you.

comes Shneur go ahead. UBS. next Our Please question from from Gershuni

Shneur Gershuni

everyone. Hi. Good afternoon

you versus Just more the to wondering follow the other the a what the of little questions, the on virtual I was on of give section, Day. quote unquote you sensitivity I'm if color change focused outlined guidance Analyst at up change. could some about bit actually us

a bigger storage of smaller? crew one that's driving containment positive it I it the that fact and call incremental Is more Is or cost. OpEx it about specifically You lot just other? big that Is said the got the it change. than input savings?

Mike Mears

We've revenue. the about continued is opportunities storage leases half to Most for find than increase expense we're savings revenues. vast of the that's taking what a doing what of rather half additional ourselves. and is position majority storage doing Yes, through and contango we're

to opportunities found that. we've So do

also, for other look continuing We we're to opportunities.

at could we crude right Park that potentially now to Galena looking We're oil. at storage convert

continue optimize opportunities. we As to to try available storage

We also, um, that, Houston monthly. have East an ice has lease it of compound that a space auction storage contract, at we where

also that the And so from benefit some number. there's improved in

that it's cost That's On the of continued year, now the I and been happened. And this expense side, late that multi-year fruits a reduction that. that around we're long had reduction its note before initiated focus would number. accelerated. on we cost also increased and seeing the last work success program we've

in with, for advance program. flat-footed So the of crisis. We well with we weren't, we didn't cost start that, been framework developing this had the reduction

Shneur Gershuni

on the a Okay. appreciate then that as follow-up. maybe I and color

FERC Or filings market something the do rates upcoming wait we and put so back and to for increase if Just I something could to virtual the like five to based like able a that that years FERC the about to too the demand structural your going about review? actually so forth, to had you see you the about at quickly. tariffs And Analyst decline in tariffs, forth. pretty would have theoretical discussion late there's talked Day being imagine with into it Is happen? that that

Mike Mears

elements of as best and a I to there's lot said, I'll you down break Well, what can. it just

those and competitive to fit, the will forces the freedom rates tied of we if market based the the not other see or rates in tied It's index anything the market have based all I where all, our to not at First raise to related our proceedings. generally market it's rates, what when mean, to lower with allow. it's than market, date. we not a specific

So, that regulatory in means are to could standpoint. basis the yes. that competitive on We fact need because rates from is, rates We they're market-based short a those a that, they evaluate case-by-case market. increase answer the

And need what related we pressures. those so, to to as be competitive just cautious in we to markets, do

to market, With so go is XXXX. on be results index process regards they're won't the calculation. for based to that index Again, factored XXXX or data, that be of the into determining XXXX calculating going none the until actual actual the will now index from indicators index into the effect

out we the to that don't necessarily do pandemic and lost income yet index due will if done it figured want we it's separate and time. it from process. recover action, index likely to take likely of the the right and have that might be it's outside need But completely thinking appropriate to the or process, anything evaluating we'll to think So, in to about be we

Shneur Gershuni

I to now? on now first just plans evaluating maybe market you do follow-up or comment, specifically increase just your rate it push rates. a to mean, And have based through the currently to

Mike Mears

that, or on made our year, say rate mean I this. evaluating in planning we but markets certain we're had for those we should any decisions in increase not that this haven't yet. adjust I'll a we whether Well, assumed and

all can I probably that's point. at say this so, And

Shneur Gershuni

in timing the the use correctly of is if payment but clarify today, be on. later Okay, cash that last accounting statements receive And the were flow the understood you to you could clarification I the on talking of remarks a about revenue Chinese deficiencies. that, One want great. effectively statement question, recognition I your deficiency cash just oil prepared

increase not a it's permanent economic about that cash but you is and can see in it? think near way right see corresponding scenario side, to a So, where in a term,

Jeff Holman

just are to credit? are happens. door to And possible. then are little That's they some have that evaluate we've same for to trying the question becomes deficiency contract you a we How happens, same time use talking bit that credit should other Yes. have them possibilities the before. also a when it And the amounts that physical if many which had that people we in period what it And get about? how realize much to and and at so, do

Mike Mears

point, DCF this. and really in include. happened material for We This Jeff's don't not talk to numbers that. us adjust the been had since we've about. We to And our every contracts place, really enough don't for had we've had has Yes. year

So, haven't. historically we

million So, we our recognize defer for we adjust received for the our just yet. to of time cash. wouldn't but year of adjust the instance, earned recognition material, market If we cash, that a to period. of what reflect we've aware won't that haven't if the but that so We have fact is, we some in numbers $X particular DCF become DCF, will be those able it We to that number will disclose been received the likely that.

Operator

Next from Please JP question of comes Morgan. go Jeremy ahead. Tonet

Jeremy Tonet

Good afternoon.

situation follow more point. any this Didn't if to regards are today provide shore were on full a, the out bit increases what specifically a the to of on structure more. rate place with color level how guys of wanted little the be market kind and storage of know might to up you type Just exactly to happening able you contango in what given there just

Mike Mears

too I Well, give hard where the instance. single higher. I as to really contract no a you it because do whether while doubt, data you And to on to want in are year a same, to depends contract mean, a willing rates hot. you're month for the is tank it's it's market's six or point a at secure to try There's not the some, wish, every depending two

rates I the of very to have contracts. short kind contract, you're the So relatively mentioned the hard is ice auction say. do can through term ice which contracts, high. ice Undoubtedly we it's willing platform, if to term be short the

err terms. We longer to to tend We were get there. the very, on of attractive very side some able rates

contracts would some to contracts for get we of short term rates doing something than peers may term lower which higher prefer what longer be typically, we're I'm different. sure for trying to do. So rates our is

for to going revenue the what say, far will be market. storage what So, incremental it's exactly incremental experience everyone's as be is as current hard in revenues to XXXX from

Jeremy Tonet

trade continuously too trades Got guys there. portfolio sees, if that there's that out participants having too where and here. long right Buckeye at looking sense. assets, sold higher versus value makes taken take recently discount know Magellan other level now, saw just And where market a XXXX not I long assign you, not even street to you we if look to ago reviews seems ago, just a It question. like at Magellan wants I more And your the estimates.

in if a private guys what you is willing at current you do level, you how think higher about equity environment? just So to could any share this thoughts that do where about trade dynamic,

Mike Mears

have think long-term that I would than for really we're clearly, now. I a state has trading question. an answer on I I don't you company our that. value Well mean, loaded right I that's more

to don't I know So, necessarily equity right slowing the that's benchmark to pay. what is against private if compare

firms to have acquiring don't We're of on not in end. talking that. much I equity our the more So, be wouldn't about at probably private that list. the Honestly, color top Magellan actually

a of that. So time we spent lot evaluating haven't

Operator

Sachs. comes question Please ahead. Lapides of Michael next Our Goldman from go

Michael Lapides

go a pricing? pure in little move the so, it's jet growth guys. to went year Thank in you WTI to the early, just or you questions. my of at for bit closer normalization or fuel probably that Can taking you significant maybe that's spend kind you're world, and Hi thinking of you, XX level for do you a directionally, And of what either in capital time on given for know a when get about higher just demand spend capital think XX of kind two? I but down a same gasoline maintenance simply

Mike Mears

that's possible. certainly range think I within the Well, the of

we're Refined crude Product find short-term. that going skewed be likely oil the in more some more than it's to opportunities opportunities, towards opportunities think, and I those may

on very counterparties we're potential projects. here XXXX, today, working As we've actively sit commitments little we still with but beyond

a built projects, those of Obviously, some our And those haven't think into of significant any we of we prospect happening. have forecast.

And available. given not significance creditworthy are would project opportunities the without of market, But we those way with to contracts it. underwrite strong is still the now, any it proceed

I the approaching strong we've in We what environment be seen I future. to a anytime debt. capital similar I'm issuing balance when open to the be primarily the think we're sheet. significantly as will we're interested still markets it talking But years that. to from reduced about We're equity say we're got in that, markets, this in And likely a looking that, it's going not last X X capital us. foreseeable We've at not in growth. are the capital think or

So, parties to right But committing think least many opportunities of got regards these counter And once now. product to say but not short-term. than be projects I to again, us. frozen, at in front them, their we're obviously anything stronger in I interested refined some in up, free hold, are speak to oil with or the are not starts in should we've of that because on interest the opportunities is going think I so crude strong than

Michael Lapides

available utilize? just your your to we your versus I see percentage is How is understand, roughly? want refined or what product of crude how for and to storage, a marketing the leased that try I can in And that if contracted about and team of much when think both percentage long-term open much is is kind wise customers

Mike Mears

our are available lease, for is for different. I business, storage perspective In crude available the oil is have in the And from asked amount of the mean, in almost the crude Crushing it is great of available both have don't storage of our crude of the oil. I majority You've percentage significant all oil, question. we a storage front mean, businesses lease. I lease. for that me. in

the high for that lease. our precise don't the for is storage operational the Midwest, of product percentage those it's numbers. throughout refined smaller The to the a product majority The lease, in I have business that's available Houston, different. nature of and that's the we very is of is that own maintain storage flow refined products of percentage available In but

Jeff Holman

setting, even my opportunities in refined as really some storage us going There we've point that that It's typically. But cases. storage available. model to in But it's product not it's to our had use speaking, on activities in marketing that's marketing. what in everything for some use not is operational, view that are if generally

keep for for So, it marketing We need we it, try to much don't we and ourselves of very purposes. don't lease operational. for

Operator

ahead. Please next America. of question Our Bank from comes go Walker of Derek

Derek Walker

but about question and thinking of are my of kind buybacks, thinking lot it has avenue? and about the process the answered, maybe past special know how distribution CapEx the been I talking do about around update but that to you your just A -- you've guys distribution. of in just thought special on kind

Mike Mears

and a be balance little especially we're the it's from market's about lingering transient tell keeping side, should this market. really that's for about though right uncertainty caution, of mean, on think impact XX this strong on maintain our really for the events discussion guided product Even to this we the can view, this when paying now, sheet, right not solid the nature. in think at And given we year. Well, And, we maintaining of XX seeing or as we've whether I level you, keep a year, clear said, we've it towards the were And growth are and now flat focus a our many X% that, that. distribution in for going I coverage. long there abundance of the I growth year. out distribution it had beyond flat

distribution the as the of decided year. keep out as still next would what to abundance do caution, We far year we of this flat

at But look We changed and point regards haven't when see XX to on on we decision made XX with decisions We'll that. a we a will on -- really thoughts capital view later make when our that allocation. have nothing's what like.

be time moment. those the when the in the the slot in at going right We at at be and right are still that'll still right, buy the decisions price, mix, interested time stock of And time balancing is all we'll and backs forward. the right

Derek Walker

maybe just a on my growth follow-up Well, great. the Okay, CapEx. question

kind this products the on crude get But how we on at about and of really how Obviously, that move the kind I forward the say the Or refined to I you and XXXX rest want the some getting of As really then really to some growth of of -- given forward, guidance, the about a see it's that capture of year do the needs lot there's do I the kind thinking think kind there. and those you FID feel past unknowns be happen could be you're of out more second half to skewed opportunities of are, like into trajectory. year projects moment, pull and you these the of guess talked -- before of plays opportunities. page? to don't cadence

of before? think and things parties, Just in kind it they sense move ready forward think kind really one be if the you for just maybe of functionary problems trying in having counter your this going that's that things with some probably environment will really XX, year discussions to or improve of half where to they're if get you're a second to

Mike Mears

really quarter recovery. back refine it's of to Well, third the and and fourth I lingering refining industry going think then going quarter get pace counterparties into fourth make depend the receptive is the we that's issues demand going probably to products If talking quarter things to on the to into push delay. we're If some more it's the normal, of the have about. to third we forward and and then

that to very both projects and interesting counterparties to a environment. in predict attractive think really us we hard are normalized that. We So, the and it's have

we normalized get to when so, that got we've environment, potentially whenever I think a projects. is, And actionable

Operator

Credit of you. our Suisse. go Dounis And Spiro Thank from next comes question ahead. Please

Spiro Dounis

afternoon good everyone. Hey,

if is it covered already. Sorry,

to specifically. I'm some crude thinking around wants about of payments, to and get deficiency volume discussion the Just back the

saying this of their the yet at well a they peers last has think And, is on been seen week major demand response your product response One out that, assets. have not documented I refined point. pretty supply

meaningful side if crude any the the on volumes curious, Just spot uncommitted you've movements? in pullback seen beyond

Mike Mears

not. have We

Crude to-date. pipelines movements our We on have strong had Oil

this nominations point, talking at And we're strong again, have volumes. contracted for May. about We

because that levels. by surprised those volume not we're we shift have commitments contracting to So,

to-date. uncommitted material volumes So, no, we haven't in seen the volume, other a reduction any than reduction

Spiro Dounis

second you to it It's now basically was is could downturn and this If to before. touch maybe to million of has would projects want just this off profile I you a just question, you think the Great. as of if now, if COVID? market to at those happened, the project My before hear. how that all could versus curious understandably the changed late the talk project, all? how That's $XXX projects timing right characterize of but this feature when not come same on good focus believe

Mike Mears

or this I likely I little the going refined a the most at so on projects. year are Crude Well, earlier. But most I touched project, product the think actual our projects next bit think, over oil view of for those a demand time normal refined the challenging in quickly back are And being. actionality view the projects to to we much by be product our environment, so… really more is driven get how

Jeff Holman

just to. product changed. project. projects, to going of really be hasn't my that, before risk our to we a would always worth balance We not which for view lot hasn't for and take really going and other going risk that's we're of to were large We're side work changed, that on and the now the counterparty changed. be approach always not refined looking not for if right overlaying In It's we were looking as strong be to a

approach balanced up, and make always point, same probably applying lived, again, think require the my investments on to to that and so, methodical depends account it most going risk would lot worthy But parties willing if that being some reward we'll and be the forward. we've And used credit clear clarity. we a short of are of disruptions basically that

Operator

Mears, That any question. you. for closing back over final Mr. to you remarks. the was I'll Thank turn call our

Mike Mears

interest have thank thank Friday for want you great afternoon for everyone Magellan. to to to taking we weekend. we all listen on a has what you your continued to Well, say, Hope and all in time a

Magellan Midstream Partners (MMP) 1 May 202020 Q1 Earnings call transcript