- Earnings call transcript Q3 2022

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Operator

Greetings, and welcome to the Magellan Midstream Partners Third Quarter Earnings Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Thursday, October 27, 2022. I would now like to turn the conference over to Aaron Milford, CEO. ahead. go Please

Aaron Milford

you third thank us to today Hello, financial for results. Magellan's quarter discuss and joining

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

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

margin due beat reported this other As and items rates of continuing quarter. from EPU in this our our just solid end outperformance. the basis to gas flipped morning, at you to led transportation our that were blending primarily There trend lower Most year. part a of as saw our differential third favorable the positive higher we quarter our season average products far including results of that exceeded began overall refined our briefly, tariff liquids financial expenses notably, that so performance the revenues guidance, benefited expectations commodity the number

I'll the results for our back to the CFO, financial answering guidance versus the Magellan Holman, with our turn our call our the growth questions. approach yield of In a pay quarter announced to $X.XX week, increase before distribution our Jeff is X%, our period. year discuss in portion remainder from trend over ago to of important now of proud a review investors. briefly over and increasing guidance investors cash addition, of your recognize distribution attractive, Then continue last the each to consistent we last year. we current I'll to our year general out quarterly be is year. the At remains to to yield third

Jeff Holman

Aaron. Thanks,

their million. exhibits morning, earnings measures. including $XXX metrics, references flow, $XXX This be release reconcile will unit related quarter, free third which of financial of certain our flow flow excludes of or DCF, reported Adjusted last is XXXX. to cash earnings flow for guidance the out as quarter quarter million, these was up $XXX of distributions and to quarter usual metrics to which non-GAAP operating note that we've year. $XX income that margin, I'll detailed the for from our third nearest million after I DCF the cash the included of free making Free million pointed quarter for distributable First impact the A compared is quarter-over-quarter was adjustments, per commodity description to cash million Aaron net GAAP in we and earnings $X.XX, cash mark-to-market to resulting $X.XX. variances $XXX release. $XX million, in in available increased exceeded

more So XXXX offset a between X% primarily higher million refined our highlights. lower by Starting the XXXX as mid-year primarily volume more products, in by was average periods. slightly tariff were The in as volumes a operating driven average the increase of going than period, Total environment, $XXX just rate driven transportation average. this rate products refined than day tariffs increase A about higher the decline. modest usual, I'm average of XX% few higher to was favorable as touch rates. well margin commodity on on

our workably markets a X.X% increase our as deemed X% of the of X% an in of average consists XX% rates, with index average an increase competitive. increase approximately this in Just reminder, markets and

Operating by using was our long in connectivity period to in The driven system rates the were refined addition, expense. expenses impacted In the part areas third rates. customers operating product in along our segment demand satisfy reduce from during quarter which the XXXX decreased network that favorable of more due quarter. for primarily at overages of in haul haul refinery long benefited to the during shipments our market current higher move which shipments by the disruptions increase extensive

discussed item. they overages can recall And of last as product mentioned more that expect to margins the an then, the But blending these increased variances and part as gas we unfavorable liquids we quarter as You fluctuate even on with we've time periods to period to we Product activities. generally or out pipeline. less may experienced. operation volumes higher in period between our margin over recently due

late. plenty negatively activities. the margins gallon to couple we normal, about direction, our differentials we year season again blending Harbor versus and as wider the heard resulting move saw benefit On of impacting before off fall $X.XX last earn prior we blending been the have about basis gallon kicked that talk between of on closer recently, a More the margins our calls, $X.XX our realized widening you've basis margins Mid-Continent increased New in other per than Our period. in the us realized year-over-year in to York to per how

to impacted futures addition the related gains margin significant our have operating liquids contracts In to we in hedging period. current favorable results, unrealized activities, on blending gas which favorably

their ignore Of our underlying product that for DCF activity will impact future periods. to the out-of-period contracts on in period course, of better we these in gains sales with calculations futures DCF occur match the

Turning crude to business. oil our

the our system to more barrels pipeline recent the with primarily of the in have increased XXXX, the period than resulting operating lower Volumes versus distribution under our year period. volumes quarter prior system. shipments third nearly compared based from 'XX committed on around quarter averaged day to margin per our $XXX in move XXX,XXX a tariff when timing to due higher of volumes million, LongHorn elected connection customers increased in to to commitments. their shipments XX% XXX,XXX Houston Third

backwardation. on declined futures demand rates, market as simplified margin to the move contracts a from revenue storage to our prolonged a well general in structure due crude storage to product of benefited related result utilization under gains addition, Similarly last quarter, to unrealized In and to the as throughput softness Houston Crude marketing for period continue customers services hedging we fees our more terminal activities. additional barrels current increased as pricing lower electing oil within oil area. activities see due to in as

resulting on deficiency higher our rates the already their payments recognized volumes cash payments ventures ventures. as day, the than approximately Moving us we distributed perspective, an just equity oil basically barrels committed XXX,XXX to for on by both by period. commitments, XXXX earnings, our our joint results BridgeTex recognition move the DCF pipelines, elected volumes revenue equity to shippers recognized received timing associated share Double with primarily per barrels earnings and in for deficiency joint line earnings in in joint of revenue more XXX,XXX which of barrels a under From ventures customers per from over from volumes Saddlehorn of to time. day XXX,XXX in the those the XXXX averaged that offset equity that have lower our were It's flat were And essentially Eagle prior little at were in proportionate the while day when down to BridgeTex crude periods. at due segment. again additional this once important third of to and average quarter again Saddlehorn, 'XX, although our note per in us

highlight our year-to-date. periods, just comp are results. increased expense due due few our individual a strong items from other in like the overall beyond reflecting I'd segments, year-over-year Moving results to increase G&A compensation primarily part incentive to there higher an costs, to between in

unfavorable, including primarily items, is expense related year-over-year non-comp our in miscellaneous June, in technology legal quarter independent in contributed lower with elevated some during to addition, due which ongoing matters SEC operations. costs additional the from filings. to aware, In sold we expense legal Other recognized of our was course terminals the disclosed finally, and income associated increase. as discontinued previously And everyone resulted

allocation, on and liquidity. metrics balance to capital Moving sheet

in terms of credit we us First, to billion $X continue facility to have our mid-XXXX. liquidity, through available

value outstanding. on about about million with As interest remains in our term still with $X long weighted commercial XXXX. was average rate of debt of bond face the maturity X.X%, next September debt The paper billion the our $XX of XXth,

the on X.Xx realized Our leverage gain our terminals. independent quarter the purposes, incorporates of at of which the ratio sale we end compliance the was for

about gain, allocation, combination of capital for, delivering distributions, known that our you've we before, leverage term while remain say through equity have us X.Xx. After discipline committed for heard we're value as a Excluding would the financial capital been cash long and repurchases. maintaining to investments, investors

billion. $X.X units, during unit quarter a total the on continue million about X.X of repurchases an of to repurchasing little unit Year-to-date, a to since million we the for $XX We spent average inception million. at nearly $XXX $XXX per total price buyback under spend our on bringing strategy execute

of So through returned which cash combination that over be next far our over billion pays to in number distribution, XXXX, month, we total announced unit repurchases of a billion. Including will distributions. have investors out and $X $X.X our recently a

committed used to as cash careful equity. and to legal continue available of distributions free price market any focus flow to balance generally on including the And as to after we allocation repurchases note, spending, important see well our turn And number to over repurchases conditions requirements, unit Aaron. metrics, regulatory timing, with of flow, factors We repurchase a and volume our expected longstanding ongoing But our course, the continue expect price always as Xx and we of limit. that, of an equity. back to unit cash of efforts. call sheet And the depend capital our to we capital will remain I'll expansion free as leverage be are trading

Aaron Milford

and we guidance our Based Thank to on the Jeff. you, billion. annual of the $X.X year, million expectations $XX our by increasing DCF rest our for are results

paying around during quarter, keep Magellan’s our not with quarter. economic conservative eye of spring XXXX $X.XX the blending factors five in amount remainder of the just margins including to this up us commodity fall usual at in gallon. noticed of environment, our previous the than to as our further, the to additional average of the differential moves further the related XX% of year, hedged All basis with blending on differential by consistent continued to and have somewhat to expectations earlier an started per months margin is progress out XXXX with far. XXXX were now Specific the increase few performance gas And guidance per activity $X.XX we our continue in, year. of XX% new is we higher increase to hedge may far annual will primary commodity also But per finish have hedged We've third attention bit in blending, that and margin. conditions and liquids volatile last gallon, of to a our next a year XX% look They now be as excess we've annual Jeff far. $X.XX the hedged so average short-term did gallon. currently head about While the year in This year average at basis remain 'XX margins our for of expect blending our past activity ahead our Broken number $X.XX The we estimate improvement generally. than are so outperformance blending with we gallon. blending reason this the of which over down related Like for we that $X.XX bit the led next activities, full significant in in close fall have well hedging as pleased margins to to we the to to you full continued for year's at attractive. discussed with hedges lock make even hedge XX% year. margins to per have is expected a at

depth locking So do in there's to extent in to market prices so. the and opportunity we're the

increased available have Moving pipeline on products quality from million Based to commitments XXXX. Paso, been system XXXX, expansion the in $XX supported schedule, or now The spend related million we million expect capital, early projects in approximately $XXX Houston expect pay which to in recently primarily estimates capacity announced expanded committed. expansion expansion already El by in we the take $XX that of our and with current from refined Texas $XXX to million be our is on to XXXX construction to on XXXX counterparties.

around is as opportunities assess year recently, attractive with capital and usual, to return estimated a infrastructure assumption continue that projects, analyze risk profiles. develop new As of and reasonable projects expansion we Most creating we continuously million for value for we've $XXX projects. undefined per

likely capacity some was higher $XXX at this million in key this levels but financial to an of possibly other years years when our crude to currently rate to we pleased usual to spending on with briefly In will couple spend the that past, well bring overall significantly don't just at a as time. as expansion below. As shift estimate average results business. planning new XXXX, my level foresee we positive committed with years. constructive, across above the assumptions beginning to of already remaining $XXX projects, however, the early organic on In growth next report we've projects our in fourth we Longhorn's guidance for of year year, as next is prepared next is life specific material we're provide we possibly found quarter I'll committed a an XX% developments year. XXXX Longhorn be a a our it terms mentioned estimate noting recent today, in finish we're spending Consistent and that a higher, little six approach, remarks million in financial that ultimately But oil particular, meantime, receive we plan line. being end commitment Since resulting additional

its ready and of working exclusive both who customers for addition, these extended are call think We providing our flitter condensates underscore the of link value to of agreement our in take open questions. has us. the that Christi Operator, Corpus developments the additional we quality customer use the XXXX, contract. until assets our of In now with end see or for the that to facility pay recently the

Operator

our And is with first Tonet Instructions] the of Jeremy question [Operator from line JPMorgan.

Jeremy Tonet

Just little of kind helpful. pick and up bit capital your there all were want of to a more very on comments allocation

impact Just talk sharply more, of this that or just as and if as calculus going forward wondering, changes if does you're on anything could moving they a within the of have context recently, quickly and I rates guess you kind thinking? rates bit your

Aaron Milford

general to clarify pipeline valuation? our about you just on for see we are charge your rate and may talking environment interest question, the rates or Jeremy, Well, we impact the its how movements

Jeremy Tonet

interest I rates specifically. later. rates, I'll other for Apologies. meant save

Aaron Milford

Yes.

go of eye we an on look So that of think company the evaluation, all into And environment it, I'm we details certainly to consider that an as is. we going at keep the but rate does value impact what increasing evaluation. fair not we it.

in to weigh about we So the value units certainly that our buying will see back, consider but continue decision we into it.

Jeremy Tonet

Got it.

you that implicit with happy So are your leverage ratio.

this don't need at of of kind And so to you adjust any that point.

are a point. You at good

Aaron Milford

not related Well, the leverage ratio. I'm it's sure to

I think paper. a have recall, it's issuer the long-term important, environment, XX in been rates year we -- general of in

several insurance cash immediate and So last in an rates paid and in of the over flows, rising impact have we terms interest expense for that our years. essentially

So that same we of that of the given nature just don't duration see the fixed debt debt. headwind and our

the that flows we have. short-term expense So over here going rising of the cash our with impact interest interest rates sort aren't to or debt

Jeremy Tonet

out to That everyone sense. Not takes approach conservative makes debt. stacking same the perfect

And increases yet. increases, how timeframe have thoughts you. on whether and that. then real like here, into under direction. quick pacing just you thank it's under tariffs, rate just the you tariff just But lot not for rate multiyear of allowed Thank you're or in for So a that a strategy about on next finalized going methodology? just headroom I think going increases maybe indexation other any seems do It guess turning what's year to for

Aaron Milford

time I perspective and are. to markets where are So to move want how last our thoughtful dynamics think to we we that into changing. taking in on I is I the index the don't we rates. dig quarter folks, remind spent this our about And service mean be understand are time even think we our a our and I competitive little market. other There like competition. of rates, always have providers really we We

that. of be So to we cognizant have

about or how decisions haven't into pace it. want into made pace we to So any not we it

we today, we to add as are how don't around event, still question other margin, Jeremy have to that increases than be? to thoughtful. we we be in here specifics any are going sit the healthy, think I be any that And to quite are to they going the expecting, So rate to healthy is are the to going be say, going

Operator

from of is go question line the next Our Barclays. Chen Theresa Please with ahead.

Theresa Chen

reflecting just Hello. comment Thank Aaron, outperformance question. the business, costs not do refined full related conservatism see elaborate your annual go baked into be bump or you back for my a Can like taking guidance annual fourth the I'd mean first, and the to your it conservatism? by the Which the of you about third underperforming quarter you you product to of whether what quarter? exactly could in it. bit areas on that volumes to

Aaron Milford

you the basis I in the one. one just in think specifically the I particular would Well, is to item point differential, volatility commodity that's markets,

I We we also as mentioned already comments, past, in in the talked margin risk. in. for been of our very can't locked most have, basis have And majority our it's the quarter about as fourth we But hedge of my really volatile. the

Jeff went New would minus Harbor earlier York then from the As at higher some complete or had year, and minus been sometimes was comments, $X.XX, $X.XX, to time thing New it's point in positive mentioned where opposite Harbor where wider. But cases, even in we $X.XX, call his the happen, moments. minus that in in and $X.XX. $X.XX typical a a it York differential This be there October,

worth about it's just annual more but sense, us. a to it's basis lot $XX basis in nickel to an is some million you got lot on we've So give a of a not it's volatile. wider, And -- that that move

feel really market that XX, or to about swings how's little cautious talking about XX, positive causes us minus going minus XX quarter. it you're move to when fourth to in the a So of

that's that So to. specific one thing point would I

would general other are conditions to our The I that is important. on economic thing a recognition part point just

don't business of has But guidance itself, time that where that uncertainty and starts through even really continue. through you recessionary expect that durations if there. resilience you're proven shorter occur. is what to And get to resilient, as provide economic Our to the want out actually to And or times. some to manifest going expect, that when when there's still trying years to we uncertainty be ignore to into we

be, at But to it trying higher. of we're has at commodity-related to not to really as general So And recognize specific some in more we that. uncertainties the expect be volumes, It's not just well. anything recognition potential it's least basis. that volatility moment. really overall the that the macroeconomy the around It's

Theresa Chen

of seeing slight what of the seems relates previous in XXXX. taking in you your into shipped? just be business, uncertainty, above decrease guide being X% macro below speaking of And to as demand, are the it annual products account And total refined quarter-over-quarter it volumes tracking to terms

you're curious seeing there? So what

Aaron Milford

attached it's refined the about XXXX period. on we, Well, X% in you up math the interesting the schedules resigned year-over-year, our I products total versus do we are earnings year-to-date, to report, for think, if

in we if up of But around quarter-over-quarter. slightly, terms X%, did so straight X%. So are far, think volume, year, it the math I was the down almost you for

-- that going in the going X%, to at think but maybe be whole look think I that to we sort range. a we're As we're of above, below, little I maybe around in a little be year, that

One of perspective, and would to probably the I of piece see. the forward, sit volume been rebound XXXX out quick the to and a that or we've we think from and We’ve going seen we in talking holding we're look color in And coming of today, rebound post-COVID here are tracking, add I as most growth. volume. it's the things there. past So as about and

course, see the of quickly rural But Our markets. more quite are and markets, to our we've been metropolitan markets quite rebounded significantly. waiting

seem City. behind be pre-COVID So metropolitan Think and think those a little to era volumes. of Minneapolis, more the Kansas they St. of Paul, of areas, some still think of

but longer But little that in that's get it time may up the of whether pre-COVID a of for XXXX. to lagging little giving we're be back think be may in going get grow of for our markets it together, we're or still We just think metropolitan a rural of year-over-year. normal we over still sort of of there. Boil expect the are areas I many necessarily Theresa, we're So back of COVID above period see cities I bit, defined those still hope seen but a reality time, -- new normal, as not, as recovery all and could us just won't it answer, from many were bit, debate But not with volumes we're at. with XXXX. that long we've in where to the period most where our sorry to they the a

Theresa Chen

Mid-Con And you the quarter then refinery supply from third Whiting, to for the ongoing Coast downtime expect in when at continue saw haul to you given Toledo? longer the Gulf the movements imagine due the to related would rates, that to disruptions, BP

Aaron Milford

and Whiting so. pretty I as resilient. refineries supplant for Toledo to mean, supply think those it's I markets, demand it’s think that pretty there's long into longer is potential to the we've but with have I shown seasonal, haul as resilient, down, the are us as

so well condition long exists. how that So us, bodes that forever, for

That's find for to barrels market to the are those to from But as positive or they tailwind so running places, we other inventory and and exist, being speak. the seen. fluid long XX% to lost disruptions fairly at around. ways, how our ability just of, to generally, to for refineries the to longer to short-term the across And country terms With long what it conditions in on us respond match has high ways. exist? different adapt and XX% that's has disruptions, extent in with exists. system many Markets low and move continues a that as they yet it In be think

through that in when But the sort further that if is think bodes the wasn't existed has contributor in also disruptions past to So we lack that we built predict, see may resiliency think But It's Mid-Con. unpredictable, or it longer the of well. in when market, of to we hauls, disruptions. time a it's seeing occur. hard just

out West You've and longer of But to new Gulf, hauls adjusted we longer customers this had also Texas, market. our system group footprint the movement, we shippers of got hauls the as within to the obviously, sort longer hauls. our have the

long really generally it's haul So pipeline shipments of all almost in our areas system.

Operator

Our next is from line Wolfe Stanley of question Research. Keith the with

Keith Stanley

company. just so some First, crude other big And XX Can think there's mark-to-market about QX? product it talk was can it there. the quarter, a little the history it types the had margin you for volumes marketing I what where stuff of in the million. just type moving probably activities? was pretty space? Was Or the number was in you opportunity arm versus But for it's a you

Aaron Milford

still us. among would different our talk I was about relatively really game it's to much spread one Well is And new crude speaking, the that And an how encourage I for very we to you space. many and activities. it really optimization activities think marketing fairly are crude -- think about

everyone has how We in are against we been XX are over ways. of for doing we years, scheme competing many have in still grand new the and but evolved centuries, that it market

have learn us themselves frankly continuing And opportunities to taking to So to I present to the and we we than that's going at get we past. advantage think continuing are are of better in continue. that

that of XX know. we things whatever? much differentials opportunities a going a were and are quality Will we maximizing There’s today value able were of And opportunities is, combination terms to present are don't quality themselves. is differentials, be how be expectations better of value always on on themselves are just driving that And in ability themselves. quality present of Our capture, different mindful that by present ago year sort customers point The location than location service expect. our executing I working what's assets, remaining it as we like outperformance the lot to quality as unpredictable sure differentials. that are our the learning but the these exactly being maximize to to million can. even and of like we like of make we based it's things differentials, that and opportunities as they we frankly an things value also, it's they that

trying customers opportunities we're as are to and we rebalancing ability maximize we're just we we're better and going -- see see with them And expectations try see. opportunities, our what and we our the they to So at to grab the getting of want it.

Keith Stanley

Interesting. Thanks.

big one. question, Second picture

since updated thoughts updated and you topic have on look some kind you views would delve you Just with kind share EVs the this you benefits details of the on and a the Analyst the at the the through the and passing before? long-term adoption the impact and IRA lot EV Any of spent Aaron data on on how of for views just going IRA time and of Day, at into to in company. detail

Aaron Milford

talk about I'm happy it. little bit a to

doesn't much EV subsidies. would the a at significant of it our conversations it expressed back change the think level, assumed April we is change that in views I this summary doesn't have a year. that IRA the And really we implicit reason lot of in

So that was of implicit. sort

more us. the EVs the thing not fact from is, the one incentive manufacturing sources to new terms not makes say the going difficult. is really about going And input domestic that to there will achieve, the to is of for that or information being it's -- one that is coming around consumers of because be really no benefit the full threshold be way hard to that. product There to meet to So the it. requirements requirement foreign It's I think and getting more get in difficult I

than would in probably the we make restrictive are of into the can about I an sort argument talking more minutia be in were the So getting when But April. we in it. that's that place place incentives of thought incentives this

But overall. really you that IRA incentives it's the competitive the in that's and don’t area from of if I'm where to still from for trying with bases. COX the the of the that where the projects incentives incrementally COX on economic. are chin that in They sure sequestration. making emissions things benefit set credits at terms other capture not of the were game focus COX, cost have are increased like really or a to get think before, I are about opportunities would more they changer $XX Much heart I more most there the that XXQ bar the

from probably I road. for look could not like. am sure the that might the sustainable opportunity doesn't things needle. incentives fuel. margin that rule, But The very specific the additional move set view But our So projects in as on what on again like down changes general aviation it a April

I had certainly economic It’s consider capacity together, more positive. the capacity be some But the were it's for adding I materially could that That's to I we changing those producers views would in that diesel more of not aviation that taking that April. all net to put fuels. just if of renewable sustainable making produce to think it a say interesting. or

Operator

Our next line of question with is from Fargo. Wells the Satish Praneeth

Praneeth Satish

that's and balance on view tighten a I takeway to LongHorn for the do versus I you why takeaway that, I not you're waiting contract wondering you contracting quickly the details Permian, and contracting may you I up at think you'd new timeframe? do tighten provide in contract mean, kind your at on rate large that how was of mentioned a and contract on in XXXX of signing heard LongHorn. if of that end duration? guess, a for a more more how And capacity then now? prepared remarks have if correctly, better the I any maybe the

Aaron Milford

at wait we the able to views and the particular if way overlapped that wouldn't all the at the rate, think risk accurate if the over the mean sure you a the we general and world the going was cash is, to evaluation now, case, very to which not to differential In a in our not, accomplish, case, a lock that better right even I that get such we with before till the last with we lock I'm a that, think curve of thought of wanting constructive they're I just committed a thesis that's going it's do, barrels we're a case are philosophy part, start term why we it or thought flow by reduce way look or lot not In case, we by forward it It's a customer deal and I'm had how which it we're being debate long-term what to it. going contract low to of and longer is where with was our differential, at whether customer we you in sense this everything it forward a overlapped it's multi-pronged But much that look do. general on look you we on what curve go can balance. case, on would do deal which but part. this our do. we up, up. differentials made your say Well, question you it, to case part, by sense made about certainly when is balance

to LongHorn part XX%. on utilization your that comment, my be the average will in of going I the beginning when So committed question, I mentioned around January first notes, in XXXX

So it XX%. have before was the you we sit told here we would today, contract, as

So a increase overall. average the it's about on X%

essentially, is, happening at same going that duration, a Of think to day, year we were course, from year, the XX%. where would from at duration years the duration now, of keeping going if where we're you five sit end And about that what's be about essentially to that. duration, also then think But it, right forward. we XX% the year utilized to utilization six we're roughly the were next of you have and after

utilization last it, to committed roughly year versus a period over we're gone passed year since weighted higher by essentially about it. years six term would just down gotten if hadn't a talked probably the you So of that about get because going average have we

gives in that I all hopefully detail. And So contracts. on the don't you specific just enough to want details get

if sit would termination like higher for longer time. really a of sort between of in I I contract period think most with of utilization tightening. to 'XX, we've when that say where a the time to show period our 'XX crude tightening. estimates interesting it's capacity you And think Just that relation contract suffice generally, and overlay I got

Praneeth Satish

But wanted I I to guess way. I go guess question on and would return. -- it just I impact I And to capital Jeremy's the just back rates a ask on different

distribution thought return been the there to of digit high a has a Specifically, and more capital shift moving higher, to a lot from get potentially rates yield are growth? of Interest you now places. can single

attract yield capital? your enough competitive current environment to like feel in is you the do So

Aaron Milford

I an strong again, I an ability that some and a that of and our it depending up. in additional things have our versus and at adjust the think risk period would in out other yield we yielding value in really think so. of proposition, they're it, yields to when you're to compare investors individual some defer and adjust at. those yield at status tax yields, absolute I the truly on on start frankly. And a for and benefit time, higher of on and you come units, there, units where I know depending where have taxing own when as our risk MLP, of gone look But I that's your they've you some hope are that lot

extremely I think So it's Frankly... attractive.

Jeff Holman

also It's the yield It's between I not that keeping probably was have norm in opposite spreads normal. years, of forward. true. that's spread think were rates that for the worth up mean, and couple years those a reason There's a our before run probably this for rate lot no this were they in they they ago what corporate and recent time aren't yield historical all to been in and XX the should those more recently, is rates the being highs been treasuries mind than hold run borrowing last narrower the up going proper our has rates.

a this so more represent would normalization. of And

Aaron Milford

We're that’s at the our our think So part of I to an we in going distribution great subject to and that is that for to and value it's proposition, the a continue of and as buybacks, timing, about attractive. to so understand we changes unit important don't us. deal value, think totality, remain going -- think we same views on time

Operator

next Neel of Bank of Mitra line question America. with Our from is the

Neel Mitra

you LongHorn to quarter second It is it and you've touch lower wanted has on a but the collected revenues, seems I it crude and seems changed. like BridgeTex This deficiency around the that volumes, row this like have segment. the said had a in the language the Christi on volumes more that? and of timing export market. Corpus you back there from timing second time comment to versus it seemed flowing generate higher volumes quarter, to you were net Could what by mean like

Aaron Milford

out basin. our fact revenue different think I timing making with us comment the they're commitment shippers decisions do to going to Well, really the they the a perspective. that coming with still have encompass are to is what from of meant the And a barrels

to are they to going either us So are efficiency pay going the they barrels move later. or

is So we doing expect. move them just are would what we idea different They to the the that with otherwise now right expect barrels. than something them

ratably in to just commitment the may really So were or at expect than that's flow a -- what drives different you time we just later if They is, barrels time their flow. is timing a comment the And are timing the some advantage you sort to be go out. to want they their see. a to other it why desire may take charting behind a shifting they reason that differential of is Corpus of or and at

back will is another. long-term, those or for one want and Houston well-positioned go look we come and to barrels Houston we reason As think to

they be than really to comment at it's them general point you? different are have think because the The would making clarify timing the more doing meant is decisions of with time both the put we barrel it ratable why ratably in reason barrels expect now. different you shippers a right that of on it's in are Does and terms to for you So less flow those I if maybe items. is of just what

Neel Mitra

It customer does. more ask LongHorn a to on XX%. new question specific maybe And I your can going XX% with from

Houston said had kind you volumes that and share in market. what will philosophy that rates You to the Houston shared think a return you market the should the why you as of back on eventually to? we philosophy look Can is,

Aaron Milford

happening. of One, view a of there things it's about is Well, I going some what think exports. couple do think you depend to I on

it. little If get interested is all advantages state you I'm doing. just of is to pipeline. to question a if I I look don't in Houston. That's there producer cheaper I'm do play at Corpus has any export that, think it. a the That's want there over over and some It's today, all the

little is efficient terminal the for Some more scale capacity large export. of a

question really do is if complex all The Corpus So given it's a Houston time, large to want Houston through and but that a there that And as than exports. today down a optionality evolve as Our to provides more which more will much that? expectation permanent is refining is, Corpus refining you that producer Houston. how as has get solution? occur lot to some complex, not cost-efficient to long you to how is is going

time, with we If Louisiana. become more Corpus to think exports. move it to it Through continue you can for over are to you competitive get exports also to Houston, in going Houston

Houston think evolves, it, at market to and again, as Houston. it time, should look we pull we about as So through that barrels more

the of leaving now dealing terms market Secondly, condition a world are exacerbated meeting exports. we right those crude and in oil with pretty market

it's come pressure up exports mentioned attractive the But a run. different bunch the I of You beliefs continue Houston or long again, is with we of for continue. of sort some that can to around the the it's to to going if long more over assumptions abates, extent think how the reasons market on going just

Neel Mitra

really of you the ask and kind $X.XX blending in last of sort Is If it third question, right quarter? basis fair advantage up the it in worked QX, liquids just quarter that, QX now, favor better gas was the September. mentioned during could saw that of the basis of one because the of I end your or helpful. say in is margin kind That's the getting to towards the only flat full $X.XX you're you moving versus either where

Aaron Milford

sort to I you would condition. tell we basis not already love speak the other as has the flipped that to of back

that quarter the the really third a has since short quarter. that of was lived we've abated it portion fourth impacted benefit So entered a

quarter. So that, say unfortunately, the is going through benefit can't to I full flow to no, that entire

the that's of reality So just it.

Neel Mitra

Is It anything that was short track basis? product. the to able like to be Mid-Con there seemed

back. product to So is predict anything that? attract try there at can But look it we was able to maybe some to

Aaron Milford

two because the can And day, at the you instrument Mid-Continent if as compare deal is business noise basis, physical to a futures to basis those. a NYMEX, hour mid-con serve creates better able and market something it would price, Hence Platts that right in you at it perfect, more price. to of much more not a a Group the for of referring between get an get a you fact in careful be want it the look that hour, to things. volatile, have in trying look futures to because Well, the -- what that Again, you're Harbor of look I a won't as to pick I a now -- able I'm of of to some more we're be. you're that efficient basis some it. markets with it, but sort to futures to will being just physical X this sort more you perfectly, to sense If difference those being than at New a it a be a market to to markets, futures cases the call compared don't we're if market of why cases, least NYMEX being is spot for it's in most think sense give much trying you it's of of But will were view but the to well, York be be about little your round basis difficult terms that But market. day talking about. at it. to And reference, what is predict is, may the the to But hedge indication it indicative do have market they on a that basis. out, both of

market a and physical to make in You into dynamic time the a just sure account have more taking market dynamic futures Mid-Con. you're compared to

Operator

Securities. Moreen with Our next question of the Mizuho from is Gabe line

Gabe Moreen

Can to relative healthy, contract mildly. splitter I 'XX or when have may LongHorn the for then pretty a reup guess And put you economics the pretty that time, at been the To maybe I there, it as guess what ask a the the at are things well? extension through as contract that and extent asset about moment? consider of you look through with other positioned lot paired is asset, the do I also, well alternatives, that which for

Aaron Milford

Yes.

contract the are the LongHorn unrelated. renewal splitter So and

any there. interplay So that there isn't

going In to term term that XXXX. frankly, with, of was happy were terms happy we out the customer XXXX, XXXX to going our it out to was and a

I getting And to was to on the the think also about beneficial the both of set. on little are more right terms now. us our pretty in realized the economics we that as much options that those have term talked past of customer highlight a thought favorable and economic sort of But I us. splitter the were we pretty for splitter options renewal had splitter, exclusive the that

trade the economic got, out that what getting we're getting what and expected ended to we getting which doing term So to up we've get. We're attractive. the we is XXXX, found we

us. we decided very of we'll alternatives, we're to either and the we're but that that happy comfortable we other at. discussions is ourselves? sit now, in point But of able terms to and the we of as it might long-term, are what get that in get do going happy customers happy I operating in were with we're our down know. to not where look long-term term something additional We'll the the be figure out time have that at case? about do long-term. In we customer, staying how splitter at think XXXX, to here the also ignoring for economics terms don't it today, those it we're be we splitter Is would our be For we that

ever changes. -- So it want don't something maybe the lock maybe up for we such to

happy. pretty we're now, For

Gabe Moreen

one expansion where multiple to Aaron. your Xx the a projects? quick Thanks, the just where stands And expansion contract, El that Xx with -- then usual that could maybe ask on if Paso I on reference that

Aaron Milford

even that Yes, range. of way to it end to probably be going them better. the could range, be work it's the in expect lower work that we things If out, out

Operator

question Partners. next Cusimano the of from Michael is Our from Pickering Energy line

Michael Cusimano

was is Can than year-over-year, of Coming that. year, higher guided of And I it's in, the if looks believe to tariff if how just markets? you dislocations into some in that average it the the the the with conservatism trending or you you're you refined And trending rates there see update kind transport despite products like seeing higher higher coming us going flat forward? uplift. on

Aaron Milford

to tariff that us beginning One adjustment sort is think to made tariff yet. times knowing making there of is of Well, put as of our barrel, we that And provide going that actual think some how to pipeline on the what often history what long guidance if happens And a we tariff In has adjustment? long system? there's it haul so the really, as really the the and midyear But words, to rates, haul per assumptions our is average tariff been is of assumption that's to haven't we got specific supply patterns year, come on pipeline? where couple about And other we a about have we’re that what speak, on terms, movements going those ideas in. pipeline we've realize. are. average be what's the we our But we our second make. approach in gives a that

machine you together, the increase into average rate led Hence -- would flattish, in if a generally we those the put itself, it changing the historical rate to even and with to we came things from year, we on patterns. that And increasing necessarily the two gave. overall or fairly So midyear that led expected as expected our realize. that the wasn't put the haul guidance

longer today, it experienced haul so is what As be. we than what we we've of some due disruptions, here our would of far market sit it length thought this year, to is getting the

at and the given in essentially tariff higher realized midyear that's higher rate. hauls longer getting a we're now tariff So the resulting increase,

what's detail is of not that's driven sort that by longer. the or haul In guidance. So in serve necessarily cases same refineries the disruptions and assuming the get the of that’s getting longer is stay many actually And some being some a down. in in shorter. we with our opposite markets the to were happened of cases We system little get unforeseen

question there comment So and you or I'll stop have that. additional see any around if

Michael Cusimano

like very more where so that's barrel that is to short-term on quantify just call helpful, Yes, system No, in been in dislocations Yes. think structural miles the there Aaron. that. or continues have hard your that one we because it shift or follow-up Do far? you that longer, has a seen market forecast it's to it,

Aaron Milford

haul compare expansion As that we El bring to average our you longer our to on and a instance haul. for that's haul, Paso

to El Paso. way haul would especially as a that system potentially going So we lead out the whole, to are net-net longer a as all the in

may there think some I benefit structural some So us. areas shifts in be that could

In refiners terms resiliency was to of before duration just disruptions, backfill and things to it what's that, those, levels And to disruption. we I refinery nature in there refinery But refineries, as terms where keep the need disruption, whatever into to predict mind down, are Cheyenne, down a the shut of New the system haul. you in think going the resiliency the longer of in inventory disruptions in like those occur, less and the it's we that is hard have then system the had shut today. in and built something is leads Mexico, then of

is answer that a say, structural longer haul. to winded this there a know that themselves some ends I could shifts So repeat long be up to

that's rationalization 'XX, how think three experienced We had think over do or and we occurs, some longer all I disruptions shake four predictable. that's years happen, certainly but ago, ago. haul we that less as of it's Longer I to years our done longer we than well-positioned refinery to to for or out than are going are four year, experiencing haven't but we it's see what experiencing And don't hauls as start a we work benefit But that possible what haul. this just then three know.

Michael Cusimano

to lot just can. whole, Okay. somewhat is the the your makes consumption lagging Yes, right? Aaron, I -- a wanted areas area make your that Is that comment not one And I the that a of are more their as metro system. to if sense. metro then sure that on recovery. that's specific

Aaron Milford

those. Well, we the in some part into of of a these systems, are metro significant supply

maybe whole, it down we we may at for not bit. that the what So be seeing on my little supply, are areas. but least the are comments in what But more reflected are the share a metro of experiencing we

Operator

no are turn Aaron remarks. further back the the I'll on any there And to closing questions for line. call

Aaron Milford

Well, thank your today. you all for time

we on pipeline year business maximizing strong, our are over as expand for long-term. pleased Paso. well the Just focusing a the on investors products finishing to our a new managing value the We project third our El remain and to as results, quarter responsible reiterate, manner with in focused capabilities, the financial refined

Thank and appreciate we you, Magellan, continued nice support. of behalf day. have on So your a

Operator

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

Magellan Midstream Partners (MMP) 27 Oct 222022 Q3 Earnings call transcript