Earnings call transcript Q4 2022

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Operator

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

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

As a reminder, this conference is being recorded, Thursday, February 2, 2023.

It is now my pleasure to turn the conference over to Aaron Milford, CEO. ahead. go Please

Aaron Milford

you fourth thank of us to today our Hello, financial for results Magellan's year. new quarter for more and discuss outlook and the joining perhaps interest, even

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

the own review other Magellan discussed the a excluding Magellan's that should refined with and You risk SEC taken transportation quarter. impairment record information noncash by year performance. products in results factors exceeded the another volumes with our and future supported financial in solid wrapped the expectations, our opinions filings up form quarter your about and

call review results billion XXXX, now distribution, our answering back attractive for value of questions. to over over before our XX Magellan's discuss period. ago our fourth Holman, distribution marking I I'll to delivered years annual Then During via XXXX and cash equity to Jeff the year the financial continuous growth. we repurchases $X.X annual versus your opportunistic investors quarter guidance turn of our CFO, to be will

Jeff Holman

Thanks, Aaron.

commodity $XX to Earlier the I'll Adjusted the mark Eagle per DCF free to XXXX. adjustments, quarter $X.XX. release $XXX quarter this and to earnings our Pipeline First, joint nearest non-GAAP I'll we've that cash of excludes investment margin, net market for measures. related their These in metrics million or million our Double flow income compared of $XXX note, these results unit which impact the include reported impairment flow, fourth the as to be was of million quarter, earnings exhibits morning, venture. in of certain references fourth included operating making GAAP cash usual, that financial metrics, to distributable and we reconcile including

the to the distributions for $XX $X.XX, from Double earnings after million, of increased quarter of per free resulting the million. flow impact of negative $X.XX for flow Eagle million, last unit $XXX free was adjusted $XXX cash quarter was up guidance $XXX cash our DCF exceeding the Excluding in while impairment, year million $X.XX.

our year For in billion, from experiences. unit available to A unit cash year. growth in in of cash XXXX. $XX in that full business per excess $XXX XXXX, million free higher deliver the DCF $X.XXX resulting the increase XXXX. X% the XXXX variances quarter-over-quarter Full buyback description detailed of This billion, flow distributions growth for our than $X.XXX significant per an year $X.XX, was program ability DCF XXXX flow about per perspective highlights of million the DCF and of was was release. our for free impact the reflects unit underlying after of earnings is in

So a as usual, I'll few highlights. just touch on

hedges. Higher commodity offset were our the refined XXXX in quarter core to rates operating midyear $XXX with average our X% average. increase from higher about Record transportation market Fourth quarterly of XXXX. volumes essentially rates adjustments fee transportation and products. and flat million primarily activities terminaling with Starting quarter driven was our fourth mark based transportation margin on on unfavorable of by tariffs

primarily Product a result were be prior that quarter, favorable period shipments increase in partially favorable of as year driven as expense tax higher current operating just rates. current rates in about refinery These addition, reduced continued expense Operating by both to higher volume along unrealized haul to the long movements expenses than recognition long and $X which areas a decreased haul overages, the impacted to to more our sales results less was the of million were long as increase property system at network satisfy due by on XXXX. margin between losses fourth margins In in for mentioned. haul product market Similar periods quarter. increased saw items the activities, our costs, more liquids hedges the which the refined as using offset connectivity primarily offset period, by by the higher outages. demand segment versus gas benefit from quarter well the shipments, true-up power move unfavorable in our of in favorable our higher largely customers third which additional continued commodity to in extensive from blending the

per per $X.XX Our gallon realized gallon in $X.XX blending about year to closer prior versus increased the to period. margins year-over-year

XXX,XXX due a overall. move new a overall at of so average increased actually from the than partially XXXX due lower shipments, higher we Houston affiliate committed currently increased Fourth period crude for resulted affiliate the long averaged pipeline volumes, variables. Turning activity volumes slightly quarter shipments connection 'XX just day, to margin on rate increased our the as on in volumes. is this to tariff system higher higher from business. fourth in rate per marketing barrels over in lower than XX% year than higher nearly resulting barrels by realized million, prior to to haul down earn part we in $XXX segment the our period. XXX,XXX Longhorn increased oil a on quarter XXXX. offset committed margin lower Longhorn Volumes distribution revenue the HTS These the versus operating marketing in margin shipments

quarter dock as electing as partially prior barrels a driven throughput higher addition, Houston benefited simplified terminal oil services increased, opportunities. structure the as period activity our move to as and In customers from additional crude Crude versus more the marketing year result pricing area, increased our of the demand. for margin fees well we by oil export product again in increase the recent in within

risk but factors, call quarter, core that are terminaling pursue different location low quality last as to our our on noted provide and opportunities returns these we or and continue ratable differentials available. we As involve than less when transportation such business,

and were XXX,XXX oil in volumes day slightly averaged BridgeTex the in day per Saddlehorn volumes 'XX crude per down Moving lower nearly day, ventures. in barrels from on barrels barrels per period. barrels XXX,XXX fourth XXX,XXX XXX,XXX per nearly to XXXX, nearly the than of 'XX, quarter day our joint

noting revenue of the of these decrease this recognition were quality from volume an in the earnings although both counterparties equity we services to when of committed equity resulting payments in the in short It's pipelines, revenue earnings, results for deficiency Eagle pipelines, Double increase earnings worth to due associated higher the cash the the additional segment. our timing ensure customers’ of that periods, take-or-pay already regardless by both again and our ventures distributed were utilize received and us DCF by an From for recognize shippers from we proportionate our our as want of share commitments us at For of customers primarily in our logistics recognized time. equity and to get is joint emphasizes payments paid importance term deficiency that and perspective, in prior BridgeTex decisions. to those

the our Eagle. the are to I'd impairment to impairment just results. beyond segments, due highlight and investment increased items other from a there like few expense in Moving mentioned primarily individual quarterly Double of Depreciation, previously our amortization

customer to consequently provided notice XX deficiency the years Ford expire commitment Eagle shipped Eagle and that expiring for to of operations payments, the year contracts their to provide those those did as below third extend Eagle connection than their for the when out pipeline indirectly it customers Those nearly the paid intention significantly not Houston consistently a contracts. was condensate and later levels rates Ford our their basin through commitments of began delivers commitments Double recall to ago. current party for directly Further, by a rates which You'll from customers while lower market initial pipeline, this long-term the provided are in Corpus backed and contracts. in have transportation

Eagle As investment impairment a the quarter. recorded our Double an of fourth during result, we in

sold will independent discontinued everyone terminals in current resulted period. course, which, Finally, June, as of in from income our we the in lower operations remember,

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

most facility that those we XXXX extended the have fourth $X in of terms liquidity, under credit commitments First, of during billion with facility to maturity continue available quarter. of our the to

of of with $X our still reminder, As on interest with our remains remain borrowings. essentially that The next rates bond our a average all weighted of than X.X% other amount long of And about rate XXst, debt term million outstanding. about billion the face small paper our value commercial as maturity December of interest XXXX. $XX commercial debt was paper in fixed,

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

gain, have that Excluding would X.X about times. been leverage

hasn't As allocation, for our story capital changed.

repurchases, equity using financial are believe is important all capital of to to us committed investments, capital balanced remaining it for. strategy distributions a continue discipline to cash and We execute a combination while we known the allocation for

continue average price quarter, execute $XX million. spend strategy an during repurchasing of million our $XX total at on for about to of per a We unit buyback the units X.X

$XXX unit year since For we the full billion. in repurchases, to bringing $X.X the inception million nearly XXXX, total invested

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

back turn that, Aaron. With to I'll over call the

Aaron Milford

Jeff. Thanks,

outlook about Starting guidance our better about $X.XX key you used This for results. XXXX few segment, products billion walking margin. you comprises of I'd the year. to spend XXXX, to new develop a operating we morning, for our how guidance our through which help than higher like announced Turning the about our year. assumptions thinking is to new moments XXXX XX% with DCF X.X% refined of our which we're to the understand

than expect expansion the and including stable annual in about and online pipeline which demand to volume will contributions Colorado, We first refined due between continued Kansas in X% system moved quarter shipments be the the product our expansions, higher from come record year. of to XXXX small the of

return are to which their impact assume returned Both activity robust our markets not does will slightly such estimates markets remains they few It's as markets notably. historical of essentially to outliers believe us City and their As slow economy not outlier our in if These quarter, these demand nation's larger demand. new Minneapolis, pre-pandemic lower. that if clear fuel of discussed that most metropolitan and our normal. our a we Kansas still drilling or while to diesel now at levels have remained last

current our capabilities to to to and guidance, become XXXX our next expected to contribute of part project increase in a is underway should not early While operational volume El year. Paso pipeline which XXXX, growth

metric pipeline Xst. products key In forecast increase charge. all-in products for approximately average our on the by an other we July system is tariff assumes The refined X% of refined our we average our current rates

the have producer December who XX.X% been that based last investment is the be you're change our be approximately thoughtful currently of the indicated community few over our level to those tariff take results of the the through very period. ability estimated increases We've increase quarters For increase. to on the index tracking intention PPI allowed in Should the in index, of price markets index, XXXX. an make decide to the aware to preliminary future the subject difference full unprecedented of to up approach retain not the year allowable within we the to to to our we will XX% the due in FERC the this

products not refined to will index the to The our conditions. other markets XX% according market be subject adjusted of

We assumed Xst average have X% but break decisions. we we not on guidance in more the finalized not our effect will plan out in year components take today, the our the decisions finalize do we'll and provide of that to once July later detail rate all-in our

full a for either impacts volume tariff our approximately products basis. the million by total reference, transportation or X% For pipeline average change every system year $XX refined DCF on in

activities, blending which liquids gallon hedged which average with the of year, $X.XX $X.XX week's is results of volume, blending margin have with the per margins Between and five we fall hedging make $X.XX of XXXX margins per our Specific per the spring XXXX 'XX $X.XX. XX% an and margin, year at gallon $X.XX compares gas for have have about estimates our to last of and we progress hedged. XX% our to favorably curve further, we nearly Breaking of currently down our activity average for to forward to margins our hedged closer of forecast unhedged continued already our expected gallon. closer we blending per gallon commodity significant to blending XX% hedged now

Our RINs. the nearly for of pricing to XXXX high costs due RIN estimates ongoing per blending $X.XX incorporate gallon environment for

also sell in attention country. the in in differential We our close pay we NYMEX of of continue located system moves based basis gasoline the along middle to the pipeline and hedges between the to our the price markets

basis Our than levels double which the historical negative a differential differential projections $X.XX an is of currently per about better include average average experienced in XXXX. gallon, but basis $X.XX

Moving to segment, of XX% our the which crude comprises operating oil remaining margin. our

higher on from owned XX% impact year the full recent about results, connection. increase over Houston volumes wholly system a on primarily to distribution We related pipelines our expect of pipeline XXXX to shipments our

day XXX,XXX day per in barrels We shipments to also barrels expect Longhorn XXXX. approximately increase, averaging XXX,XXX per compared pipeline to

years a third life Specific quarter, XXX,XXX to last shipments based levels volume XXXX, will day about barrels shipments activity. payments capacity barrel resulting of with per our At paying an average and at small life the Similar approximately venture with on during customers joint XXX,XXX than Longhorn, has expect of per XXXX, commitments as day annual per to deficiency remaining nearly commitment three month. average recent result. XX% committed be commitments in years. day BridgeTex average an lower recently few are discussed party we shipments remaining this the of new to BridgeTex, capacity point, day per of six a this to than point with lower commitment lower quarter of around first be last even pipeline's a XXXX the As pipe's on during XXX,XXX to expected pipelines average for expiring barrels barrels added customer XX% being XX,XXX with we

pipeline’s to about shipments. average capacity barrel an of move XXXX, currently to four barrels Saddlehorn life remaining expect XXXX commitments XX% the we XXX,XXX day Saddlehorn, similar for per per approximately day which has during For XXX,XXX is of years. with

products We lower refined XXXX in storage during expect storage and to XXXX revenues we well. crude our as theme a oil be both saw for assets,

price pricing generally business contracts. those independent sale term Although made received we agnostic million June to of during contracts longer are from assets short our movements, term somewhat dated not contribution repeat difficult that renew ongoing has Further, expiring we for the XXXX it terminals storage curve to of $XX last the year. in target our more backward the will following

throughout the several initiative side, environment kicked operating On the as inflationary possible the are that well assets. we've that efficiently discussed past ensure to we of our expense in us Magellan efficiency has ago integrity current years the off organization. This an especially opportunities as safeguarding considering initiative served identify while the to optimization

expect again X% efforts, few optimization don't With a we the year, well expenses these as new we benefit XXXX. of by currently to onetime expect recur as costs about increase in total the in to cash

spend the to simply XX% the range which communities to actuals timing The work integrity large and operations the specific year's related assets is electrical year higher normal estimate of significant where but success, based effort nearly protect XXXX spend live of above critical last each with relocation our $XX not expect a time associated annual to million and projects pipeline and and work. capital, upgrade. we in company. maintenance we with to to and onetime ensure out on around are and project $XX is Safe our XXXX, an our the reliable for we million Concerning during of

on expense $XXX considering projects. work both to maintenance In excess expect and in integrity and recent in spend with fact, capital consistent million XXXX, years, of we

we barrel average assumes in with aside, our an today's of $XX recent an oil consistent guidance release is the also earnings that crude As price which pricing. mentioned per for year, futures

unhedged related we and of purposes, in change DCF impact currently XXXX, approximately of oil activities each in $XX For to sensitivity the value will primarily our crude overages. tender million our $XX blending product and that pipeline our the estimate liquids by deductions gas price

Coupled billion all expect XXXX. resulting build distributions X% value X.XX of equity times, business, our up for in after growth, of of guidance to annual committed distribution additional these currently distribution $X.XX of to In otherwise summary, cash than can DCF coverage with our flow we key be assumptions more free a investors. $XXX the buyback or remains allocation reinvest used in for that Magellan balanced capital million create to our planned approach.

important X% this will value past distributions two component results an our which to annual repurchasing continue through opportunity by to trading see recent distribution allocation yield create of X% based capital on nearly remain the prices. years, increase year, in plan but to a plans. We to similar MMP We of our units,

While expect higher next few modestly repurchase we're to seen years. this at XXXX not per DCF over recent this modest we for flow unit to potential with even providing units Combining specific expectation growth as have underlying financial distributable time, our grow guidance growth cash to to in in the results years. we continue beyond our continue

DCF for our For in period. our our just for and during under power example, healthy current create the investors XXXX, unit DCF term through per an DCF capital with over X% per demonstrates unit same to rate the long annual believe, X% a our XXXX at of annual rate just capital approach between average combined distribution value increases. appreciation ability example, the allocation grew potential of grew as and we This while at our average an

underway. intent on expect to million company. future $XXX attractive approximately XXXX in and Moving developing XXXX to investments currently create already expansion on spend million in $XX to We capital our capital. We expansion remain for projects on value

is spending to El of XXXX. pipeline which probably our products to Paso, earlier, in the in largest to related be profile the this expansion as know, operational mentioned refined expected you As included project

assess footprint to new may leverage between to expect continue network, enhance arise find market likely extensive filling incremental gaps around logistical to projects of supply. available flexibility that opportunities our that We and and the Magellan's most demand

You that as million assumption year a generally around projects. may per expansion recall we've spending of reasonable estimated for potential capital $XXX

planning we're noted, XXXX. spend just level already to that As for above

that are disciplined So we pursuing term closer depending year. placeholder as times our $XXX grow remain to relatively to our also aggressively on the exceed approach. the intend tools. We how million term for projects thresholds through number to set identifying low. if X stay Quite and Magellan's EBITDA in committed our of value opportunities existing our to this meet Even consistent a a X achievable though additional other capital successful allocation projects reasonable were new of additional remain projects, and investment assets is of optimization multiple right for near times we long or DCF, we to patient utilization believe continued simply,

are ready we for Operator, to open now call the questions.

Operator

[Operator Theresa of from first comes Instructions] Barclays. The question Chen

Theresa Chen

competitive to lean unpack exact you wanted And work that you the bear. the that rates, And be Aaron, are given the the And some competitive through X% way point. you process I'm willing understanding products math this breakdown time on aggressively at XX-XX for your you've refined the that that just the wouldn't digit on share if price the between rates confident up to increasing with has doing of I just wondering, major you're discovery more rates. FERC FERC giving they're your been of some and with customers this increase? single not rate. Either giving just tariffs, just But close market increasing your big have are be higher you to index gone rate talking to you to clip willing what competitive you process the for the be than ceiling that and split mid would would your rates or

Aaron Milford

there's about we're as made very And good always a a we're we on if decisions by is going terms or And think loss, we're bit what think in say. we result what to in what going but There have But But trying That's in we about be we're you we said do for be a the market that to which the Xst, market markets, customers, increases. make we trying rate, a comments, losing good sure my are in such of little of that rate any increasing haven't on to do in share. we make our of I buildup that see way we a July placeholder don't should all-in things is are what's to to healthy. we push it think, is July X% envelope a going wouldn't as any we that share rate much rates, frankly. Xst healthy sure I final talking going now. feel our a that manage in the market event risk market are to think right increase for

have. we that sensitivity the that's So

would at all-in that and rate, And X% than index If we're at we most that healthy. here combination charging, markets rates, likely end both we sit rate as to the you that running that today, they're market higher up risk. may be which we we is but a rates happen reflect look X% think to of think our think based what's go will market likely don't our that going we indexed up

Theresa Chen

to the butane And turning piece. blending then

of the business more favorable negative But the quarter. there's helps which this clearly, As butane going blending a of been basis go unplanned several blocks have our down January year, and set things Mid-Con, [indiscernible] the on. we we lot has But refineries than to the think you. the downtime to for about Clearly, in sometime at fourth quarter. $X.XX planned building assumption for is the

we evolution think spring of basis throughout about the the season? So planting should how

Aaron Milford

it's going the going the it's you why many we remain remain we volatile. Well, to volatile. And to answer That's simple of highlighted to reasons think that. think

a just event predict, could and think actually way around at saw Last if through of you XXXX, lot happen for it. expectations the our really go we you hard It's we that's We year, again look see assumption year. reasonable negative a positive, we of that bases $X.XX for a year. but whole traded think volatility to look of some our negative. not If this sort a

and when the the but considering So seeing sort it was that in just markets $X.XX, chose also looking it both we them directions can was minus volatility we're future where at the sitting happen. of

try think year. good year than going we We elevated just to little it number. versus a chance we historically there's in what a traded to So last any But event, a it's margin. experienced this it's reasonable a be pretty by pick has better still substantial where

it's So forecasting than be year our on what been historically. best last we using has year, like, just to to the it look good us out but full turning see not better estimate or as which we it as certainly -- slightly

Operator

The next question from of Praneeth comes Satish Fargo. Wells

Praneeth Satish

On growth? the X% be to I'm mean, distribution up distribution pace year, you're thought going is up growing to just projected capital this the raising you've to if be X%. of EBITDA given but allocation, -- to I only wondering

what buybacks seems decision but an would guess you're flow it cash I doing here there's you growth? growth. distribution grow at So I active consider like And not distributions line with know accelerating to point in

Aaron Milford

interesting and fairly we an it's simply. think, I think Yes, question about it,

first I to an mention a view our we important proposition. overall distribution of healthy want part is The thing value

The still do here they think the buy like for to make compare units long will seems us, attractive materially is term. we it's back we the to should when we two, we and which compare we us. that for you're do our see always place that be. right investors one still do depending it at, the emphasizing value. or And tried best We've think growing really question make sense us, long-term as to key of I for distribution create the faster about to And opportunity would we buybacks have where are still at than that's value the sit those now, doing your an And distribution point, think we make. spreads most from say the a to on what's that So to now. we point That's decision things and right buybacks. already to adding happening where what incrementally you can true most add for the is wider change really to treasury

So in right going important. we both our focus. that's opportunity, we opportunity see important where that's just unit it's very it's right marginally And we But of are them look as where price. we stone, now. we're see not being if long And that set as in see that we to now,

Praneeth Satish

getting the think rates on versus higher margin. Longhorn marketing on And capacity contracted then you're I that you mentioned

there's small I'm remaining wondering contract it contract in So open just when on if and potentially of XXXX leave that open that to capacity plans piece things or tighten? Longhorn later

Aaron Milford

And I very all, wants that us specific. as some counterparty that have talking first about attractive interested we difference. a if look that. Well, pay we're an of think in time, of rate, it's to you through counterparty And

of have different about to different they either ride mentioned so to make different and people capacity of or take producers or term motivations views out basin. I've much to feel sort As of think for to want the the have whether not spot customers speak in how past, they term want to just of about, surety to they export the market, want and commitment do how

want come up to fair counterparties a that there certainly we'll consider with rate it, some term have we if on out with it. So

the are typically the going fair. view they're to sure we of commitments term term saying, one over rates with is we're and this taking if at customers and reasons that period look rate are the make at time, So that of higher a to at is we're looking wanting need why a longer those have are longer to

happening business, market. more much more the of spot of a what's much side marketing of the that's On today,

with trying spot optimization So you to don't necessarily do see our the that the movements that same term affiliate. marketing we're structure in in

when price the that term those pay to sensitivities different as in difference a got through sure that customers in working result. a of perspectives, and that of And ones a both to perspective two you those out just they've more have of them with want are bit of take there’s for you basin. the the marketing interested little to make little different wanting So and affiliate, typically our capacity types willing

answer does that your So question, Praneeth?

Praneeth Satish

it Yes, Thank you. does.

Operator

next from of Jeremy comes The question JPMorgan. Tonet

Jeremy Tonet

come little repeating bit benefited able you to oil as be see XXXX on wanted what might in and factored far And Just you do dive if XQ? them the margin guidance? to more, a specific activities in product in is that into as

Aaron Milford

to little those continue. million, level because we at this of locational do expect as year. specific We are, assuming I are million, them going continue are simple. expect it's level not differentials and broad, $XX pretty it, less I'm was our super we the are said, opportunities. marketing we if -- probably differentials. find $XX activities bucket, we the satisfying, opportunity more be to it's that really, and the make but we're But in it's pretty to And quality broad opportunities similar find specific think and call But we look accrued have, So more guidance to we'll where basically it much a trying and our hopefully you just to opportunities can't a answer XXXX, contributed, to predict next the

Jeremy Tonet

towards want just the then to And CapEx. pivot

see placeholder kind now. of might said I wondering, you $XXX say see project guess, growth potential opportunities Would that's million you suite of be a think there. just I'm XXXX? I it reasonable or you Just the how as you been more in time? than be over the as be that maybe I guess, growth see, it's might trying opportunity less could -- where earlier to it evolving

Aaron Milford

we're in going would than past, and it ago. I and going that see for that we see say of that they're recent to us. optimistic would the a probably, lot that with is potential would say help we the more I today levels as but to to have new environment not them what certainly has mean, with. And do I And even the was back trying what high I have we're saying I I year a completely don't that really and more can some the a to they're saw seeing for that having. objectives describe investment customers conversations Well, some in customers optimism. today it accomplish generally, our we're do we opportunities

not sit in today than different was totally as ago, I'm certainly a code. optimistic I but more So a here ZIP I year we're

driven by, in and we've things really spending year. few expect was this projects we're year really already find we to in to what do committed this of already more a million $XXX the excess a good $XXX So million

So some to give least you of wanted the of magnitude we idea at that.

that does question? your So answer

Jeremy Tonet

around I a just I if one, could. quick very could helpful. that’s bonus ask if Yes, And

you the if delta opinion product about EIA weekly any impacts the Just Magellan? in seeing numbers and if we're had monthly that how versus demand

Aaron Milford

have I opinion on don't an it. really

We on a And what direct have on doing. don't customers are I opinion are focused our it. just really

Operator

from next of The question Dounis Citi. comes Spiro

Spiro Dounis

broad. there's I than a good it and and you to I of an outsider's every that looks year back We looked six to go and keep or over the last want to take would so, pass or think guys you reason your years try kind you from But guidance one. to single the on perspective, conservative and approach it it beaten XXXX, pretty like all other guidance, give initial five a I'll guidance. have like a seem pretty

another curious, and just maybe surprise Maybe sources some asking I'm guidance guess upside kind of highlight? where I is, as what's can of way anything could you in be, the potential you guidance? the not think of So about

Aaron Milford

tried reflect of I expect, or Everything foresee Well, couple that we would a to highlight. guidance. mean, in we've this things I

We're clear was basis was assume as we'll you there. how about, than For tried but example, We we differential year what great historically. see we last it the But think better around it's a just that's of on out it's assuming talked not year, going hold. basis. to the give guidance still as we plays it to volatility really

Commodity an to using we crude or worse? Could oil an product. area give area. $XX you one to year. what's tenders sensitivities prices? based and around our for the be That's in they be happen what's with We're better unhedged our strip going some that's tried basically prices, that to on So left

haul of going We've a whole to part benefit. hard good from it's for a us. usually year, refinery benefit is the that. if to some of outages going longer predict level unplanned either we continue that's seeing been And area unplanned of refineries what and we get sort a us commodity that that we've seen maintenance unplanned what outages, could are first start depending unplanned But And difficult to direction where do have of really would unplanned outages, slate up. average So that, long higher a for then do. in we're for a have shipments. influence we those to lot end outages But to outages, of to expect we prices do thing time shipments, very that's have long expected there's generally extent heavy on we frankly. running and unexpected, the on element some an in The we got expectation haul the of the

to it So on we've very nature It itself. predict. on happens, take what difficult happens, tried how are the to unplanned of long depends see but where the outage can we the account outages into outages, it just

So predict be that to that traditionally could difficult something it's for that's us. good

really going happens think actual happens that those, that differential. outages, of what is basis the think it's guidance commodity simple. really with happen we reflects So unplanned tried It's what to the markets, And we've with I what this outside year. to provide

Spiro Dounis

there? Second guess I function would this Is how to the to something just directionally on to futures moving it or a that subdued I year? just market's the what's really you last storage. here, that curious pretty see going maybe improve question know been of I'm there take the could characterize at moving how curious, since but is higher? that point economics get curve of is occur structural kind just

Aaron Milford

market of order looking take on talk to are wanting curve of the taking in prices to I stores. we end itself. storage, the the think really future the forward the the difficult I At mean at about it's reality go right when for the curve the that those now, to margin, day, justify is is structure

the think see we shape I market the a a what of consider So the move curve before futures back would difference. into and more I will to contango have

look to are direction growth take our again, can and that that HOU just of are I idea us. forward forward logistical going by of curve. some price Now help Coast, There at Gulf to the has going But had to than be out the change are have the But to think and wanting more to operational tomorrow. for to happen. purposes, is but real an demand see that's some turn customers I'm some to is point a little It need improve, being Speakers] lot do in the going we terms the of business, think opportunities are what things things. the it we'll to we're better. better as we mean [Multiple just With left those now things But to doesn't think overall operational the there lead curve year? to it last the of lot, create continued lacking to say, really I'm that storage sensitive higher and a going do market some more were could in attractive. set storage rates the about was storage your same. some the forward We so it be feels are contract. a Exports same structure less And overshadowed pretty for our those that that storage said, to for renewing what contracts we've some that market, done for

days don't. the little Some a some feels days but generally it about same. feel better,

Operator

from The next Research. comes question Wolfe Stanley, Keith

Keith Stanley

all notch things some for the out, we transparency your the you is of versus Aaron, top all the questions really thank have. and And you these disclosure. peers just First, lay remove when actually

to growth. start on on -- So first, follow-up wanted distribution just I a

unit. the doing have opposite, interesting little the [MLP] buybacks So I growing doing distributions as higher. a the peers of especially per the buybacks, is so faster, growing are they're especially your and the What's stocks moved logic on DCF less peers get

over for I'm on or you're time thinking are you on dollars, competing more all if your economically? for into are just curious sense So investor weighs what peers as makes what focused the Magellan at doing capital allocation

Aaron Milford

of of compliment all, the most successful on the first We try, Well, transparency. think and thanks time. we're I for the

appreciate So being that recognized. I do

what company. Now to their are doing their your they lot we're their about we're for be need don't think and on in they to decisions their frank, we see their distribution make to question not company, not based their growth buybacks just about because distribution and a company, brutally about what terms they peers are, running of growth, our responsible

together, for on trying We've healthy I always and X% our focus powerful a company. and what going years, for to mean we've it's powerful XX our our proposition yield. And what differently. people that cut compare it think we trying And value and you it grow and that we ability proposition unit, our an really really accomplish we what if drive be accomplish then we're So never could to to to think Other have company. got think that's happening per capital be appreciation, to see we it's distribution. really and to what you significant put we may almost view DCF value we we've important. they're with grown when their a

are of doesn't to aware our influence others but run how we're company. trying it certainly So doing we're what

Keith Stanley

Second just the oil one, sensitivity. clarification, a

holding adjustment an making that per change in line million. $XX variables there is all $XX oil? costs So Is barrel it's other or like with constant butane

Aaron Milford

a cash overall change. to $XX sensitivity flow an That's

of year much be, as what letting to flow it's would a through. it the and it's in meant very not a sensitivity, barometer constant result, or everything flow So But holding would it's a Keith that's say, sort the than thing everything I as to but thumb highlight The through impact of it $XX one a of is we is would magnitude an we the change already an place. meant hedges in I though be exact have considering number, overall. are that

also the product overages, yet only then we throughout have and in which to our tenders, So year. that applies hedge our sensitivity collect to we things the that those

unhedged product what butane that's the blending, difference and is, and tenders so a change. $XX and And

the in place. have we into taken account already So hedges

Operator

next question John Goldman comes The from Mackay of Sachs.

John Mackay

top-down overall lines We've see about given you're export a a or to maybe trying Permian the for I Corpus though, obviously, the think just pipeline benefits starts that's of just any start I'd two as over about pull. wanted be from more if from kind XXXX? we story? to how Houston pipelines. thinking a directions if up the interact the Corpus you crude how or those perspective. curious, to tighter, built fill to on kind think maybe seen, bit bound markets 'XX start pipes in and getting 'XX Really really, of of little

Aaron Milford

There's more pretty the which So well. current as pull in are a I continues think into production should the Permian full, over those Houston export Corpus a the to to for becoming result barrels certainly through you've situation flowing purposes. grow. as lead And pipes summarized pipes

setup. we that's So a think positive

the where differential at you is playing expectation might Midland look see between actually that out you and out in If playing that or Houston.

look If time point that's for it's curve, to for is, differentials, that frame. timeframe you the you sort forward the 'XX that pipes. all increasing when in 'XX look of forward But good to at at the it would curves,

statement So your I in think made that aligns with the question.

to to But frame, got think what I you're good we're ultimately. does what along 'XX happens of So year we've going that I road, really depend meantime, it's it’s next 'XX start export play bit I insulated the think then think more the probably we seeing a slightly way. really on out the going pull before to contracts, or with down how time and that's out. the further little in But beyond in so production

John Mackay

micro Maybe smaller probably one question.

Just obviously, be? the Eagle what small. is just the maybe number Can talk you impairment, about impact on on EBITDA that could of overall financial the Double kind basis

Aaron Milford

this because It's a at a year, year. around we're in based the it's it on partial to million been Eagle but it's closer distributions assumptions, look you basis. $XX later year million. $XX on Double for this year expires our expecting if of about So full XX% Historically, year

Operator

comes Energy Partners. question Michael Cusimano next of from The Pickering

Michael Cusimano

bit little guidance. assumptions I more wanted a ask the about to in

like in historically, within of much markets guidance. the think between Magellan terms hasn't dislocations assumed I product

have just today years maybe or approach? than maybe aggressive visibility a in wondering, just you more So do past I'm better

Aaron Milford

dislocation, product you just say inventory… mean, do exactly you do you you me dislocation, with price what help When mean mean

Michael Cusimano

business? products your transport Like miles higher barrel in

Aaron Milford

been tied predict, to or are us plan down. the for difficult That's when be area always that's typically to pretty it's been planned about unplanned. they Refiners to whether an vest

haul seen So more and a happens. planned is just barrel we've maintenance when happening consistent longer what's certainly

going just us it little expectation becomes those to outages. for that planned get a we're an that on to easier some So have benefit from

of a And visibility, it we're a to combine guidance. all the really track what's refineries, benefit just getting plays that's of is. more little going as that higher just that when for really this bit So we included seeing that difficult year, a you predict. cycle how that. little unplanned the some a think I record to our is And previously, And out. We're it said of from we've into maintenance for part of

the in we have that. we unplanned, to include So can guidance the of to anything extent But we that. that see turnarounds, really don't we're some have says X of we planning don't percent trying are

visibility towards about seeing it is less probably us track it's more it, more it a So is I than say. record so of consistently what would

Michael Cusimano

if all you disclosure was provided like in because just then you that the any sensitivities that think the you've or more don't methodological past? one on guidance. was additional wondering on if wanted I provided the adjustments, And made I the

Aaron Milford

have say should especially and we've to some I sensitivities, sensitivities, commodities prices. or crude around different provide We provided tried

be and think will thinking how change But to because how it So about producing we that assume we're movement, or guidance. new haul record the we the of same the there that's in for aren't have some instance, we've looking no sensitivities in it. Again, more seeing isn't of any changes extent, of track it, way. a longer new. got for at methodological guidance we change in guidance not really the there's the We're methodology us. And on about pipe

Operator

[Operator of U.S. Instructions] Capital comes Advisors. James question The next from Carreker

James Carreker

July that talked talked tariff mix on also step that. shift X In may basis be lower products number than to headline then about about due segment print refined of kind the you've you but up, the previous years, for

and Just to wondering hard you understanding as unplanned to any look that seeing it's you're out if planned dynamic 'XX, of predict maintenance?

Aaron Milford

No, we're seeing anything. not

James Carreker

planned increase thinking And the markets. in then July, however, allocated index competitive also just between and guess higher it's rate than I about here average

becoming relates but get to pros concerned Page these point the the at earning mid in earning growth single start years cons, Assuming maybe as of rates high another is about on a -- we there I over of number and to on a couple know risk you over if that, high tariffs? it which 'XX, XXX has digit

Aaron Milford

care Page I not overall, customers if but we take day, the try of look of of are that in it, of good it in percentage something mean our we what the wouldn't rate really the mix to that and price, that run make our the be is what things. them. are the at as XXX aware worry say the scheme really and grand But end our it's of about aware we're says. we of. a material At considering and we sensitive the certainly things, we'll rates a you I decisions calculations that of good

over-earning, about to So of, -- we as thoughtful have we're be long and aware something obviously. but not as it's that worried I'm

James Carreker

if back XXXX could system your maybe markets I below upside you is? happens kind of existing be talked did of some And about volumes, it to fit with certain respect that that could normal. how if it this to sensitivity I whether be XXXX, volumes? levels, in And kind more. 'XX, to get XXXX, what whatever would of to material How 'XX, maybe your one are any still and markets the new But guess

Aaron Milford

other. I or -- I of it's really don't first think way going be the to all, material one

I probably volume, in gave have X% sensitivity the within those probably we with using it's But don't you're if that it’s bound of So that you, and/or that within me. front sensitivity the rate bounds. that right specific

Jeff Holman

on components. come do back, varieties kind it different way the a to back and of going depend just there. Is of part the metro they way infinite It’s all multiple areas, the there's

So it's…

Aaron Milford

sound thing have But not they're come to were them to just the little would the back it's we're they those but is not I areas. to on XXXX. metropolitan of It's want And would of reality trying highlight They're that, like sort and drastically in a expected make just I from they different aware don't everyone and pessimistic where is down we drastically bit. haven't. different. overly

Operator

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

Aaron Milford

strategy pleased the with long for XXXX balanced to nice an we hope year appreciate in stronger in financial committed maintaining your proven term by look capital Magellan you On of ahead. day. generated the performance investors. results We running to your even continued allocation company, and financial value discipline you to our business time support We're maximize and today. while remain our have Thank a for our solid thank you. our forward and behalf responsibly, Well,

Operator

for ask This please participation Thank your you the call does you, you good conclude have conference and that for day. We today. disconnect thank your a lines. and

Magellan Midstream Partners (MMP) 2 Feb 232022 Q4 Earnings call transcript