ET - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to Energy Transfer First Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Officer. Financial Chief Long, Tom Please go sir. ahead,

Thomas Long

answer for Thank the team, are Energy operator, we by want of Kelcy help and joined McCrea, here I’m earnings of good to welcome really the you after all our thank other and Warren, everyone, to us Transfer today who questions prepared your and today. also afternoon, remarks. call, you joining and first members Mackie XXXX quarter management senior to

press our as seen we have issued slides afternoon, you of all this release well posted earlier Hopefully to the as our website.

will certain making XXXX. Section us available as XXXX. of detail information Act we reminder, a current XX-Q meaning Security on more [Securities the (sic) statements These in of beliefs, of and discussed our the assumptions to statements As of Quarterly Exchange the in Report be for Form well forward-looking currently are Act] within based and Exchange quarter are XXE our upon first as

refer I’ll measures. and of financial non-GAAP to or which are ratio, DCF, cash distribution coverage flow, all also EBITDA, distributable adjusted

of reconciliation a to our today. measures filed non-GAAP expect our find You’ll XX-Q website. And be later on we our

impacted in our pandemic ways than more one. COVID-XX current The has nation

incredible partnership the work products and of through our uncertainty, during coordination and navigate and safely more than their keep this amount and requires the hard efficiently want women assets for today and to XX,XXX challenging and for country. benefit moving appreciate We across energy start tremendous the keeping understand commitment running thanking our our it both we of As this contributions while to remarkable men our we time. by team of the country

first I’m and XXXX on highlights. our current addressing before OPEC with start few a oversupply, to market the Now of by going quarter brought COVID-XX conditions the

$XXX the to quarter our DCF the of billion for we times which resulted billion, coverage the was of cash $X.XX and EBITDA flow quarter, attributable generated of adjusted For and distributions ratio in first excess million. as of partners adjusted $X.XX X.XX ET after

was in the first segment inventory above adjusted in adversely EBITDA adjustments these been discuss billion, Adjusted which and of been further affected $X.XX valuation the would approximately EBITDA EBITDA and by quarter results first have quarter adjustments, XXXX, will I reviews. would both our of $XXX DCF adjusted expectations. Without million have

our day. the brought per seventh Belvieu over fractionator to total Mont barrels which capacity During brings online quarter, we in Mont first at fractionation our Belvieu also XXX,XXX

Basin commercial cubic Additionally, per day Permian service II placed into our the January Panther million full of in plant XXX was foot XXXX. in processing

We we position our January the these first in the Finally, completed debt reading facility. $X.X our all borrowings XXXX dual were A pay remainder had of billion. used down short-term from the of and used perpetual amount maturities of in on offerings to billion portion to of quarter. of $X the a at offerings credit preferred aggregate strong approximately liquidity the with end of proceeds

Additionally, billion XXXX. a manageable we of in very maturities have $X.X

Now our looking at outlook. XXXX

projections financial increasingly that has has been diversified lower believe has built our help integrated year space, that challenging become offers fully industry in base energy resulted the to benefits across current cyclical and the the in markets. foundation a unique midstream mitigate and Although we asset

to our additional billion. $XX.X guidance weakness the significant and In light we range destruction prices supply, demand EBITDA of $XX.X OPEC XXXX the in to adjusted billion oil due revising to COVID-XX crude are

lower contributions associated expect Permian, reductions commodity SemGroup the from in as East, situations In some crude prices, projects processing ramp short-term and addition, volumes as as with do Frac some full in NGLs. went existing producers VII, in from curtailed from of Helping Mariner we up to to volume addition as lower the the and gas we new wells, offset drilling service year impacts in expect shut contributions and the XXXX. well of that related in increases assets, well into the as

navigate taking development ahead. flows growth include new precedence and keep conditions also we cash this are and on continues expenditures. market additional CapEx is We assets. steps for existing terms, to measures atop These our efficiently volumes and cost longer our reduction running challenges team to focused of reduced as locking steady in and assets XXXX take Commercially, our over

Operationally, infrastructure drive operational optimize assets. to we extensive help efficiencies leveraging our are and our

profitable and network virtually is and of disruption. lot margins utilizing employees, of this our wide talented our extensive hard to combination us of spreads our storage The a allowing from have opportunities result, As diverse of we assets. found on base all our during work a through capture products contango new the asset some hydrocarbon significant

of have Petroleum crude X.X the of contracted the XXXX, end Strategic million Through capacity we in Energy’s Department storage oil Reserve. barrels of

terminal We Nederland this for our have a connection through to our efficient so reserve is franchise. an extension

we both as on identified initiatives are have cost-cutting In operations. executing our as pressure field this business, our corporate in addition, and significant our due to offices well on

result, our a budget. relative $XXX to to XXXX As million we $XXX million to save expect

also We completion impact date, project cash expenditures delaying economic near-term our capital further today, on reviewed growth particular projects, flows. spend have including for and XXXX

includes at projects in that other the and Star capital East, Express or be to XXXX. complete XXXX expansion, expected XX% will service or and in of This XX% Nederland. Lone projects early the spent and spend Approximately Mariner are in growth the export LPG are be XXXX more Orbit on

as projects have the projects, of change VIII including pipeline. Frac we Canadian delay decided to select the Ted Collins However, and scope well as some

by growth and are another $XXX to are $X.X evaluating our potential reduction reducing billion this on XXXX capital current million million million for to $XXX market, Based year. we outlook for $XXX we expenditures at least the our

business we we continually view organic the the projects for opportunities over growth several backlog to years growing footprint, anticipate we major given are is we add Although new and our any unlikely will XXXX. it our asset next evaluating

capital billion. to rate four we after years, We flow and committed and an cash free positive next about growth annual expect still remain flow cash free run equity the to generating $X three we less distributions. think future over to in be As than capital anticipate spend XXXX of

at through our closely I’ll Looking developments. recent our more growth now projects, walk

West crude We the that existing spend Ted alternative will assets terminals. are in expensive Collins service expands service. of to transport export to and The Houston a market providing up into refineries. be improves utilization Link, and and oil Ship to XXXX. terminal the allow pipeline Houston Nederland Collins Collins per terminal XXX,XXX is Houston which pipeline and increase our while and Ted same to of capital and expected connectivity reduce the Road us from Nederland access Link Houston existing transitioning pipeline This the to our now and and fourth as well day will as barrels in much in quarter from will Channel less to be Ted access Texas The our facilities, quicker the is our Moore between

capacity made in plans the of the Bakken The the market further phase as now of to sufficient Regarding accommodate to to completion in process, the per forward XXX,XXX Subject open optimize service optimization the expect the interest volume Pipeline we capacity move have day second system be during will we of XXXX. previously quarter Pipeline capacity. permitting commitments season. by additional shippers barrels optimization, this recent pipe’s with the mentioned, to Bakken the current received initial above of capacity

Mariner us volumes started on Customers ramp underway Pennsylvania. Pennsylvania beginning moving And volumes the at barrels third-party the Complex Protection quarter, the offer the season Department and to by placing barrels averaged Hook some Marcus including Complex East on into system by per of of to barrels to the rail that has year, the additional flexibility taking of reached with coming in we projects complete in during allow per advantage total markets. Mariner construction Now East an upcoming through with At local the NGL pipelines. day that April, system, up for will our we Marcus Hook first Environmental East in we XX,XXX of Industrial Mariner modes day winter XXX,XXX are other this to the have agreement system. our

to generation. with to on connection further plant advancing while local Cambria Mariner system, market transportation CPV be Mariner from the shippers We Fairview options. for flexibility new are for efficient County the ethane This initiatives energy pleased supply East East enables connected power Pennsylvania the local in power for

the while products. producers Appalachian even At strong COVID-XX. of same fuel motor remained time, has our their international propane has for and butane market demand because is for helping waned demands find This a

which Looking phase final the we now awaiting the of first service in be project expect of while the XXXX. quarter of to in are quarter the second XXXX, phase the in ahead, completed we anxiously next

for markets first with approximately quarter XXXX, per the customers In continue growth Mariner their as efficient will our incremental East. way capacity expansion to at terminal This the of provides we at the Hook XX,XXX volume the NGL reach in best accommodating from terminal addition, Marcus the most throughput product. barrels day of provide expansion it

Moving service assets, in is up our has on now Lone Frac and Star VII to as expected. ramped

the Lone NGL the over add south VIII our along Lone Fort quarter from we the of in pipeline our Expansion our barrels current volume the and the of And Worth, are be final stages Frac Express of pipeline Star per in construction capacity delaying service XX-inch, we with expect We XXXX. Express of expectations. to based XXX-mile Texas. on mentioned, As day Basin first volume are construction of on will expectations, XXX,XXX supply customers’ which Star XX-inch now Permian in to

to the be in XXXX. expect We of quarter the to expansion fourth continue in service

some to natural This store into to us another diesel we of us of Belvieu light the at barrels In allow XXXX, storage amount benefit significant dynamic converted of revenue. valuable conditions, our provides with contango a facilities have gasoline Mont and significant demonstrates current franchise. our which of

expand Looking Nederland, capacity expansion, integrate strong, day. LPG demand XXX,XXX the barrels to we this per our will XXX,XXX has increase recently expansion cost-effective export capabilities. which day remained has further LPG project, at project very for our to LPG found which Nederland a demand as have modify Belvieu way Mont at to assets from will per our assets with our this barrels

joint on and remains and in completion, pipe the XXXX. venture the is it NGL Cliffs Orbit Export to White is of crude quarter for schedule of Satellite XXXX. to to fourth Oklahoma oil December service commercial in this we which this on with ready Petrochemical in on flowing to well, from the project complete, be year. nearing volumes conversion be Colorado Cushing, progressing and expect service Pipeline our of began Platteville, fourth runs is quarter the The service of Construction in Ethane Construction from

processing Panther January in service in of million cubic day Basin gas to in West II Permian full our XXXX. foot per the processing commercial into plant was Turning Texas, XXX placed

Bcf X.X completion day we are per than of With capable the is this Permian processing subscribed, fully of which plant, in the now more Basin.

in take primarily from XXXX. $X.XX Crude billion of refined prior the quarter Let’s NGL first little impact Consolidated at that adjustments first of quarter quarter closer of million of quarter products of million impact a EBITDA The first results. for EBITDA look of due the $XXX had to refined adversely period the the XXXX change was quarter to for the $X.XX affected adjusted a the of valuation compared of was XXXX. crude from and XXXX. positive inventory to oil quarter NGL the products and billion, first first and total and $XXX in million first adjusted oil XXXX a $XX

the last compared adjusted, to the to coverage quarter the for million DCF decrease Transfer as business $X.XX Distribution an adjusted XXXX This was common for $X.XXX of or paid be per will per In of distribution is X. was on consistent year. billion attributable March, $X.XX unit May the This primarily period due the for in on the is annualized $XXX X.XX EBITDA. of to ratio as distribution common times. quarter of record of partners, a first with Energy quarter, unitholders the unit first announced first the fourth basis. and same quarter to down close

This million year. to EBITDA were segment. $XXX $XX from look of adjusted adjustments was a valuation which by the million, was in refined first the volumes offset period the record for impact partially quarter in in $X NGL Starting and first results of adjustment quarter with inventory compared products, Let’s transportation by XXXX. to increase same changes $XXX a NGL million XXXX frac valuation million and versus due last at

Basin well X.X our million on volumes increased per day and of transportation NGL system. for last venture Permian was year. in to day, barrels of East pipelines and as The the pipeline million X.X as Mariner per regions, Texas majority joint increase period same on compared to our wholly-owned out on the North barrels pipelines volumes the our

volumes per XXX,XXX per XXXX. of First XXX,XXX for barrels to quarter first barrels day, compared quarter day the average fractionated increased to

oil by million last negative adjustment, valuation XXXX, crude was adjustment. XXXX, a in For of we was period million, $XXX This a quarter the the a of had million the EBITDA $XXX had million year. the segment, inventory change In $XXX same million. compared to we for in adjusted adjustments first and first primarily driven of positive $XX quarter $XXX

first in of the portion the quarter, barrel’s recognized the been which long-term operational is inventory volatility the reclassified to help a as asset earnings of previously as segment. crude expected a In reduce have

increased volume service million acquisition barrels to million on the per XXXX. per growth year based the and expect period last Texas primarily second of we existing same forward, barrels. of of these the our current fourth is well due our in to assets Bakken, quarter barrels pipelines, the in million of transportation Pipeline approximately of increased to as operations, day SemGroup initiation X between Phase quarter to our Crude volumes Going Bayou to for that X Bridge barrels the as of million subject to X adjustments the business inventory compared X.X of in day XXXX, be the out X

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

last for increase XX.X were due the footprint. year. operating base was strength same our day, across the gas to volume day to and million per Gathered growth This our regions per MMBtus period volumes majority of the both XX.X and MMBtus our compared demonstrates asset million customer of

well to rate EBITDA million, was million EBITDA million pipes. year. was XXXX. Charles first revenues demand in $XXX and from the segment, contractual adjusted of the due interstate Lake the our on facility This change Red for quarter last pipeline interstate of our compared transport optimization from Bluff This compared increased a storage And These fees result higher primarily our at $XXX lower adjusted $XXX in were new Express, lower to margin of several as In as from higher million quarter $XXX the storage primarily was to our offset ramp-up contracts. first segment, services for of optimization the activities. the was by of

to $XXX expected the in XXXX. evaluating million reduction full this CapEx. $XXX and $X and are be XXXX. midstream which now billion ended XX% and products is primarily billion look XX, year. spend approximately of we we Energy the complete and I segment, are growth excluding at for capital segments. are our organic potential Transfer earlier, refined million CapEx as $X.X early Let’s and XX% quarter take primarily in USAC spent spend mentioned NGL and than midstream on a to for the expect XXXX XXXX projects on the a XXXX, reminder, as March in in And year another near and NGL refined approximately to more And projects And in SUN the service for products

our our we which facility. used XXXX a offerings at briefly January were $X.X of the in down all included and liquidity under for early transactions year, the maturities. funding proceeds pay proceeds credit an billion, dual remainder Late amount source used aggregate completed position. preferred this and the borrowings provided our XXXX of to short-term perpetual liquidity of we to in redeem XXXX This completed financing of successfully The portion bolstered efficient and debt which position. in our Looking

total ratio And our facility. revolving worth forward, maturities a looking leverage X.XX approximately was credit we reminder, in liquidity of $X a available March billion credit of and facility XX, under was billion of XXXX, $X.X have very as our As manageable XXXX.

rating a to We target continue to ratio X X.X leverage of agency times.

value we our conclusion, as I offset of projects. ramp-up and projects remainder we are excess continue expect Throughout cash to And very that and fee-based to just as solid growth fully to fund which integrated our assets, delivered to the want well have of to reiterate near- long-term headwinds this predominately flows quarter. the another XXXX, In will our multi-product expected cash drive to are pleased year. growth continue flow generate

combined upside space extensive are recently addition, our capabilities capture the In opportunities related to providing storage leased with contango SPR our to spreads. at valuable the

uncertain We remain flexibility our strong to time. with and provides committed investment liquidity our navigate through grade rating this us financial position we as the

spending and our additional However, once remain Safety thank of and while also we’ll we mindful priorities, to our work top their continue know disciplined continued execution among time. that employees our during for to our imperative savings. and we pursuing it approach is challenging capital remain cost again project support this hard to and want expenditures

open let’s Operator, Q&A. to call the up

Operator

of conducting and this then At to question Tonet [Operator for rejoin time, you. session. question-and-answer In Instructions] one the with a question. any time, the from question comes limit line Jeremy JPMorgan. with question we’ll Your be first questions. Thank additional please interest one proceed of the Please queue follow-up your

Jeremy Tonet

Good afternoon.

start Just post-COVID side. on assumptions demand your with the supply want off as recovery discussing, and as both side far on the guess, I to the

with your think to if trying guys how they you off bounce factored your and how kind us view if were world, you that could the Just this agencies guidance. point. into of kind And the outlook of through at comfortable

Marshall McCrea

Mackie. is This Yeah.

then Let can me Tom follow up. start and

in nobody - country unprecedented predict, As kind ever could that world entire everybody times shut be we’re knows, down. of the

and difficult last kind of of part really things then got April So in May.

couple - in shut is have some ways in we had we assets, G&P in. impacting our a how of it’s for our example, However, volumes assets

the Midland X% That the we’ve shut in example, in. of was had beginning However, May. just to Basin, give volumes of an about

we’ve that today, XX% of back turn seen about as on. of And

look our of our to to going and of they’re that all go. have improving at of as and opinion out grow. in an that where’s we in things we as we see going it, assets of example WTI look that WTI, lot depends things through our on segments, So course, as bottomed all are and A

hanging strengthened optimistic we’re pleased are to path We rest growing the year, going of the how it show on. and in of throughout that the be we’re of range pretty the by kind the and it’s mid-$XX kind and that’s curves

we So, seen. next bottomed and the from that do faster things not gradual injected our have remains growth to if the an least How perspective, we’ve And we for quickly our with think But expect, they’ll quarter. Energy in grow Transfer out. growth, at discussions in be rating agencies. projections

Thomas Long

Jeremy, chime in We cetera. quick I’ll evaluate them the do continue continue very chime in. real on agency I’ll projections with et to here of part they work close as rating it. and to

we feel have great them. always, As with we like credibility

We’re to continue going with work to them.

highlighting the various levers the about, levers, have to CapEx we we’ve also the it, like cost, aspect things talked all We’re that that other several of at. looked that we’ve pull,

given we agencies with and information, our all-in-all, have. So, dialogue the best like continued best will, we the the forecast always, just

Jeremy Tonet

to at point What as that’s evaluation side Thanks. And the the XXXX the under down you get CapEx as wanted far on this touch side. million point? trending other and just in to helpful. would million you to do $XXX That’s CapEx CapEx see how incremental for $XXX

Marshall McCrea

look have. We again. that we look of realization our This projects, the is fueling those projects at the and timing hurdles Mackie of some at and we

it make talked some into might that, that, those to or consistently projects further are away even but look sense out where to some about, as XXXX of in push those at cases. addition the down further In we’ve road dollars we

of that us that real We we believe in quite $X heard push a there’s could range. out a do But we it’s So that projects prudent Middle on continue and unknowns to makes the I cause everything closer big dollars the now. certainly XXXX, weekly path turn make, from delaying analysis of day-to-day, that today. getting on things looking costs not happen that cut lot Arabia can mean, where are we’ll certainly and we are Saudi million billion we standpoint of the us can those to at would that it around Certain a in those could we’re right X we’re possible and if and another East. it’s barrels bring really closely timely. it this on way there’s where sense. But things

Thomas Long

good right And we’re give less, for guidance beyond. billion but say or and now do trying XXXX right about I XXXX for not $X now, to we feel will

Jeremy Tonet

Thanks. it That’s Great. for helpful. That’s me.

Operator

Your next UBS. Gershuni of with question. comes Shneur question with from your Please line proceed

Shneur Gershuni

heading Kelcy, just kind on environment Hi. lower difficult what be under in $X could that years. so trying XXXX crudes to we’re Is when a the you’ve scenario Good can right touch CapEx we’re start got the an for billion billion wanted oversupply bit Tom to big mentioned for how to next in have it’s the side. there a materially just low to CapEx now right if CapEx and many than afternoon, numbers in to where Maybe XXXX flight of $X make everyone. right go that three little off, CapEx to just situation are adjustments than realize four an year. I we or understand I’m projects if Mackie now. we’re into in better now? next

Marshall McCrea

Shneur, is Yes, Mackie. this

that that and, in of Here’s deferred, projects, demand charges commitments some that cases, we we’ve that how I’d are have the many is in. the answer even projects kicking

at So certain so sense past for make demand those when a charges point, of it the point those the projects delay kick some in. doesn��t a certain kind deadline really to and commitments

question, unlikely. materially that to it or think it answer do we to billion knock say $X So, and that’s could down less,

evaluate to think and the on pretty up we between Tom certainly, but a range billion $X down, $X.X well, it expect to continue next years. that’s now. said it right circumstances, over four depending that good or billion I we’ll three But or be

Shneur Gershuni

forth. XX% Tom. you spreads the these the follow-up and with have you a guys that appreciate us Appreciate slides X% today commodities as to No, for for shared so Okay. maybe sensitivities and updated color. for and And now

around that. Just trying the to understand sensitivity

your today and are at today, today at do that X% today to there? and and be guidance worse with types of But spreads prices see XX% where downside today materially would is the sensitivities? based that there’s I to to and are those look where have say I respect prices look exposure to gas on NGL current are when so things of So,

Marshall McCrea

it both prices Yes, spreads. upon current prices - our based is short and is. It answer. That’s the

Shneur Gershuni

Thank very the much, Perfect. please safe. you guys. stay Appreciate And color.

Marshall McCrea

Thank you.

Thomas Long

Thank you.

Operator

Your Salisbury of next question Jean Please from the Ann proceed your comes with question. Bernstein. line with

Jean Ann Salisbury

It Hi. which contangos surprising, hundred expectation earnings the have the moving around in fallen your inventory what crude are beginning seems since in somewhat a say maybe valuations the you like dollars there? and few million by product. the spread guidance, Can in bucket, of the is just refined pieces year that given

Thomas Long

valuations, not here we As far quarter. in the to first inventory what the in guidance reported the we’ve as baked other have than that do

Marshall McCrea

up across Texas And have tightened. that. spreads our I’ll the crude to on follow business certainly On

our that on of However, we spreads long long, contango that impacts offsetting business. haven’t that is crude negative narrowing time the in to we’re seeing kind seen storage the counteracts spreads in a business the significant

Jean Ann Salisbury

Okay. It I though, looks the last down, went like time. versus guess, overall it

contango pipeline loss bigger get So is guess make I gain? I kind to the of it. is the sure want crude - the I spread just spreads

Thomas Long

I’m your question one. I on following need to this make sure

as You’re down guidance the saying far as went or goes?

Jean Ann Salisbury

Yes. That’s it.

Thomas Long

yes. yes, Oh,

Jean Ann Salisbury

Cool. Okay.

Thomas Long

You are correct.

Jean Ann Salisbury

or year Jeremy’s it’s anchor be to kind question kind US if this Thank that? overall production of or - but and you. get it’s related there kind better And in that than a worse to worse using than that of there decline to is this of or better forecast you’re that you’ll then is earlier, then Permian

Marshall McCrea

is This I’ll Mackie. start.

have seen ins I certainly some shut earlier As it’s mentioned slowing we down. and significant

hang and kind the we’ll is strengthen, think optimism we now there where XX it others maybe to that think start days. on to and faster recover kind XX some see we volumes of WTI of next will based that However, our in than over

for anticipate some don’t where period are down significant circumstances, of time. we volumes stand anticipate we any don’t significant So they notwithstanding

Jean Ann Salisbury

Thank helpful. really That’s you.

Marshall McCrea

Yeah.

Operator

question. comes Please Michael your with next Your from Fargo. proceed the with line Blum Wells question of

Michael Blum

just make one to Good asked. clarify afternoon, questions everybody. sure, the Maybe of just just was

captures spread, I is want So deck, the year? the guidance? in X.X% - labeled for just this that to does X% capture that slide the as of that XXXX your upside that. contango that Does clarify to pie your

Thomas Long

Yes, does. it

Michael Blum

do Okay. of on that Or VIII. Great. then Frac question And does left where service stem out just turn VII there? capacity into just contracted? to Frac you went Frac at other still have My and the Is kind VII Frac was fully VIII point?

Marshall McCrea

this Michael, VII completely running Frac at is full. Yeah, Mackie. is XX%. It’s

you our significantly If look nameplate the fracs, at of those. above running of all we’re

go so And of those Frac VIII. course, volumes designated were, to to

able VIII now, But we as have in of out we that XXXX it additional the because capacity We’re have Frac brought extend nameplate. and to to storage right above lot we a of NGLs on.

frac of a of it’s but our will so current we’ve and And some days running been storage status. going full out for number of and as months

Michael Blum

you. Thank

Operator

with proceed from Lapides Goldman Please your question. with comes Michael Sachs. the question of next Your line

Michael Lapides

questions. Thank my for taking you guys. Hey,

looking or piece percent of pay tariff take show at you’ve what but where you got into large you X on that is slides of the XX% to that XX% of slide pie got the pie chart volumetric the is in break and the for adjusted X, Just fee-based. fee breakout and or the you’ve percent that exposure? what Can set EBITDA

Thomas Long

Well, you’ll is midstream Michael, beside keep-whole, can Is versus one. from cetera. at it, think see MVCs. look follow that’s I I’ll that we’ve that start you that it necessarily you from et if that, the X see of obviously We the up for deck, Probably much with know POP, you of the then standpoint, to And pie way a kind start you’re... least but with in how afterwards, at don’t fee-based the a moving I chart you question XXXX. can if the with turn other lot. captured that’s slide

Michael Lapides

the except not Yeah. referring to referring segment, business. to the entire on I’m Kind of midstream just remark, I’m

of the same look the volumetric? transport, I is that side, of but fixed And on if of albeit take versus much pay thing right-hand like table on So or slide question, how like on interstate much easy EBITDA how very or pay? fee is oil X, take volumetric the crude

Thomas Long

And, later to with out follow Michael, that this back up We’ll have now. broke we have right week. you here don’t

Michael Lapides

Bill Happy one a when the dates on you in-service? the to what up just seeing you know the call clarify the that? just of I with just bit all remarks, question. prepared clarify for follow about you’re but little timeline you and offline. in-service in kind can other Hey, team Can mentioned and expect East it Mariner you the XX and on

Marshall McCrea

capacity, moved we with to year, very first about next charges. XX, this is is Mariner. all, You to next and then we bet. fourth And expect of This of have that quarter already positive slightly first significant Mackie. bringing in the additional so second on that’s demand barrels quarter final X, from quarter of and are of then the And completed Well, XX,XXX now June be expansion completion XXXX. year we committed

Michael Lapides

Got it. appreciate it. Thank you, guys. Much

Thomas Long

you. Thank

Operator

comes question Suisse. Spiro from with with Credit of line Dounis next question. Please your Your proceed

Spiro Dounis

everyone. afternoon, Hey,

go to the to want cost back Just cuts.

how in You versus slides, it you quarter? would we the then costs? happening rest of budget. And $XXX up year we that all the for first much versus mentioned and think showed $XXX should in much you I as the some the it’s million guess like just How characterize million again of more XXXX realizing maybe could deferring broadly, And that year? out in how sustainable see so the about

Thomas Long

came is fuzzy. little off, Tom. this the starting When it question? mind is over with you a Listen, started Yeah. through Do you

Spiro Dounis

this Yeah. better. time No works worries. Hopefully,

$XXX cuts, the to cost million. Just million on $XXX the

sustainable first you that should the showed and about think rest how realizing In much those how in for just is other Just the we curious then of really words, savings much year? quarter versus the deferred? of of how that up

Thomas Long

it’s far all as the be the going as to how put even really spread through very as would through spread year, year. And it’s I sustainable. it No, of

first take really go this kind and you remember of and through that G&A quarter the If OpEx. evaluate - then and is

continue So will able year, see as amounts we you you’ll if additional of we - spread identify to the evaluate, And those. those kind to throughout may be we there. actually, may

Spiro Dounis

Okay. Perfect.

the just seem I’d here. far would It to M&A, on get to time just one, opportune mindset that this as love now. like consolidate as Second is an industry goes your

doing in that where about the obviously have you guys past You shy could. been not

now too. So on would just M&A both I on landscape your also appreciate corporate individual but assets of view the M&A, right

Kelcy Warren

Yes. of and plan This part always it’s be. and you’re will is business just Kelcy, correct, our

all But guidance we we is hands performing. I’d give at do will healthy was would day. now deck anything tell We not not about it is every something that every our is are deleveraging. make right it’s day. that that on this - to if We and talk on it any business there’s look sure one you thing you I

and look or not can to certainly to So were. possibilities that then that at begin there that you to may apply would possibilities wherever need be may

Spiro Dounis

Very helpful. Thanks, well. everyone. Be

Operator

comes question with from next line with Please the Your question. your of Cho Barclays. Christine proceed

Christine Cho

Thank you.

say CapEx with of that CapEx, to or more if So in-service could that XX% you complete than half I are year year. for put year’s next the guys this start or the is projects this

online come thinking that For supposed are are this the that on further that to say to you you’re contemplated Or it? reductions $XXX million you’re are deferring to year, projects evaluating that those next maybe and projects mostly would reduce the to service of be or looking about reduce, post-XXXX? in $XXX types is to year spend million

Marshall McCrea

start, It’s little both. Mackie. up, it’s of bit would follow a I’ll Tom but

do I and of defer earlier is said year in as coming the weeks third projects are the make those and of there it hopeful our we end that projects sense are in that what next and expectations of XXXX. and of the into get does budget we then the out optimistic or - them and we is. we’re push of whether kind our of over as by And then those under some year it this year, them completely months, and Some push next to these what some come some basket we evaluate

Christine Cho

I sense. back of capacity could and That additional Okay. current versus flexibility in And just outlook makes if prolonged the $XXX much million need the I’m those us how be downturn? tell DAPL customers have to production one And date in sort a move to for it can do million $XXX in is the if for the evaluated. would trying go that potentially curious the if then push being of expanding this basin. projects reconcile over to what to in-service you you’re this we are expansion,

Marshall McCrea

and country baskets. for Dakota been one our now, But it’s shot right an in really project of Certainly, in such exceptionally it’s has incredible been so that DAPL such it’s for well. those and arm North got a the

Our to open and get we’re to do soon. hopeful XXXX approval regulatory expect We well. season in went exceptionally expanded have the final

do. some that But and doesn’t or that However, if shippers commitments. and mean we there the bottom can commitments and options shippers’ time. might long of that line are in periods demand charge-based service different we we’re These circumstances depending not kick quarter approaches, will on of those in. things not some is on depending be interest have for other second commitments arrangements And made the XXXX, and are

Christine Cho

able much by? going to are to expanding you’re you be how us tell And

Marshall McCrea

The is on now can open That discussions that’s completed, we in as expanding range. but XXX,XXX ballpark. change the you a somewhere and kind season right go barrel of know, anticipate XXX,XXX, certainly as

Christine Cho

Thank Great. you much. so

Marshall McCrea

Yeah.

Operator

of proceed comes Pearce Hammond question with your Please Your question. from with next line the Simmons Energy.

Pearce Hammond

questions for Yeah. Two taking here. Good thanks my questions. afternoon, and

have strength other export that First, like sounded LPG your in the midstream business seeing remarks the prepared companies highlighted it and some you’re in same.

I outlook the and ethane, what you. wanted dovetails Thank And then is question that. butane with for on color to which first, So propane, from your year? you demand the some get this second

Marshall McCrea

Mariner heard, adding of you as a exciting the as kicked LPG kind is we’re industry needed. South another, we home a This the XXX,XXX and needed an then gone close much find barrels signed needed of of years well off we part us, and domestic build transportation all to it’s saturated number What for capability, to - of ago, our business. kind the Mackie We fracs to saturated for of again. market. we and We exceptionally up, that’s

and With a the light. turmoil that’s all shining downturn on everything and the all been XX that’s last XX, going the been days,

amount We demand. of have tremendous

conversations. We’re in constant

adding for vehicle We’re partnership whatever be for our the out for of we growth that process to a come. see periods of significant that capacity we’re some And in time. selling to many years

Pearce Hammond

capabilities, a on that quick storage on successful storage my mean it does got well SPR, the then And in the your us being the upside, leased capacity the pertains that and bit upside bidder crude as more to tell follow-up what little about SPR? from you’ve oil but storage as

Marshall McCrea

now course, having storage Well, including as number a products, you right of very of of crude can is valuable. imagine,

and from we in winning Our in bid likewise, benefited And for storage revenue been standpoint is other was that the the existing for way producers. as the country remainder this will contango have that SPR and and, it has big but a of the Nederland for the us locking around important the important contango, year. spreads of state and and also our

basis on for and to consistent there that When it these that more necessary barrels. basis transport wasn’t on going looked their barrels for that consistent any try market there make sure more to of all kind a find markets be like buy for capacity to we a customers all thought and space, was we our was to a

customers’ customers buy the slowed on to side that we And to barrels that, so, that needed make our it, but our things certainly barrels call sure all have for down market have we for market move. the

Pearce Hammond

Thank you, Mackie.

Marshall McCrea

bet. You

Operator

your proceed the line next Please with with Pradhan of Your Ujjwal comes Bank question of question. from America.

Ujjwal Pradhan

everyone. afternoon, Thanks question. my taking for Good

and Basin there. Haynesville the on you some that have operating one First

growing Tiger across assets basin. you We in your as Can gathering your Pipeline? interest or have seeing few of expectations well what heard assets speak as activity what peers the your the the you’re the on to in from and are

Marshall McCrea

interesting moving thing the leg. about area very years Haynesville years it tremendous bidirectional I our growth and in given a potential any number and for of and system got and second its mean Yeah. on system. a it’s now slowed The Haynesville’s a of we’ve day, it’s been that then had an down we’re Bcf, beneficial - on the and thing X Tiger number interesting is

can predominantly only where is its interest wanted into move Ship where find is go, to the not finding into market. has always our east to the Texas, gas ultimately we back its network, into way but LNG Channel which So, way now intrastate down

a assets. been our for area So, that’s very positive growth

We years expect keep for many those to come. full to Tiger

areas lot the where kind Louisiana, in. I of some of a treating, we even these gases that being our assets times gas in have North - been especially the when there’s of gathering Likewise, products kind shut mean, in are needs

We’re seeing leaner in of the the which Haynesville plays growth is, play. gas course,

So, even - lot in, that’s being when at and see mentioned earlier, time we really a speak. growth oil tough is as we as that a a area shut of gas I a as

Ujjwal Pradhan

ET flow free this spread and of And assumptions please positive commodity big maybe for price XXXX, priority the Thanks to in how for it? on cash today? could it. Got starting that. And expectation your for a in you baked is speak opportunity

Thomas Long

worth and $X the you’ll Well, above distributions. XXXX, think I that flow. we at cash out year you look call free - you for we’ve XXXX, guidance, When guidance cusp. at of over That’s cash have retained see flow, not is see guidance when billion where that put look really we but our talking what right we’re at this where have you currently we know, it as about we you had

get to that’s really what the debt curves we’re the now, standpoint. that’s as as see our lowering of can EBITDA where deck about these think we’ll you to be out where flow some to what But looking we more cash levels price are, you for Right the free $X on from year have. we’ve decks. the talk look in - XXXX. it’s when what about today, When start look you of now using you the use that to billion price about continue the probably than going talked at longer-term later projects going and billion at and And type XXXX, less we’re $X grows to

Ujjwal Pradhan

you. Thank That’s helpful.

Operator

proceed Stanley the with with question your line Keith Please next from comes question. Wolfe of Your Research.

Keith Stanley

to Hi. Thank start clarifications. just two you. with Wanted

size in a want for commitments? inventory So, barrels to then do EBITDA you Pipeline, most the on quarter, billion just, that million that you’re than Bakken expansion the for is that in was $XXX confirm capacity larger have the headwind write-down day, step-up billion $XX.X XXX,XXX one from the the to first firm the assuming to year. guidance XXX,XXX $XX.X is headwind I commitments the for And of or second

higher. million even been the $XXX So, guidance would that, have absent

Marshall McCrea

This volumes and on is is Yes, Tom start majority significant commitment vast I’ll the we’ve the open capacity so start. of demand we’re and second. the Mackie. season with let capacity. our the got in first I’ll charge expanding for

up have. is baked we far whole say the And for the billion $XX.X capacity, as you a Of the to of would million as saw in $XX.X yes, into second I walk that is yes, course, room first of demand. of it your that it guidance and type question, we’ve got quarter, $XXX part billion the the but majority

Keith Stanley

talked the us market? free sheet how to Okay. then vehicle And you Great. down Tom, you’re cash the target starting the Has for at on leverage to flow leverage sheet, balance a on though happened be remind debt. year strategy and all the pay next in using And oil given can the about just approaching company? changed just potentially the balance what’s you

Thomas Long

a very it no, question, and Keith, good Obviously is very, not.

levers the but free XXXX, continue We’re term, times. into of to down excited CapEx. we I lowering we on, cash see using that going When some know pull X.X phase to of look to come as the continue you the to of that X debt target start being the at to get really as out you other projects to we’re flow paying able now keep

projects you’ve a goes. more of here heard come far about But nothing So changed than today. as is our going of as the lot us growth to from lot nothing talk strategy a

Keith Stanley

Thank you.

Operator

next line Please of Colton Tudor, Pickering, Holt the Company. from with & Your proceed Bean comes question. question your with

Colton Bean

afternoon. Good

So thus a contango just around the quick discussion far. clarification

should think, you earnings well. as marketing there the degree contribution that in looks some noted Tom, the I fee-based X% have there. But like to footnote of capture may X.X% be

that up is the is showing that yourself, rate majority spread actually you’re charging the showing So is accounting in market up in the of or fee? the benefit base for bulk

Thomas Long

portion any held me the by through fee, but of I some would for that the think marketing would the not - that’s say the let do majority We no. I showing in not have of moment. arm it, up a

Colton Bean

Okay.

so. to seen we’ve not last moved a in half so and just that And what market given month base materially or say up fair has the rate the

Thomas Long

That’s correct.

Colton Bean

condensate gathering versus your us the evaluate Got on as dry for midstream, and it. And you then Northeast particularly rich exposure frame the footprint, handling? just in relative can you

Marshall McCrea

Yeah. handling issue has condensate northeast again. really just Mackie but an is elsewhere. This not become Clearly,

with help We our a time to going lot and condensate, closely said move them to to don’t that. answers around a can in see and how But things will they last long earlier don’t help that assets of knows. we this their are don’t of we really it’s Like long options to working utilize we’re who and don’t not. have to recover, going everything some last, if I a find producers think the condensate, for long-term really demand’s we we going to as increase know producers and entire the short home we’ll or it question problem term. doing your a then are And

Colton Bean

gas guess, condensate? your seen rich broader just on of I then one, you to date helpful. curtailment any dry. relative guess And two, kind I That’s Yeah. exposure And have

Marshall McCrea

ours, Yeah. home companies a condensate condensate. I’m for with midstream their for where any looking for help has of about talking not their other condensate mainly that they’re impacted aware

Colton Bean

Thank you.

Operator

closing question-and-answer and end would back and we for the Ladies the gentlemen, have remarks. session, the to like Long I Thomas Mr. reached call turn to of

Thomas Long

for you Thank after appreciate one. to We support. we today. of your really you. once We us really joining and talking all look follow-up this forward enjoy Thank calls again you, do with

Operator

concludes This conference. today’s

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

Energy Transfer (ET) 12 May 202020 Q1 Earnings call transcript