ET - Earnings call transcript Q2 2019

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Operator

Greetings, welcome to the Energy Transfer's Second Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to turn it over to your host, Tom Long, Chief Financial Officer. Mr. begin. may you Long,

Thomas Long

joined Good team quarter And remarks. really XXXX you answer of after I'm all operator. McCrea questions Warren, Energy other your are and do to here Transfer of members also today. us second Earnings senior joining prepared by morning you, Kelcy welcome Mackie management everyone. the the appreciate today who Thank our Call. help We to

Section XXE are a on within EBITDA, of I distribution As adjusted as distributable to we ratio, the of information Act us. making of will our and also available financial currently and well based coverage all the statements forward-looking of cash non-GAAP XXXX. reminder, be as certain are measures. flow, Exchange assumptions refer DCF, which will to Securities meaning These beliefs or

You our a on our website. non-GAAP will measures reconciliation find of

with Let's highlights quarter. the start a few for

quarter in to This Our the the another record XX%. hit as for partners second quarter of second the up coming of DCF was increased last ET of adjusted attributable XXXX, almost also year. to billion. $X.XX XX% EBITDA adjusted at compared

assets. high We of our very in continue performances all utilization all across see of and businesses to major very our strong

immediately. coming The VI result in online NGL quarter driven XXXX, earlier businesses. frac differentials driving record our much remain of Products planned up markets Pricing another of strong and between continued Frac as to outperformance delivered than of filling record and Refined segments a MEX ramp have were almost for up the volumes optimization by also and that

quarter. cash flow times two million was resulted after for quarter excess $XXX the in for coverage Distribution distributions of the which

processing Nederland natural pipeline at July, on ahead the successfully now barge brought that at plant our schedule. Express operationally we the Bluff We're gasoline. of our the end with quarter, In And to is end addition, pleased say loaded Arrowhead the phase first of second online complete. also since Red of we III of

As revising initiatives of strong and are performance completion a this adjusted the key guidance our several higher. result we growth XXXX, EBITDA of for

also lowering CapEx guidance. are We year our full

our expect $XX approximately range. We up billion, our guidance adjusted XXXX to billion $XXX $XX.X to million previous which be from is EBITDA

approximately now coming organic billion $X.X we growth down impact expect projects, is result CapEx, start to approximately projects This any in than expected dates. at to previous not deferring costs from guidance have as spend for capital is a $X.X well expected, a number spend which on billion which of As on lower $X some billion. as as is of of to our

around regarding update, Before more growth latest going discussion provide into detailed CapEx and the second an to want our growth update projects. liquidity on quarter developments earnings, I our

March, in foundation that with further Charles investment we the As decision. the late export Lake LNG framework have develop a provides announced signed project Shell agreement that for a reminder we facility to final a

project, of in Lake will Charles XX% the and invitation addition, will offtake. contract. to and construction each bid May, for to procurement to Transfer the each Energy and early US to interest equity and entitled In consortia tender Shell be LNG a international have engineering, company issued XX% in an

Charles uses LNG Transfer export million gasification X.XX The Energy with XX% or annum. LNG project actively its network, the vast the per existing tons would to Transfer's including to from pipeline an the Energy major and terminal million per existing The fully abundant is benefits and a of Transfer's annum. tons liquefaction capacity offtake permitted, pipeline Lake Energy convert infrastructure gas import marketing facility proximity supply natural LNG project and is infrastructure, of XX.XX

China and continues to to we to constructing Petrochemical Gulf XXXX. the progress as of for the continue venture a provide US be Construction quarter ready and Coast to both our we export which the in joint is ethane US ethane As to terminal Satellite. for commercial expect Orbit new scheduled Satellite are which with fourth for for the service export project terminal the in on

April, East when that the at placed of initial XXXX into in December in volume ramp Hook late ramp up MEX continue and approximately this of pipeline combined Mariner through operations system Since we MEXx we per a continue moved resuming MEX up volumes online the has later barrels looking System, expect to on Marcus NGLs second to on day Mariner year. service reminder as capacity XXX,XXX our comes Now, to XX, East quarter. and the

volumes approximately of Additional this heavily arbitrage NGL in our utilized. brings barrels reaching inbound were demonstrating terminal to to best trucking economics day. This total modes per strength quarter, Hook strong efficiently for LPG and the customers. markets rail XXX,XXX the remain transportation the Marcus second and including International

expansion of for summer efforts underway further are Hook increased Marcus expected Our XXXX. nicely advancing with facility at and capacity

western a and in to eastern County continue as plant additional for butane new the markets. Philadelphia points central additional including in We Greater as make Cambria area progress and and at on serve to Redding offtake Harrisburg, distribution local ethane, well Pennsylvania power Pennsylvania propane connections

manufacturing We domestically PDH Hook and and including at also to continue technology evaluate alkylation. discuss opportunities the additional Marcus

However only we our on and capital will synergistic remain target higher disciplined projects revenues. returning with approach

time XX% target construction by service this to mainline the MEXx, and at in continue having looking is we complete pipeline XXXX. late Now, at

very at day, to XXX,XXX barrels first anticipate full day it assets, to mid-February, in Frac On service per Star reminder, continue XXX,XXX will as which VII, the VI Frac quarter been also our be since service it's the capacity Lone and per will and March. barrel expect to in of into XXXX quickly. be on we it went full Moving in a be

another also with online Frac quickly. Mont to Belvieu. day. in XXXX our per is million XXX,XXX frack second capacity forward will and at at over moving VIII X Mont Belvieu day expected This come of per also expected barrel up fractionator ramp We're quarter to the total to bring barrels is

expansion, the Basin capacity the our to service add or the Express Lone Express XXX Star of pipeline by Fort Worth, quarter As Lone over estimate of is fourth expected south Star in to XXX,XXX XX It of pipeline day before be XXXX. mile per will of to Permian our from inch Texas. barrels original XX NGL inch

extremely our natural expanding first suite gasoline. our and Nederland At loading expand we operations our looking offerings strategic product our facility. We're gasoline further to barge at of started with this are asset, natural export

In are integrates assets LPG our we expand our addition, barrel export with day with XXX,XXX further to Nederland, assets which expansion move project Mont Nederland our excited to at Belvieu forward capabilities. LPG our per

we Another excited very optimization. Bakken capacity pipeline are project is about our

solicit call with shipper optimize plans open move July, transportation our open announced capacity. we the us More forward to system. Bakken the for additional recently on to a mentioned interest on sufficient system service received previous for further season pipeline December market XXXX earnings supplemental commitments the As season in binding to during

made barrels The of current be during commitments initial the system expansion we as based day shippers of have Bakken XXX,XXX on per its received, made open already season. current commitments will that as pipeline the capacity by above well

grow demand. future, expanding to X.X we volumes capable the customer of over the per based in Bakken will million upon system time, day be As barrels capacity up

expansion that XXX,XXX at The per barrels our of with capacity pipelines, full Exxon Our and venture an expansion of system. our are day will operate to all Permian of complete joint Express with part And full to discussions to be continue capacity. Mobil pipeline the which Express an PEX, We're additional PEX almost of X of is Permian X add connected project would Express Nederland, be from system Permian third Colorado project City in to the capacity end the a We're Texas. VLCC the terminal. of this on advancing service our our Nederland year. expected by to quarter also

project you specifics. to this with closer gets we will FID, As provide more

Now, per Delaware Arrowhead in processing basin, West end. a early went into in and projected year the be Texas, plant turning MM full to in cubic plants, our feet July is III processing by to day XXX,XXX service

million Bcf XXX In will than subscribed, the service Permian in bring capacity end addition, processing our schedule of fully day. ahead This Permian per already year. processing day Basin plant X.X will once plant Basin the we is in bring the more per and to cubic foot in on total by of this additional

Red these also The per Phase generating thereby Bluff in went downstream. during into quarter are the XXXX. Waha revenues second X flowing our of Header, through our On day. additional service averaged Volumes MMBtus XXX,XXX Oasis Express majority volumes pipeline, May approximately

We second operationally to phase the say is Express are of complete. pleased now the Red Bluff

portion commitments next step collecting begin a of August to on XX, those years revenues the grow system of revenues ahead as over schedule expect expected are the We contractual couple of up. on and additional to the

expected will of Mcf approximately commitments. backed early capacity is miles XX We're existing It to can pipeline per September us by and a pipe XX inch to incremental project at XXXX debottlenecking losing provide assist Katie that Texas service Beaumont markets. completion is an based be also Central in fee with in of XXX,XXX in day and nearing and

an Pipeline loading on project to and Sunoco terminal our in Midland, On truck the The XX,XXX joint fuel newly the venture began Texas, commercial pipelines, product Monday, contributed has to Texas The or barrels pipeline per constructed service joint LP agreement initial Heber diesel Diesel first day This we and were Sun. was ET X. side, area. existing from utilizes transports and a in XX-XX August capacity the J.C. is venture. Nolan terminal of which now are

our segment. for results. operating four ETs to was closer compared $X.XX take in growth EBITDA performance we'll our second $X.XX out refined of little billion five of strong operating Now, billion XX% record is This in the of product segments, second including XXXX. quarter due the a to quarter look and at consolidate up adjusted to NGL core

partners in to for times. primarily adjusted for second was nearly $XXX EBITDA and XX% to up the DCF the or the as ETs due the second period was billion year, approximately quarter two last same coverage to million quarter, attributable increase compared adjusted $X.X the

This the quarter is In $X.XXX close an distribution unitholders of on the common XX $X.XX announced or second paid record July to August unit Transfer per compared X. as of unit to annualized of first be quarter XXXX of the on August on basis. for Energy a flat distribution common will business per and of

X we'll Turning to Mariner as our product and increase $XXX EBITDA for start to million East and period NGL last to Adjusted due the as significantly the $XXX refined frack startup terminal well compared with record which the to results record the volumes. was increased by benefited transport XX% volumes, million, from year. segment. of segment, The same

and NGL day, to venture million XXX,XXX same the transportation day owned on on of XXXX. of quarter was joint Texas our pipelines per as our increase volumes The as Permian MEX increased year. primarily startup last and to the for pipelines the the higher Northeast were period assets volumes barrels regions, fourth our on of North barrels X.X volumes our through Basin in wholly compared out per well pipeline due

increased to primarily of compared to came volumes fractionated day in due and the per daily to barrels XXX,XXX barrels last XXXX, average February year, of Belvieu, in which fifth per six quarter, fractionators Second July of XXXX day and XXX,XXX commissioning online Mont respectively. our

for between year. The due and to Permian XX% last to for increased of pipelines. As adjusted EBITDA more and throughput XXXX primarily on to increased crude than our on second second oil the $XXX quarter $XXX million the was the growth Bakken compared period existing our million, same pipelines XXXX segment, increase the quarter of in

primarily day Texas transportation the our an per last the volume day a barrels through in existing increase approximately per year, period in to record barrels pipelines the growth X.X increased same Bakken. for and X.X compared million volumes Crude barrels million to due

on our quarter the per is averaged XX% which XXX,XXX day, year-over-year. During volumes nearly pipeline barrels Bakken up approximately second

demonstrate As and very in results Permian Bakken remain our both pipeline demand pipes space strong. our for Express

$XXX million XXXX. our to adjusted Higher $XX million. throughput by For compared $XXX lower the volumes million, gas of for the mid-stream, quarter NGL which impacted was and were second offset midstream prices, by results EBITDA

due increases Compared of and collected and volume the XXXX, EBITDA all regions our across in primarily Northeast. adjusted $XX the of to million, in Permian the quarter higher increased fees first the to

volumes in in Northeast, The other same increase in year. system due XX.X the period volumes on primarily the compared per Texas This as gas in were MMBtus North well the million last River Ohio region. to Permian day growth day the growth for to was XX.X million per as higher MMBtus

compared and million system. of In segment, additional for and additional from due Rover, $XXX processing $XXX second utilization This the our quarter more on EBITDA Panhandle adjusted Transwestern was to million our system, our of to primarily higher Interstate EBITDA increased revenues Trunkline gas XX% than XXXX. increase to

the and increase Transportation volumes well per million increases day production from the to increase per to as due Interstate of were pipeline, million Tiger Trunkline. higher XX.X the year, capacity Rover due and per million Panhandle shale and contracted and compared period for same MMBtus Haynesville markets, on MMBtus growth to in day on MMBtus to last of as day X.X deliveries an utilization X.X

$XXX of the segment, In increased This optimization primarily compared activities adjusted year. million, Interestate second due a commercial Texas Bluff Ship $XXX due May and million our was a as million XX% online of West to Channel water Express quarter $XX Red from to to coming fees to increase an $XX primarily in EBITDA and nearly in last contracts transportation million new increase the basis in differential result Houston of of XXXX. from to

primarily due Red increase as to spreads favorable online, coming to utilization Reported our Express due Texas transportation pipelines well Bluff increased our as system. across volumes of

ago $XXX year million decreased or primarily investment to Sun, to who and volume solid an sold adjusted had million in to increase EBITDA due $XXX quarter, another in to a increased fuel compared expenses. and operating As Compression Sunoco USA

Compression, investment a to in for ago, compression decrease by adjusted $XXX strong driven operating expenses. services, million a well SG&A increase USA million who an also and $XX EBITDA in as quarter, had in a was demand as And year compared from

excluding update, a in and billion Transfer for months the forecast have XX, mentioned, growth organic lowered as $X.X And projects approximately CapEx ended Now primarily billion. in to and segments, full XXXX, six for $X.X NGL $X.X XXXX Sun Compression and to year moving Energy we our June CapEx. CapEx from the spent products billion refined to growth $X approximately approximately Midstream USA

gross general leverage June units and XX used liquidity $XXX our million total under XX, at the briefly opportunistically of for for net XXXX, purposes. to proceeds our was we outstanding facility issued $X.XX credit were for facilities million amounts credit April liquidity XXXX, and X.X% revolving preferred of our approximately revolving under And of credit position, E X.X as Series In ratio looking facility. times billion. repay partnership proceeds the Now,

XX% rating X represents our to of securities received in As equity times. credit step three an a from leverage our all up achieve target to reminder, these additional agencies, X.X which plan ratio

Before opening to very we are quarter. to I another have questions, once again the reiterate record call up your pleased want delivered just that to

by to driven guidance Bakken, Bridge, deliver that as expansion strategic XXXX adjusted based Permian performances increased projects, Express segments, our by and in well is as Frac augmented VI, Our Bluff core strong EBITDA outperformance further is others our including Express predominantly the by optimization fee Red continue supported earnings Bayou businesses. which and are pipelines MEX, our

projects can In addition, we continue our of to generate a significant amount us of our friendly excess manner excellent cash find growth strengthen flow, balance organically further creative and bank a allow to credit sheet. which in a backlog and

we the result, needs any expect not equity a for As future. common do foreseeable

of are opportunities. integrated of nearly a the advantage midstream US major producing take in with number across a significant footprint leading portfolio With growth all basins an chain, and the value we operations capital the accretive positioned in of to well

remain to evaluating it discipline when We and safety new will very comes project projects on execution. to exercise focused continue and we'll

questions. up open the Operator, line for please

Operator

first Credit Please from your question. Instructions] with Dounis, Suisse. comes Our question Spiro proceed [Operator

Spiro Dounis

just of halfway Hey, some hoping around to coming and outlook XXXX the put maybe able good to some the being guidance 'XX, also light maybe year. on next updated think of but increase you but expansion, MEX morning, growth starting the addressing everyone. closer. out next to if differentials just also out, I pipeline through Bakken We're count thoughts takes and Maybe was relative now year just especially how guys on in puts online, we XXXX about should we even with could. for

there Sounds would helpful? be Any like plan. thoughts in shouldn't be that the

Thomas Long

is this Tom morning, good Long. Yeah,

not not at to of probably year, we're through projects. we a where good going lot stage looking that for same et seen this at start the at we're As spreads clearly, XXXX, we time, we're had have guidance Clearly, good go growth XXXX. But some kind we of very do cetera.

look we'll really we'll it's of Obviously, of to up. we look this each to the out be towards continue really, as the we I been answer you quarter think I would guess be for but this get the this walk able as walk you highlighted is And later in year. through as looking I guidance year, rest it, XXXX. to nice year through

Spiro Dounis

and you'd walk where Can understood the 'XX. Okay, just longer believe Permian the for crude adding some Is CapEx to then drivers? pipe expected projects? are other additional reduction on one more PGC we the you And backfill of point? the this on then I at through case? specific no point of some and that

Thomas Long

it will at the our that Okay, up gas overall segments, of well, first liquids, segment across the guidance. remember the board of natural so that look liquid or part the the really say listen, entire our about but I XX% makes kind I'll you when reduction, and take clearly

also that the amounts that you appreciate we the was of the that we've looked so line was associated about cetera but really So we and by as a talked great that to dollar frac, largest can costs it the liquids of in bring And lower out. team, these job that that engineering able cost the was associated with with team, lot down. et being on here, construction the

out. talk second pushing a about of that isn't part let question. the of some kind of I'll the this So of cost But just you Mackie, matter

Marshall McCrea

work side we on on about focusing moving we're focus our selling concerned And Okay. at Yeah, that most assets. focus focus projects, other doesn't and in on that building flip right on we're Midland now kind good. filling us. growth but capacity. for importantly more not and the but projects, at turn looking the volume, our is as our existing contract Bakken, analyzing our been really up we our you margins can Spreads pipes, at come our look new not online, these on of the to mean contracts other crude pipelines is we're really extend Cushing, as That have –

Spiro Dounis

on were that last part, crude you pretty both active on and quarter? gas on front, just then Helpful in and the last over to to tack that

Marshall McCrea

pretty we active? Were

Spiro Dounis

of out capacity. and firming the terms contracting In

Marshall McCrea

years of We've really our at on the out spreads long-term Yeah. of Absolutely, And part margins. go and that's seen contracts good the side teams I more nice margins XX our five, been side side on we both on to now as are and NGL out, and out, have extending – be very we've long-term. a crude it. go on focusing mentioned the seven, looking gas focus we're is the seen more a these natural

So yeah, our contracts that we on Texas, gas our VLCC natural Bayou the pipeline are extending and not also business crude our project Nederland we're in that of agreements, but across terminal, extending only the projects working under long-term process tying to focusing also also we're Bridge systems our and on.

Spiro Dounis

Thank you, helpful. Very gentlemen.

Operator

question. Our Salisbury, Please Ann is Jean next your proceed question from with AllianceBernstein.

Jean Ann Salisbury

good Hi, morning.

don't products? you project from do what export that to you a area expansion? of could maximum Nederland, If and be that And upcoming VLCC get close after you you in are DAPL - LPG do the the would the all

Marshall McCrea

kind lines, you docks of Hook if tremendous question and add the it But to to do optimistic capability answer a hard are What at business multiple product we it's again. Marcus our second We're that exporting. add are so capability in earlier, what didn't some beginning we as say other expanding project, tough that terminals, LPG – Mackie have have of docks. looking VLCC do is propane, it's a natural add at to our can of This the question. Nederland to Because can question, a we we believe all just Nederland go, we what we as I also we it's it with whether heard We're extremely tremendous butane, ethane completing hard to so project; project just even hard of [indiscernible] will our started happen. export along do Nederland, answer it's we our areas, and it's large can just we market. first gasoline, said expanding building

Jean Ann Salisbury

Okay, got it.

you shouldn't run it more didn't do concerns most like the read out it. it, of But way it's would time? effective as to be you So like of do that cost if

Marshall McCrea

Right.

Jean Ann Salisbury

it, Got okay.

Marshall McCrea

able be to be, we'll we'll Yeah, yes. –

Jean Ann Salisbury

into option And Utica And in in still that fall take then to I concerns just believe some Ascent the the of that the Energy more any Transfer around prices, Rover. Marcellus color given gas has that been over gets if past, Rover financial you trouble referenced that can part provide case? you've Is E&Ps. with and that? the there's on

Thomas Long

there securities But we necessarily when got when in details standard to Clearly we get piece Rover we've clearly I Long. set that out other is into don't Tom on do we that LCs to – got feel were and of complete we types is that securities I contract the the this can dilution at, look most contracting various we likewise. want the but from it up like of Sure, that. everything think type important features is, –

think dilution I it's So get a way that percentage. of you're asking that may more larger be over, taking about a where question the you

Jean Ann Salisbury

you very Okay, That's all that me. for Thank for makes taking question. my much sense.

Operator

Our next question. is proceed with UBS. Shneur Gershuni, your Please from question

Shneur Gershuni

good big Is should working of be his significantly sounded and get not or projects you right are we than projects expenditure wondering on LNG increasing prepared In I trend in outside can big clarification now going Hi, a And focused you're question about, response the for noodling so response in that think capital like now XXXX we if your the a project that really guys. large lot Spiro's year? where earlier remarks, forward I any should correct? really more for projects utilization. CapEx that of right morning, this lower on about was talked on not to question. your your just

Marshall McCrea

also be out of looking, out start customers more about us. will we that as of is the big but be, to pursuing expansion, mean, expand, sure we Cushing we're going to work I really – certainly volume projects. and how comment with for I are Midland. Bakken earlier, on to we're nice excited the We're move Mackie. large source this of not that's Yeah, a just optimization I'll mentioned revenue will very

looking but So we're can we the it's our capacity those growth not through and as and that lot emphasis term existing of we're on longer not assets. as keeping focusing much projects, existing a on really at gaining where our value on

Thomas Long

and Yeah second take that. I'll listen, the part of

that we once that our again third out call. with guidance, usually CapEx as put quarter far As

And see to forward we so Mackey's about in with going XXXX at to to, and works on billion for on of said currently do we CapEx a But few talking XXXX place not that to this does have $X I'd off I projects probably past, Shneur apply think until I still the number a good in the spend that. these but like kind three we're for spend very that at is how that like we be to good But our $X what billion is, are range. look looking would and four long-term. use in think hold that

Shneur Gershuni

return to high hear focused good you're bolt-ons. on And it's helpful. that very That's

outlined quarter of were strong, along leverage had seems the sort credit you. agencies target surpassed your like Just continuing it this that rating that very the lines for results you've

you like Your you to it your is strong; agencies seems would of from wondering you you agencies you a units, buybacks sort where of if with be wise over with I'm the because yielding more any is outlook? Are can actually enhancing at outlook about stage, see debt? lower. and credit are now talk on when this CapEx position buy credit your coverage much X% they're Have sort the lower just to consider to respect the backdrop? had the buyback back versus now yielding in discussions

Thomas Long

of to out question front directly, absolutely. your will I agencies. Clearly don't answer get try in ever want But to the very

about, them have will compelling quarters But as accretive. leverage to the very annualized, our is of methodologies metrics try right continue We really all back we the quarter also, as metrics. last mean, a depending quarter update have, as now, are leverage even that. do back how metrics we're buying various have But think to just say a that projections, different units on I kind Transfer on little obviously, very our et our have calculations not Energy I exactly talking four agencies, look which we and far through if various right, you that to or for look the you at as them for coverage annualized cetera, as this first they go over but with meetings they between the outlook we

in clearly to yet. that we're say to X X.X X.X I You're that range. for X not in would

how would like So And words it's clearly, exciting down. internally growth or buyback analysis unit right a the debt debt doing on or pay here, brought doorstep. be lot we're we here clearly, we you of distribution to the those feel and up we're on we pay between how allocate dollars But down.

when as can kind stage. dollar So you of any of combination remember, allocate we're large as looking we of can be it at especially get one, those, that you and it be doesn't to a have are,

now. at even be with looking you and able to we're to that, answer this So question right very excited

Shneur Gershuni

sense. That makes total

on the market? that the remove for an MEXx PES final in Sun once sort starts opportunity question, to one closure, with So if of fill products void up I products refined to to partner with it is may, refined there

Marshall McCrea

we're products of to capitalize PES Mackie. of York with New we're anticipate situated an is supply and though, of our Yeah, certainly just we Sun, we shortage They, to This of as for looking to pipes and happened sense help with always lens refined makes sure, with – Philadelphia that kind utilizing it so working sense. ways and the ET our into at more manners, different From the we'll to where our able are between partnerships were mean pipes at. refined in course more makes be two anything look of and demand are in products, I do we certainly especially going heavily our pipe the our and some work future, the of utilizing very in area. affiliates, what's well

Shneur Gershuni

guys, you perfect. Thank right, color today. much the really All appreciate very

Operator

with your proceed from question. is Sachs. question Please next Michael Our Lapides, Goldman

Michael Lapides

on we How Hey, Bakken get or actually guys, steps? to what needed think and needed other VLCC. there? two On items appropriate add other DAPL the one process one are expand questions, able and the DAPL, to to pipeline about the should the on permits the be items pumps capacity or to

Marshall McCrea

funny, as excited pretty things Well, like mentioned, it's that about. we're Tom little

the the project. materially optimization we nobody and is at on already there, pumps to that is compares opportunities need more And about have We've look move do an move to you thing forward to add volumes. up all DAPL to the capacity provide to If DAPL. secured beautiful volumes

However, the as middle have will knows add facilities contractual optimistic And to season, will the that everybody very at other needed provide at Gulf of couldn't much we it's an the open Coast, better but with net the near obligations projects season cheaper pumps smaller that and of open season, meet open we're we'll go. timing. backs in other not we're process. some how that significantly the produces all the will be end There's the over getting

So pretty about years. next look that and volumes to our couple we're excited forward the over increasing DAPL

Michael Lapides

a world easier large actually part but of either you challenging. building a mean, in specific country there really do I this? we're anything Are and be to than permits where Greenfield, need the rights to or is any able we honestly Brownfield's live always lot

Marshall McCrea

And permits this as different and Every steps as we and forward there's those soon different, project we take. we're to steps project moving on that optimizing taken is can. different have we've

Michael Lapides

go construction timeline can all offshore, you in government read trying process. US the if extended get an something build were on I meaning the think be able that already maybe to you to ahead to VLCC get and are get and to start approval to it I'm contracts? and process could when the just be actually about Got know

Marshall McCrea

on a that brings this, the you're – volumes saying at in of a out, we're for frame case you're excited half going best a some Nederland Permian going a working middle our very of Nederland. of put it this our only least probably opportunity we're to that. also years, teams. not years We're soon. and half, process several time more years, importantly it, be and earlier, we market To probably mentioned and with on And two into we make three it's filing talking customers can so our great systems, but But and years, three all then through lot two it's three Express a for about as but to

Michael Lapides

it, appreciated. Got guys, much thanks,

Operator

Colton next proceed with Bean, your question. Pickering, Holt. Please question is from Our Tudor,

Colton Bean

morning, they're I the the years? how budget, as think that overview process of in below us over process, you has whether few brief just noted, at you if contingencies in budgeting baked the shifted had all you offer Good projects approach a coming last can

Marshall McCrea

different. This again. Every is is project Mackie

nine to built like over XX, or years we build example, and XX XXX,XXX past continue the several coming them. or trials For

areas et cetera. we really So the team, we're we pretty comfortable though, with Kevin for And those country, pipeline of and the risk looking we in are go the costs, wouldn't amount incorporate much and We, contingencies. contingencies. and certainly of as and projects, his certainly try on out so look depending have rock example, more ahead would at to

good the job cost every project. we really projects, a estimating So treat that specifics of we on the certainly project depending doing differently on wherever but on we're of were at

Colton Bean

step should expected whether there on insulation would some actually on bit we spread. this profile? if rates, the Waha sequential given just expect nice interest actually to Can Katie sales than us natural but little then update and margin a there, just lighter contract does spread your later the you up was we have gas it hedge year? Got a And

Marshall McCrea

exposure most to Waha for the we on and on Yeah, buying control our that have Waha part, the example, for residue volume we're a, selling own, to index on if really the that and you're index. we don't referring that we because

that. So we to exposed or if zero, are prices aren't really negative

a we that of some state but the under have of exposed, across are do long-term contracts to POP, our lot Now, we certainly on Katie.

Colton Bean

Got you, system? not a basis so implicitly, hedging of whole going Interstate Texas on the lot

Marshall McCrea

we're six way we're hedging beginning the a That's now Really under up extensions. over contracts months third the to with year we're year hedging parties. signing is XX next right how

Colton Bean

Understood. Thank you.

Operator

Energy. Simmons your Hammond, is with Our Pearce proceed question. Please next question from

Pearce Hammond

thanks morning, Good my and questions. for taking

are probability on completed? projects sorts greater project know think questions and differentiates of these VLCC on it of a up lot a What the following gives Coast. of of do your getting on Just I project, there proposed the some the you Gulf

Marshall McCrea

regardless Canada, helps pipelines course the Texas, of of best the that major you Bridge. from that you both if one, of amount commercial every the teams West a all lot. we I we that Well, in, then area so think look from come Nederland barrels the construction engineering at that of refineries and and at But have come Bayou and from where look outlets are, Cushing, connectivity from And into Nederland. come have and significant to

an country. with largest in ground storage think oil incredible the it's terminal So the above I

a yes, negotiating And cost advantage, we're offered and we're how our supply about source, potential working that And so shippers, a real feel at significant it all from look source. if market price. just have we're with good our and from we And to compelling then be progressing. we you we

Pearce Hammond

the as my cost Belvieu see up you. Thank will be for adding at do being the an fractionation tight Mont then then And capital you fractionator follow what period? is market eighth and of extended the

Marshall McCrea

charge. about continued G&P fracks. to grow gun of with demand I'll Once at crowds it, as to tightness look situations. honor our Frac way we they're on internal in party tie to And have real built look of to we the all overbuilt certainly and at start doing. under And The Fracks our continued is we've as our have to business But build agreements. we'll VIII attention focus year, to we've our what fractionation. a XX% out we'll our we're at any competitors the pay the next try third

there's there pipelines all that cushion us if on For to volumes more bringing gives a also gets a and our little leeway volumes any in capacity grow little issues.

we're now, point don't is we customers. demands some get that But all or So building right really of tight. fracks meets about concerned at our the fluctuate

Pearce Hammond

great. Okay,

Thomas Long

time, vary or Yeah. standpoint, – you the just I'll much on a kind little previous further. go of into tie as to at this one out second a sorry, And frack I'm how the little cost Every bit a look these. saying depending then you were you these of bit part may take from if you've got

you're probably so. that, looking or range I million probably in one, million to $XXX think this at $XXX

Pearce Hammond

for Great, thanks questions. so taking much my

Operator

Cho, Christine with next from Barclays. your question proceed Please question. is Our

Christine Cho

position is morning, Is most With third everyone. this your Good party? contango as of in Belvieu. or and a your potential in contract storage prices opportunity storage NGL

Marshall McCrea

the hate again, that to to The we our keep is assets way competition. teams, about we're one, of bragging course the our compared number all storage volumes Once can of utilize now, vast This fractionators, but the of handle are the Mackie our to the there make of again. in that move especially our and sure I out is, majority we so all well and today what margins situated, that come do significant also wintertime. But barrels come in target pretty and see prices in for NGLs, but differences third lot party. we of a where are we the our

if very ability the arise have of that we large to opportunities to So have. feel do to they as fortunate store amounts NGLs, the

Christine Cho

think, great. potential to along? And to partner a would ownership tag of that just a give then sale that, row and HoldCo if Are HoldCo flows Okay, there for with moving row Rover, I were then another work? outside there the how structure over whole be the of there that

Thomas Long

comment That's able now. going do our discussions is one that have on Tom. without that you we we're could it I comment a structured partner. is clearly, that's this way be Christine, to not to with that like structures. on not one different mean, and said, there But HoldCo right right in you're now really right certain Yeah, I

Christine Cho

remind you Okay, to just Charles, of need eight the Or can continue the to for sense all once be project? fair unless trains? do your in other share the contract moving the do as like enough. you once? before you Or you you economics maybe do all it done one can to make just on FID MTP phases, at Lake to get train the And majority have forward don't enough that forward move contracted that us, then and

Thomas Mason

is Tom the cost scale benefits over and scale project year a This the number large larger of Mason. trains It's the and and is project a of size one volume. spreading reduce costs by the of of we

XX.X to and current our is to plan build million that. continue market full So are of XX% the tons

Christine Cho

you. Okay, thank

Operator

your Tonet, JPMorgan. Jeremy question is from Please proceed question. with Our next

Jeremy Tonet

Hi, good morning.

Just Permian? Does BE looking in could how had pick extend say on with Texas from there to want go? capacity your comments that was prepared west to a you of to that Does get that into you're there some up the share you details that not or that you and other Central does caught gas there right. and But the get if natural Did the that I us? coast sure remarks of far there. Waha half that any into

Marshall McCrea

growth are feeding right it Mackie. also, for details Sure, some and areas west, little a And as will run this we're pipelines Godley is the those then our Without lot volumes our a grow. of into there's lot we volume reasons, those expect down know in that of competitive more from of really where getting predominantly capacity through areas. but to seeing a the heart tremendous provide now facility – East of all strong Texas you

volume Texas parts Central Katie in outlets which the and the may country, and in all East North to of best from we also we to area. of down Beaumont kind move provide firm corkage So Texas is markets

Jeremy Tonet

value kind there or imagine maybe comment article just of can't out I on been about curious, can't the that's Thanks. talking potentially on and with much out type to this aren't you that at? asset an core to potential that. those questions points willing a is buy maybe just there, here about would use And that M&A environment that of news your But Rover appreciate of monetizing you That's helpful. is comment. few too talked guys accelerate drawing deleveraging there's to as and what sell things than you as are see far kind proceeds, as back the or pay and with that opportunity to business as concerned, stock more where buyers really

Thomas Long

assets at that – actually, look out opportunities the in be could there of be buyback the answer unit format. across I No, to maybe do I you calls, And question on give kind portfolio clip. the that whether in drivers them. the And make drivers The Yeah. and combination, just see we are previous can asked the it at mean sense almost about a be as delever flexibility a that, we and or of you is faster you they down really not same it debt and more or the entire what as might to mean, talked we've what clearly our by pay some said between put look it's of you Jeremy, would the or

that fit So yes, question, to your make would bill. answer evaluate sense that to that internally assets continue we

Jeremy Tonet

That's my all for me. Thanks question. for taking

Operator

Bank Our with Please Coleman, America, of your Lynch. next question question. is proceed from Merrill Dennis

Dennis Coleman

left point. XX% can me been in Obviously, if be written maybe with Great, last have start mentioned MEXx. you seems there's But we update, the and guess for and you Mariner to helpful. you sticking get on What's getting here. can a Obviously, there X% done I do that East. thanks. quite bit said any will be to Thanks there?

Kevin Smith

plan. his crossings quarter. put Tom to complete. is we're That's still service Kevin. end We this able to in by And in of fourth we'll confident very per MEXx opening that mentioned the Sure, number of statements, all a and HTDs be as going still have

Dennis Coleman

mile guess, of And this the on resolved? Is that workaround last MEX there has last still part been the X%? that just I

Thomas Long

Yeah. around – No, not MEX. we're sure what the not you I'm mean last work

Dennis Coleman

functional. MEX repurposed Well, you make had the to pipes that you

Thomas Long

The I Yeah. it. GRE, got

pipelines will right Hook. last that I Marcus we And max answer us which XXXX Hook. [ph], getting that now will it's kind we're will future really then focused capacity through think through the that we that finalize give Exane in the the later need will in to the the which area segment, give Marcus that will and of three us going to is on how area and way

Dennis Coleman

color and But then rhetoric on – Orbit I I be trade have useful? the before, impacting or seem would but to project Obviously, the continue, when asked And noise your be doesn't any deal. comments Okay. there.

Thomas Long

be. own impact to like several means moving it long sides other it how it doing. fact We're it any And will. some we China, not is will see our forward. a the they're in at I means ago, think if and we're that sure end all, means in what have China doesn't of – both at point, it forward we're it continuously And that's world would focus They're came with Yeah, finding parts moving and standpoint But our weeks our believe from time. and if home liquids. for all Transfer's they Energy

but Chinese certainly as forward, other areas. have move projects, a on remain in hopefully to number as to of the in other And lifted, we the expanded So well. negotiations very soon – companies. But out expect we meantime, several are with we Satellite's tariffs going

Dennis Coleman

Alright, that's it Thanks. me. for

Operator

question-answer-session. I turn call the closing We've end remarks. And the back now reached will for of over long the to Tom

Thomas Long

coming online. today all and have up the future. thank just Once that to want of to we assets appreciate the the for to today. have out in look near able meeting operator, might the we you our to all later other to that talk us you again, Yeah. follow questions look joining of you about We That's projects existing forward to questions, course, remain We of with all all support. there very you forward thanks. of really and performance be any all about We very, excited

Operator

conference. today's concludes This

lines time. your participation. Thank may disconnect this you at You your for

Energy Transfer (ET) 8 Aug 192019 Q2 Earnings call transcript