PAGP - Earnings call transcript Q2 2018 | Plains GP Holdings, L.P.

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Operator

Good day and welcome to the PAA and PAGP Second Quarter 2018 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Roy Lamoreaux. Please go ahead, sir.

Roy Lamoreaux

Ana. you, Thank welcome XXXX and All Pipeline's American Good conference to call. quarter earnings second afternoon, Plains The for of Investor Relations plainsallamerican.com. slide within News found presentation and today's call Events section our at be website can the

performance. to results Executive our SEC. from call factors Operating results. could are in hosted President quarterly by Today's also Important included results cover schedules presentation for During PAA's since our PAGP's latest PAGP's to differ references slide to the Appendix Executive Swanson, the results that PAGP's Financial non-GAAP we'll Investor intend will such and measures these comments of not see consolidated adjusted and non-GAAP cause provide on can that information. Chiang, call, filings separately President A outlook. to in measures actual materially Please we've EBITDA. with specific Instead, forward-looking Relations' contain section of our with SEC include the PAGP's Vice Chief of annual comparable included Officer. financial to our do reconciliation most be website. measures as Information within financial GAAP We financial PAA will found be the Financial PAA's and Al presentation PAGP's directly Vice Today's and filings Willie Officer; correspond Chief the

Willie. President management of Commercial Officer, call that, Chief portion to members senior With will Harry and and the our present team are turn Additionally, I Pefanis, Greg and CEO; the call. Chairman Armstrong, other of available over today's and now Q&A several for

Willie Chiang

you for and Good Roy. our joining thank Thanks, call. to everyone, afternoon

million. adjusted the fee-based hitting released the we PAA This of of total million Let me and segment $XXX reported $XXX today. EBITDA information adjusted second by points afternoon, high of quarter EBITDA start

Supply the for and distribution guidance minus of the quarter, adjusted highlighted XXX% XXX% in to guidance reduction target projects and added EBITDA on adjusted Furthermore, like year Common coverage full in Our as $X.X projected have fee-based on year-over-year likely based to XXXX for with half to expect billion. our detail and more unit our and currently show XXX% we're we to increased $XXX expectations segment we results by we XX% explain to our three, our Relative or capital growth of XXXX to also on leverage we in XXXX. EBITDA we increased call, the reiterate was increases XX% plan to exceeded slide million XXXX our first note and today's additional XXXX updated guidance, our for would as XXXX our during and XXXX program. adjusted EBITDA that Logistics from XXXX. plus is be will

respect volume and can in a completion always With We month-to-month outlook pinpoint earnings certainly detail on to we up. challenging in will growth, see to discuss our levels call volumes lag our activity data time with makes that production the associated November. Permian although Basin are estimates, next more are producer ramping high producer reporting it

minus be plus barrels to year-end with growth in up We exit production continue to line rate X.X expect day. forecast, or Permian our a million

Slide Basin growth. Permian to volume meaningful As shown segment we on X, Transportation deliver continue

day or second barrels XXXX. tariff first by Permian XXX,XXX to Our grew quarter nearly the of volumes a relative quarter XX%

in are from year. day our a barrels these Activity volume operate well-positioned resulting to benefit and tariff levels producing throughout year areas. the gathering remain second half in takeaway on across of volumes for other growth our regions the continued and growth our pipelines X.X expected our at major capacity or expect expectations pipelines near with intra-basin average generally assets in the million We systems line our and to in XXXX of

gathering multiple capital and the our on to XXXX XXXX. the terminalling place progress projects of well the half good storage first as make to of throughout into debottlenecking continue second expansions and expect service and quarter We intra-basin program as we

Additionally, Permian represents as Permian-related will combination small in our primarily The mentioned, we've the that economic increased additional capital infrastructure. provide updated returns. projects demand XXXX, dozen capital a expected incremental of of majority several strong section. XXXX the to attractive to due his capital to medium-sized discuss are Al for detail

new quarter own gathering and Sunrise Wink Crane pull-through day Other material expedite a also volume venture pump we're path Advantage system, very a expect pumps. them track component our of into to team projects our in we on focused as a its be of projects. into the me expansion of systems. and additional and commercialize Cactus include on such on several II we place Overall, our expect including II. into pump our third service electrical construction a from completed Let Cactus the to of Phase our to are a the distinct bring schedule service to we takeaway day able our challenges and XXX,XXX our very barrel on progress a factors And has which These just pipeline. II joint deliveries project supports barrel our power debottlenecking to which expansion to that just be ahead system expansion timing-related as the with executing also Wink our day In expansions June, now and Basin in XX,XXX remain been a Each we on projects, a By the on I appendix of making permits service is with slide pipeline our securing critical Phase right-of-way, long-haul projects partial presentation. pipeline several highlighted to service Permian pipeline XXX,XXX from year-end, Midland barrel capacity to McCamey, a few are to pump and key to say of We've other barrels going placed day with Delaware project McCamey. is completions. we examples. pleased XXX,XXX

projects January XXXX than for later As announced and of for these previously, partial no XXXX dates Sunrise Cactus for XXXX early we QX for had targeted service Cactus two in-service II, II.

the and year. to projects XX% and deliveries now until demand accelerate additional Cactus with into of previous have participate is including as given we and ownership our and project II, vendor Such option opportunities practical Permian service incurring in material Sunrise the imagine, JV install services the Cactus allow permanent temporary to exercised can fourth of power cost the should in on these On in trying reasonably place present commercial currently assumed utility shipper expedite us for which available. to pumps much of both can is even project as we're you quarter higher in confirm their our Basin, we consistent generators this that to the As II, partners our partial closed guidance. Expansion and owns level that PAA in efforts had

received we service number faster great quarter projects anticipated, late for be and previously permits is still begin April to believe to the able we of our of we XXXX. opportunities into chain line to than optimize that Additionally, a similar are capital now XXXX. will and two Full targeted third one partial illustration service us ability of These put benefits a service optimize long-standing capacity We're sooner. pull-through to efficiency, to developing which our allows capacity. really existing further of the also of economic one have to value our strategies

on Wascana pipelines in to Pipeline the plays are projects capacity developing take bring the takeaway for well a number a we're increase at phases service. of with take development to Western system looking capacity out the and existing These increase gathering Pipeline expanding options Canada months Cushing system. would advantage of likely we're as by on project into projects developing systems, as to that potential Rainbow that onto into to Canada our First, XX in existing bring volumes in to would capacity our of early and XX of new specifically

is to related share on We're including ExxonMobil in sourcing and to we estimates, on, a and agreements of ExxonMobil. a or activities selected for a project. with the diameter survey of Pipeline work large been support lead intent work, Permian of LOI with Basin and Moving of project closely pleased long for This crude finalizing items have of Permian very project engineering, formation June route executed I'll venture. Takeaway to development a necessary construction finalization takeaway working the letter with selection, few including to joint we're the our ExxonMobil cost new, commercial key comments

in As million X the Slide to the points X, project area. barrels Houston a expect points at over shown origination on to we Midland be delivery and ship with Wink and day designed

project continues in look than sharing equity participation in majority well advance. but to venture We of to investment capital contributions less beginning XX%, XXXX, and as expect in the meaningful, additional updates with the EBITDA forward to We be the PAA's the occur XXXX. to joint

orders for The line on we I a to steel of Cactus project I'd turn refile obtain steel for the for tariff from ultimately We're steel our like over just, we bear the to believe but well Commerce the our we're to exclusion call approximate intend Department the request before imposing to place. without considering in comment U.S. isn't If exclusion, we tax was ordered that II tariffs. the to do. July, abroad Pipeline an specific the Al, In December ordered notified from were preexisting an especially our which U.S. purchased were the XXXX. in ability exclusion, of denial Cactus tariffs make we Cactus readily pipe put II prejudice unsuccessful Before denied were to that in to that moving million made efforts the materials forced quick we II will the on forward be in $XX available not on Greece JV tariffs a

XXX quotas We job others to materials over in and of Al. of ensure call receive growth. the an to the energy and can U.S. to actively, this With which to necessary that support improved in Section I'll recommending continue potential ways production we warning impacts will absolute and position be the can turn that, the growth advocate effort continue to process the

Al Swanson

Willie. Thanks,

updates of provide guidance, And a and at capital capital a deleveraging our recap deficit During XX. program. second quarter plan, of our my the our also forward I'll working portion discuss comment I'll and call, results on few to June

Segment after As Segment adjusting EBITDA by $XXX reflecting per XXX,XXX primarily million, sale. Adjusted Segment $XX or year-over-year decrease in million, shown day, of Facilities million we while sales. fee-based $XX was Adjusted quarter, on more of due $XX approximately XX%, Permian a growth XX% was and or Year-over-year growth Transportation reported fee-based asset for growth million, primarily asset XX%, for or EBITDA tariff driven Slide X, volume second of EBITDA the than to Adjusted barrels of

over increased principally our an in result EBITDA increase adjusted fee-based XXX,XXX volumes. The non-routine and million approximately $XX barrels a per $XX quarter tariff the Permian a and of quarter of operating to transportation by in timing-related $XX due million a Facilities driven segment first Second combination segment, XXXX, as day of sale. impact decreased an increase approximate asset of by million expenses the

shown accounts as and by million, and our XXXX grow based segment Logistics guidance. the is increased our mentioned $X.X XX% XXXX on results, and from segments Slide our outlook on and billion. Willie wider $XXX half second or Guidance EBITDA as Adjusted first preliminary XXXX have for $XX X, million oil guidance increase benefit As of increase to plus fee-based the approximately million as to $XX actual for the XX% crude XXXX EBITDA half that Canadian reiterated our the over well Permian year. would includes of increased we Supply This minus Adjusted fee-based for our The differentials. fee-based we and outlook some was

that indicated also revised XXXX outperform the likely guidance We Supply from segment Logistics our and XXXX Adjusted for EBITDA this segment. would

on our guidance additional XXXX information call. on provide XXXX will our We preliminary earnings November

updated to as me move program discuss X now our on capital and Slides X. deleveraging Let and summarized XXXX/XXXX plan growth on our

and committed targeted to strategy returning within to of our First and credit metrics half PAA remains the foremost, financing first XXXX. our

appendix August and a Adjusted a last we liquidity at just of As metrics, to XX. EBITDA times. $X.X than ratio deleveraging and announcement PAA billion slide full reduced of XX, other metrics debt in a reduced have total I with noted also our more by and plan X long-term on mentioned These, reflected turn. Since ratio the slide along X, are to on XXXX, of times, of June the capitalization X.X debt debt year, leverage EBITDA by had Adjusted

our our outlook with pleased pleased the to are We stable. and changing progress recognize also to today S&P negative date by that progress from

We current with with capital expect with total primarily associated sales, variations and execution of hedge margin debt positions. levels timing to remain our of asset variations near associated program, our

intra-basin, is capital Slide in program program increase of The our portion primarily projects large majority into Cactus XXXX, on expansions. XXXX/XXXX on with have costs shown the of to the the of as projects occur II, XXXX million, $XXX gathering, and is costs, Permian XXXX, related growth $X.X costs storage two-year and forward and a brings the XXXX and as by new tariffs this which X, project combined accelerations. certain balance combination the largest mentioned increased projects increased Willie incremental such attributable increased right-of-way as The of As steel expected on we acceleration associated to of to capital as of higher billion. terminalling reflects with imposition which certain to well

payments to and we of retained conditions. an expect completion of We funded have capital the principally continue far $XXX of sales and and $XX the in expect cash additional sales. with flow received program with million million time to be XXXX, in performance passage to receive asset Thus proceeds

on cash Additionally, includes approximately may and little, capital us against I to normal majority the over was depreciation used what on of Willie. Shifting $XX expense would With from approximately to this of the short-term associated and turn gains on, our underlying sales levels. liabilities the our asset enable derivatives comment of transactions we back the amount posted advance or used and consider working debt June post The hedging net the year-end increase business cash which to be opportunities, vast these by sales, short-term to at The resources we that, targeted with One incurred $XXX million roll-off item call $XX continue which majority million we derivatives last $XXX for levels. use of of incremental to require the will gears will asset wanted above margin. for efforts XXth exceed not cash and other I'll is million of $XXX hedges sales the deficit to relates amortization a to million This settle sales. quarter million. to debt fund, physical of liquidate as reduced margin. the

Willie Chiang

Al. Thanks,

can time an you active been for partnership. it's productive As and the see,

towards We've and As progress we for do to company slide to on bring they'll of great have the want shown our made discussed as to meaningful and each beyond. and pleased moment XX, goals. a plan benefits that XXXX for our sanctioned, PAA some our entire and highlights look growth. to on are hard we're The thank today our today's call in to new got of to deliver we've take slide XX. shown projects team XXXX acknowledge and work to future I their us position XXXX forward

our we that, to for over appreciate up Roy and We a With investment. for open it turn also quick continued interest I'll your call back before comments few call the questions. up

Roy Lamoreaux

reference presentation. materials appendix Thanks, Willie. today's additional We've included some in of the

then follow-up questions afternoon. Q&A participants to the to enter question in time we available we one have the yourself us As from and queue and if will you practical question address additional you This that many to session, allow return our top as follow-ups. please one ask as limit this the

Magill to and be available call address evening Ana, now Brett ready morning plan this to questions. and Additionally, tomorrow questions. to open we're additional for the I

Operator

we'll UBS. now from And from question Shneur you. Gershuni take first Thank our

Shneur Gershuni

CapEx on XXXX? on too. as a well Any the talked up little revision around you you had what's start the wondering Maybe projects, expansion that bit those potential about. making a can get increase Analyst CapEx Falls it. off for I At the wondering was we if with well, extension Wichita if about II we and the can as a detail was FID I Day, talked more Cactus updates as

Willie Chiang

additional million predominantly and the $XXX or associated of some barrels of deep $XX that we a more $XXX that there gathering, mentioned for our projects $XXX as out some projects. Delaware labor on some million increased of – Permian projects. lot really as costs, you generally not characterize I of the I talked as is market intra-basin, There's The develop. with competitive million it captures XXX support $XXX were would to me, and to The Cushing. Wichita Basin. and the Those million increased the as million of for Falls the that, is about, XXX,XXX continue line all excuse looping we – of and in costs, nor right-of-way some is million, tariffs, III a from well of included Cactus the look projects that and in the the are projects specifically

Shneur Gershuni

related but the thin XQ, maintained this And on fixed you were or are of system, for the the function volume the quick around tariff it – kind Transportation, that'll Transportation these from question down talked year. to just a that your in trying margins just a if you is coming a to be Is the of lower will. color issues kind about of bottlenecks? I'm little you of Transportation, by and full on margins, guidance and cost temporary any kind

Al Swanson

there take I'll major quarter, outlook cause of would just anything power the we Transportation Shneur, The margins I shift at above. unit the was haven't but change. the probably actually much in higher generators. But our where no a barrels, mean, slightly kind second is business mix with or to that major No, a seen in for segment some seeing we shot we're line seeing us had bit but of And expected year. change with do $X.XX kind or it. have of are $X.XX to maybe little costs, we as movement

Shneur Gershuni

of or equity this And of internally one sheet confirm able it all else, to the everything any your review whether Al, or you're and not you final for to balance need in this, year? fund confirmation, fund you'll did

Al Swanson

of talking a some needed we're we capital to fund to common If, that. view be be security, but equity we'd any to wouldn't Yes, that changed, we about. the do don't at we expect at raise equity, the that reason, we don't preferred looking for looking need

Operator

we'll now Jeremy our question And with take Tonet next JPMorgan. from

Jeremy Tonet

was you since the that as expand here. of higher could curious expectations was strong you're capacity a like Congratulations in driven year, S&L past. for the estimate if seemed, on on and the of as kind the has more the just portion quarter in S&L side what market it good the I far bit what hedged, seeing

this the CapEx you up the side, upside XX% for gives that bit year XX% curious unchanged. in just is there, to changed what's went guidance the so XXXX? then bit fee-based but on of more And step-up And a next and year the

So pieces is moving or kind delay of other starts a that EBITDA, there? contributing any there when CapEx of kind to

Willie Chiang

Harry, the to you S&L piece? want take

Harry Pefanis

is couple combination S&L Sure. really of a factors. different

year thought First in in to in than crude, year the the when a tightness forward this by Canada year, the hedged more likelihood early the with the the year, had of all, end of out differentials the extent, we year, the greater both thought we've were earlier, probably of we we said in came little of see would we some better you – later into of much the lesser And performance remember to takeaway Permian. we respect then markets and as the markets, NGLs. of looking end to with

the really performance the are drivers in those S&L. So the higher of

Willie Chiang

the on of Jeremy, fee-based November XXXX. as this to guidance new number the better year for course, number is give on think But CapEx over XX% about the that in XXXX. number, And fee-based it's for we the increase, X.XX%. XX% we'll new

XX% would on be number. uplift, new 'XX XX% appropriate up that So an to

Jeremy Tonet

earlier come want what could a little like. you saying, like as as go didn't as that a as what of build Sunrise. back want you earlier if that at Day on And Analyst I the looking just seems frame to opportunities And just a kind bit as you're a while Seems look in out that. on bpd bpd also, there's like was and XXX,XXX on little that to so bit day could guys competitor to said so the something XXX,XXX far to the like Falls, capacity? the more far could balance, that to egress I know further into only other basin, of capitalize bpd found it think Wichita kind have do you about XXX,XXX thereafter of talking there's

had in-house, wondering, thoughts there. guys if So you any other just

Willie Chiang

of again. Yes, little I'll can want the I difficulty comments maybe make Sunrise. is Harry a on a to in. This Willie jump bit few you give and on degree

really City to from building Midland sections: Colorado to Wichita Falls. we're and there's two Colorado section, So, this one City;

tight always labor You've got lot to of been We've have this get to ahead able come we've a we've been little bit schedule. market that of together to get of January a very pieces Xst, said in done. pleased a

critical the of availability. this is paths One on power project

a generators to earlier had So the to what which before our bit up thought. system plan start start power us than is hooked the permanent up, on it is, is actually gives we ability originally up

generators a will again. So, for be the be XX system. fourth firm date the we start ramp-up roughly starting exact or generators, for have normal a I you in up be as will it on the don't up, there'll XX number We'll we have but and XX quarter,

So not up get full to should something expect the task you to again, rates. expect an easy in we quarter. -- fourth started something But this it's

Harry Pefanis

capacity kind provides or into in term. sort subject Pipeline was to Wichita barrels of the day a available markets moved On the bpd And barrels a XXX,XXX of XXX,XXX we then advantage is capacity nearer-term XXX,XXX Basin to to day of to Falls. Cushing, east Cushing issues, on on bpd the going expand system so Day reiterating It the has open either the an our of Investor what longer XXX,XXX and capacity. line, we taking capacity basis, Valero that said to season ability presentations, a

short capacity. solution take basically on we'll term, a not and It's in short is can some long-term that. crunching homes for be of that's incremental that's pay what of incremental could So, the we -- the find but what if that advantage to try do in mean, I we volume, here the that's to term probably see

Jeremy Tonet

XXX,XXX mean, trucked until there, So of Falls bpd. Wichita it now refineries that's just kind it of to kind That's -- take bpd, for from other the leg end from above you way the be another really only could other capacity I of Cushing? really of XXX,XXX to maximize get that or local advantage expansion the there, into

Harry Pefanis

pipelines pipelines, that's To some of easy Falls. more in that think some than There's those anything put out itself really trucking Wichita extent Falls I of some would connecting close there. in not probably that windows capacity there's economics. realistic of the to trucking out Wichita lend to some There's

easy You could not saying [indiscernible] it's job. an

Operator

now take We'll a question from Stanley. Tom Abrams Morgan with

Tom Abrams

just Couple quarters. Coast things questions, makes Gulf Transportation the as first the one several call and in segment, what declining again? maybe you Canada arrest and looking question. those declines for What grow at That's those

Al Swanson

of On service. principally combination the into off coming with of asset or a the Coast, Diamond Gulf volumes sales Capline it's been going

basically really of Tom, other one, And with those of none were expected. kind Canada? surprising, as So the

Tom Abrams

Yes.

Willie Chiang

Yes, of large pipes. is mainline Canada a by Canada part -- is the on the driven curtailment

what's the of curtailed, as pipes, some and declines into mainline back that's Canada. pushes of some that are pipes So feeder driven in the the

Al Swanson

say you're on of Wascana I Day in looking potential our is we DAPL the a of is second what that went majority service. off volume year-over-year of the actually And as talked into at that about would project a if Investor quarter, That's kind reversal. of

market. just amount a of actually It nature changing of substantial off. that the So a declines, came wasn't

Tom Abrams

just more just or making available you, ask things you to in what capacity dropping FT to during available guidance S&L, as and the think or about what's some people happening precisely evolving changing? wanted off your Is the I there? also is year,

Al Swanson

ago, Basically of were Canadian little heavily in as year first on we what the a the and latter NGL, of the I the better minutes dips, the mentioned hedged as margins in the not part few wider year. part

Tom Abrams

then? there the what's available, must was widening? knew dips be surprise capacity So then the the so mean, you I

Al Swanson

better than Wider year. NGL WTI dips, were earlier the the Canadian are they in margins. Midland wider yes, And, dips

Tom Abrams

wanted then ask the Red River about utilization. of now at that Where's Cushing? to And out

Willie Chiang

an number for you, Tom, have exact on don't that. We

Al Swanson

a barrels I total volumes. think, XXX,XXX is day,

Operator

take from Fargo. Blum We question from will now Michael Wells a

Michael Blum

to of know, I what one FID? questions to kind FID. cause you just there my just proposed most the are of see pipeline. as was differentiating and that would of of wanted you think tons But kind addressed. this ask through Can vying question kind Exxon I you to to I'm on this JV reach factor were pipelines tons sure of pipeline get As walk

I understand is wanted differentiation guys. try you for to just So Thanks. to the where

Willie Chiang

couple comment line, this make can behalf think Chris and ExxonMobil. this a it. When on Chandler, of comments others, it's or Michael, is a maybe about little speaking I'll you Willie. on bit

You've production, Permian equity production in their in capacity the refining amount Coast. got of their Gulf the significant Basin,

essentially a of sponsor move to the need you've to got the project that's So got and lot barrels barrels.

itself, So that, by basis line. sets the economic for larger a

combine that it's that system with in Basin, around we've particularly the Permian a the our Delaware to aggregate You and good really ability far just the In volumes, built. fit as as can you points, to more the to bring make and that a than others. competitive to got being volume which Gulf get you've work large it should with able Coast, to us aggregating then

from think of with to of at that to end a volumes lot B. to the it day, the of have you're A it pipe mitigating very in I a committed cost-effective So certainty going be will

Chris Chandler

is, pull that end has is will Yes, Exxon I a only Chandler. be the receiving remember, add for thing Willie, on The Chris would this the significant refineries demand pipeline.

yeah, the at lot a end, the production and of of the economies that feeding is taking brings large pipe So, the refinery a production the receiving pipe, scale.

Willie Chiang

a thing global other large is got the as footprint they've well. Michael,

but also they've have think access capacity the could got refining So Coast, volumes to you that you've Gulf the in only flow, not when markets. you got additional about

Operator

take now Tristan question SunTrust. from Richardson a We'll from

Tristan Richardson

generally the of and Just you talked or if about of that there. there evaluating in options projects to just not, Is sort XXXX expand reviewing XXXX of capacity egress size budget? capacity Cushing. any out you're And the

Harry Pefanis

expanded barrels Diamond We've it's of plans is system XXX,XXX probably little on day. Red a our Sunrise, capacity year. day. none as could mean, of up Yeah, next River to well. be the a Midway I magnitude about XXX,XXX Pipeline probably a Sunrise of not barrels in for got bit

developed the the of sort that's potentially be of could Cushing. expansions So, that out magnitude of

Tristan Richardson

latest that the of on of the launched Capline sort then update And and last solicitation just sort was fall? non-binding after

Harry Pefanis

developing There's the process it a alternative movement lot to owners of still project. work interest the on through on owners, to a lot the there with are owners. system. an does and But Capline three a the It's have take

Operator

Dennis Bank America We'll question from from now take Lynch. of a Merrill Coleman

Dennis Coleman

I this like How pulled have this it's been already on is XXX guess at tied rising can, say? I of to is would is been incremental -- to what get tariffs you forward to did much questions of guess, that not some just start, asked, Just and or projects CapEx costs. the how the million if much has that's to new trying back how of much I'm I but

Willie Chiang

roughly is again, projects. in million slight We've XXX scope combination, million a of million change We've tariffs. there's from pulled that's XXXX new XXX So, XXXX. into kind XXX -- increased got

in is around So there accelerating of projects, costs some Delaware gathering, the out are takeaway of everything efficiency and intra-basin, some Basin. definitely again, more around the the but

Dennis Coleman

So brand it's are XXX million that new.

Okay.

fee-based that XX% we And to talked completed, the upside about? or would that so that into roll to that likely EBITDA diesel projects be are XX%

Willie Chiang

project in nature, all have talked a different projects about term that'll ramp, multiyear. Yes, I'll that that yes, are, of so with every but, startup the be exception project the call ExxonMobil will shorter these we are

Dennis Coleman

will And is but shippers? with you option, push then can gather that it's a the cost the cost that early to startup that Sunrise, generators, bottlenecks, something, I on through the -- be higher with

Harry Pefanis

open process season tariff-based. as That well. under No, was it's a all

tariffs those So set. are

Dennis Coleman

the but thinking, where shifting, pay $XX and million confuse not tariffs, that the lot project a the and source projects there kind are a obviously tariff on you there? that ExxonMobil Cactus concerned U.S. capacity ability then as constraint that, for pipe, the to of about in about would you'll for steel you steel going project think just to toward is the -- on, source I'm you at of look And tariffs

Willie Chiang

process example Committee House The the process -- exclusion that ramifications Commerce be you the transparency, issue when the exclusions, against that opportunity we certainly, of last project, you on how retroactivity, which if then of that's piece type to business we is, which of one of with for sanction sanctity was was end our a of you up your set even impacts point but case, whole non-transparent of a bridge and the more can XX%, done, The felt the get the and it the the an significant any of different going and it's were around can or process different. steel whether needs decisions front tariffs, things in the you was meet XX% that's into steel, with far or don't the make quota it's unjust. Ways I in of United through X% size had we effective. particularly difficulty testify as Means And select you quotas, as a -- actually warning around going lines benchmark making retroactive, you a the really bring if Department so was on your all a the steel not States,

has which of all tariffs, the energy quotas, on last of have company industry, only industry successful So the years. not over entire ramifications just on number the significant could been so our build-out but

Greg Armstrong

of specific the of we and and to case an the that weren't I available to if able is U.S. outside so would add, or type we steel answer concerns correctly, II, understood I we looking I the we were we generally not source about the supplier. would just be specifications a your for don't. In have whether domestic product? think went do in And question Cactus

to the it an shouldn't ExxonMobil for so up. issue specifications pipeline, get we we'll With Our American, to and able goal same domestically, timelines. come the try type and buy of there, it the domestic, that our is the buy respect able raise to case issue always to that doesn't we just in be and like do size to weren't meet steel feel

Dennis Coleman

it's So well. it's but the -- same crudes I quality it's same putting mean, you're size, as the in right? it, that basically

Greg Armstrong

No, no, of quality about was talking no, I steel.

wells particular a a we difference between we didn't of a the on but XX-inch into do. there the on a with and had I engineering to available of third And into readily that for XX-inch the would in of pipes manufactured pipe, larger was the do that joints what that we about in the example, same what could want number Management were you to Greece. made joints are for cuts basically kind Corrosion that so pipe off that on that's issues, a And diameter talk specification, the get When respect eliminates of distinct be don't Management we big versus shelf, or XX-foot specifications that. probably to larger diameter we but the able when you issue to XX-foot get the we U.S. some details bought. get So, by in here the Integrity could here have That was issues in real get

Harry Pefanis

of We've in that differences the go differences welding a that decision. consideration. into also other taken the There's into advance, of are so specification things lot and number got mills

Operator

Barclays. from We'll from now Cho a question take Christine

Christine Cho

just later Sunrise start do it customers for contracts contracts Do wanted beginning this the with the expansion Expansion. year start year? with the or goes partial with the start to service the I customers at when still of the next into

Harry Pefanis

some contracting of flexibility advantage it's there when The the but available. want the to contracts there's space customers start when I'm sure take

Christine Cho

of Is any the S&L...

Harry Pefanis

I of said would they to it's advantage confident available. I feel that space as take would the want pretty

Christine Cho

an take service? is the pipeline So put this and year being for the S&L into to they this acceleration have increase by of option none it driven of

Harry Pefanis

Correct.

Christine Cho

do pipeline And expect assume more then be the you or should partners we with to Exxon this? that get for will XX-XX,

Willie Chiang

partners, But Exxon. we you at. to just than meaningfully haven't haven't CapEx yet our there how will be give more decision my would be be XX%, I flavor So, is less of Christine, certainly we've – more just much that And said, that. than that comments, made. finalized would be In portion, a looking to

Christine Cho

change Diamond? your talking that Cushing have extending you how pipe for And the and a James. Capline and timing you potential St. competitor then, building about lastly, reversing view partners or to Does from a

Greg Armstrong

just me Let say this.

I new think pipeline existing be a the capacity building it's pipeline on a better of than statement expanding faster, done and cheaper one. can the brand fair reversal the that and

Operator

a Ann Salisbury now from from question Bernstein. Jean We'll take

Jean Salisbury

you little expected Can that your phases. and more capacity a in export Corpus go that but pretty next Corpus new to about export see that might all what's to Investor Day the you you expect during anywhere? headline number you that Christi year mentioned pipes capacity a the why is problem You give big to Corpus detail startup involved it leg actually the bit was in start was II it so this Cactus can't have and

Harry Pefanis

I think there are two issues here.

into it of to our as all, First goes crosses Ingleside Corpus. over pipe

coming So than into Corpus. be into service in Ingleside we back the think faster leg will

some pipeline then of progress the it pace too, seems And reason. expansions part docks. a expansions a that's of pipes are and that than dock So yes, there's the the in probably for faster second, are the like little

Jean Salisbury

step-up new And forward year-on-year if S&L of then meet hedged next it the year. XXXX today. of otherwise your CapEx for estimate I wondering metrics just at leverage your to seems a your budget is kind you've like you in or locked any was maybe on and curve slight or where based need is

Greg Armstrong

the capability then mean, makes would it's don't combination. hedges that you we're to that commercial the you don't issues find cases, hedge I say out have in through. clearly, and are, sense. a want some a company I when it There to follow physical or

we to XXXX. year-over-year XXXX, But So statements expect greater XXXX than just we making enough the felt comfortable that increased and there's balance. be a we

Operator

question Company. We'll Tudor, now & take from with Bean Colton Pickering, Holt a

Colton Bean

that read-throughs improved operations facilities base or flow-through updated there there any are guidance. Is to the on the So timing? just divestiture of a

Willie Chiang

across... We've None on the better little latter, nothing to a do with seen performance just divestitures.

Harry Pefanis

Activity...

Willie Chiang

Yes.

Harry Pefanis

At number a facilities. the of

Willie Chiang

little for storage, performance some our on expenses quarters. gas chatter the of terminals, between although through slightly input lower in More year, a some better crude operating

Harry Pefanis

forecasted. little activity more rail A

Willie Chiang

A little so... rail more

Colton Bean

I guess Canadian on volumes. a on the some just follow-up crude And of commentary

onto the looking noted Western system. you updates last you guys Any and Wascana. think And what at there capacity quarter are talked So impact around there upstream and you about the from that? Corridor timing cross-border and expected to expand opportunities volumes then the apportionment I to maybe some get more

Harry Pefanis

are I mean, projects still any Those think developed. continuing that to projects I updates. advance. we're are have we those don't being that timing are

Colton Bean

oil intended that's be And mostly border? moving light across to

Harry Pefanis

Yes.

is -- extent. to think Not to Canadian a going capacity. going some in constraints So limited be will the at western going quantity, about not we but talked this corridor I It's debottleneck Investor it to to help Day. be huge be

Colton Bean

And that's...

Willie Chiang

then And Colton...

Colton Bean

just Mostly in…

Willie Chiang

I ahead. interrupt Go didn't No. mean to you.

Colton Bean

was the going you for capabilities if Rockies I just further any existing if to intended connect downstream. to there, that ask was refineries had

Harry Pefanis

Well, we're Cushing all those way the connected on pipes. to

Rocky Cushing. it to could the have that Mountain all crude, obviously, at first refiners So but move shot would the way

Colton Bean

Appreciate it.

Willie Chiang

desires our and bring comments. that Wascana mention in did to barrels I our more Colton, onto

Operator

with Wolfe We'll now take a Research. Stanley question from Keith

Keith Stanley

the CapEx. revisit with wanted to plan just I funding higher

flat that you stay So expect in the you X financial at said billion, no incremental about so funding. debt to commentary

on could GAAP on more the other incremental any the is CapEx? bridge then update you And Just sales? or you still do how Just asset there? million do also target, the $XXX

Al Swanson

that principally the program. the I Yes, retained in cash be potential on but money we that we've flow quarters, next posted very our margin the plan. And there we two, will come feel back clearly, mismatches will some over going funding comments, believe be increased mean, sales capital that to of between they're our comfortable funded is Clearly, three by some to our asset us quarters.

Keith Stanley

the million $XXX though? for assumes still asset sales it So

Al Swanson

commented haven't work we prepared not no, it we're things. successful continue that as the we I I modified go target. And up in target to could have different remarks. on we but, Yes, updated that mean, if

Keith Stanley

and pressure projects? little new contribution the offsets earlier or guys of a on upward fee-based out some to is from we clarify as projects, think II, putting The you update going it's message and to the CapEx sooner the guidance next there XX% growth, XX% off incremental coming thing that the the are of of should for new are the quarter, and to as from one this in And kind Cactus to indicated you well. XXXX, new elsewhere the

Greg Armstrong

lag say get to you full earlier, a question mean, fair you lot of and time between the the we're I the time somebody it's adding think million, asked a run-up. that, and there's capital, capital a I but $XXX incur

that end of that in through carrying again think XXXX is going coming I of really the Maybe rate Cactus run so show based in Sunrise, the from we were months experiencing raised into it's that's just plus most we'll fee-based combination volume new this plus a the projects off some a is these really conveying uplift for up. beyond. we're all capital to have, XXXX holding late XXXX into that momentum of So, of but the of carrying momentum XXXX. we projects XXXX XX% be year. the added the from just we're from the through into XXXX, And visibility already contribution further of uplift at it's XXXX XX% of that and message for incremental -- of that then incremental most really we to our XXXX, coming the XX uplift show And out still to on uplift XXXX of will

Willie Chiang

we've run Keith, is from year-to-year. we've the Yes, of pretty impact the rate seen has building been substantial what projects been as

into you second in If start next significant a certainly the of the project up a carry-through half the you've year. got year,

Operator

We'll Patrick now Wang our take next from from Baird. question

Patrick Wang

from one a quick me. Just

the XXXX, or Just anticipations And to are customer around tone those can related leveling activity CapEx situation? pull-forward off you current a reflecting heard then if have they potential purely elaborate in production you comments, activity? levels for for on decisions at those at are all new any all based

Willie Chiang

a of that. take I'll Patrick, So piece

of forward that pull basin help these projects we really lot the the evacuate. CapEx On pull-forward, a

shared So forward. we growth accelerating as it. It's think tanks in at we been I quicker it. some we looking projects that as the early with about we've Certainly, anticipated. the year pulling talked was everyone it's than And

pulled have that lot So of growth the a is basin continued is coming. view because really we our

Greg Armstrong

wells in specific We've better laid area our than as some I a them what overall, -- The a on forecasted. had somebody's than count's coming we I up somewhere certainly areas higher what in curves. are where they've say else. rig seen but we or where fluctuation would say, down the good modeled given type in rig something should picked

they're forecast our did horizontal XXX of and now. running XXX we about think I off rigs right

we're lot DUCs. just so a And building of

putting and need we are have shelf believe wells inventory them. to to on and for in them those off them ready ultimately, calling people and So just the to drilling they're if be pull them and – shelf, you you going want unless saying, we the DUCs

they'll they is I know markets, got they've start of completing markets. completing. make when money part it oil them think start they'll give make it So is, production. tariff We'll we and they'll If

Labor for addressed. ramp seen what's concerns It frac fairly perhaps far some actually continues going big about as spreads fill enough out an will you pretty probably be you're to be incentive the can we issue see. But think We've we it's being need. had going of that been up a that's there, be overall, we to for as if that give and the So outlook again, available, there. on. to appears robust able

So item volumes to the far, gating out we of on production be don't infrastructure the Permian. building want

get the got And guaranteed markets. the producer our and system world Certainly, and makes so therefore give accelerate. by to chance takeaway sense that on the pulling this to stuff those just the the in forward, are we've transportation where we've efficiency intra-basin can given now all capacity we

Willie Chiang

at be a data of we've what typically we've point today. another to of talked definitely crews the increase to, may kind surplus seen an been bit a basin. and just completion from we've in people crude have where crews limit point, And in completion Patrick, in seen completion little we even the there

Operator

Jefferies. Sighinolfi with from We'll now question Chris take a

ChrisSighinolfi

could. question in et answer to aid your clarification regard Sunrise if how appreciate to I the up one of cetera. generators, comes Willie, I with Jeremy earlier

assume should something Cactus Sunrise capacities wondering any So I published both relative terms earlier in-service sizing. and or as in just advertised the if of we to at for was would be you what diminished if earlier

Willie Chiang

way. if way designed having would generators a power. think that capacity generators regular not permanent have the is power. our the the solution, we've And you under Clearly, about optimal it you not system, capacity want is I Chris,

probably we'll how to up clearly, see will slower the start go So have ramp generators. but on things and up

Chris Sighinolfi

would expect by guiding before have profile you under time power you way But to regular the were XQ?

Willie Chiang

Yes. Correct.

Chris Sighinolfi

Analyst But in point, a held is but regional operationally get little either follow-up position you guys in on it about a shipper your seen position sort before, offered the regard have the my stocks itself at think And I'm a curious, the there Investor then realize weeks than Cushing changed does consistent draining operating we've thoughts since was I problem decisions that point? Harry there. the thoughts Greg be market differently might of seen levels position. or Obviously, a a Cushing, some a we certain in at Day up of to at might a Day. similar have peers, you have different you but your big become just do certain at it I or

us you curious at offer could that just front? operationally I'm So anything on Cushing,

Willie Chiang

I if make, ability I'll low, jump key limits testing more more lower in. of inventories are of to difficult it that difficult is. comments operate. the much maybe ratable and to and to think transfers the It Cushing Clearly, more -- and low the make the movements is inventories we're a and others you is can at you have be what's couple

move assets less area others. I have So flexibility. of our the some less as if in far as priority think call are to clearly, connectivity what farther In ability good think cases, I barrels, us kind we you the so you're perhaps than and hurts away, it

Powder think this move got not level, DJ may clearly, barrels volumes even far may back you out other barrels. to and it about also to as moving you've is go as out able Cushing. think and When be the more You difficult of at that to additional longer that barrels term, move forth. River Cushing production come Basin, But into and

term shorter a right this now. think is I problem So,

three Going more years, could forward, couple a I picture. be in think it a much different

Greg Armstrong

once would direction you're full on, to year let's Cushing. in moving or directly be say, indirectly about That's day we effectively bring barrels out, Sunrise also into sending I point that now. I a at going effectively, of volume, currently the first mean, XXX,XXX right not

the and going also down low I you're to you fly lot you're going I an way. over see on you would tanks. put up say to sitting Cushing think roofs there the and oil tanks airplane very, is on very today it, most and Cushing, in if Willie alluded of yes, a relief kind of our So, in to just the see

Chris Sighinolfi

result, there raise that does Do the on cost mean, move a within to more difficult I it's me? activities you're of at you if follow as levels the Greg, hub? sort And low running and

Greg Armstrong

it that so Well, know coordination I just becomes the don't and much. It supercritical. makes the complications cost raises operating operating the

Willie Chiang

Yes.

Greg Armstrong

the parties a kind hub. be of for operational able part not make again center of chance third where deliveries of to the their And it there's to

Willie crude That's XX about receipts capacity. over for to than ago. that tank the said, built As more a be That's every relative probably out to we system to me anybody XX. designed say manifold just do Hard we of and move else because years pipeline. little to about disproportionately deliveries but able simultaneous

raises it cost, and some on creates if but the opportunity able it. So that capitalize can market it cause the don't complications. I you're aberrations And to raises that know it

Harry Pefanis

Yes.

it's Willie the I get difficult you the inventory, think early key behind on you're is on and ratability there low earlier, catch touched really in because up. month if very to

Willie Chiang

pull you about do a time when think all with and can more can bit difficult. move of just you a out get low it just very, makes only you Yes. inventory, period the the of batches, inventories volumes little Typically, over very staging larger longer it can you

Chris Sighinolfi

clarification hopeful, Willie, my it. very really That's question could guys. to said something you a earlier. I if limit appreciate ask but I I'm know over I

you the But directly tariff, there and that to the Cactus it. increase, the an if I tariff the pass or Sorry missed steel. cost? partners cost Is it's stemmed the do on eat opportunity federal through that from

Willie Chiang

owners' costs. the That's

Operator

Danilo now Juvane with We'll Capital. a take BMO question from

Danilo Juvane

funding. I just follow-up had question one quick regarding

possibility to going trigger be here, would [indiscernible]. equity forward needed You issue the will need [indiscernible]? mentioned but no What for the

Al Swanson

we last fairly there? fallback. of foresee year. we thought it we've some to been that consistent that counting cetera, it Is or sales for, et don't to. the with other tool reason, still say, for recently, asset we is come that the doesn't but that a don't we were There's Again, need opportunities fruition, need That's we expect how would to. the on if, the be done But have see several

Danilo Juvane

forward? your becoming so recently versus M&A growth assets Permian are And for some thoughts sale, what organic maybe going on in available the

Willie Chiang

good but always a probably and something look We go we lots it it synergies, buying we're makes to with we're unless differ at that's at going not chase. lot sense a look of of M&A. at things Well, value

Danilo Juvane

But less year, question think me, S&L. balance guiding the stronger negative XQ Should think initially the has to guidance $XX Last guidance Or I EBITDA you what from by being you do million. increased you're we the negative? of should of XQ than number. more of as we to think for with now a much expected?

Willie Chiang

is guidance been we that. too think haven't Well, fine resolution quarterly -- too is -- the on I

with we So year's the -- stick just would guidance. I'll

Roy Lamoreaux

Hey.

the top hour. if to feel I of going we'll and beyond me we're more others free think or questions. on queue, in the question. to we're take question. We're one going one more to the your then afterwards, with take -- analyst But we kind Brett there can through And of analyst walk take are get

Operator

Advisors. question final Becca our take Followill from we'll And Capital U.S. from

Becca Followill

implies about else to or $XX there is Under something the billion segment, going -- billion Is there is the Facilities that the the wire. In half be second conservatism versus that on? $XX the would first guidance half. down

Al Swanson

Becca, to, first the relative really No. strong, I say, mean, second quarter quarter. was the

to just look slightly I but between some we're much it's no. just in if second you so pretty line, chatter And quarters, it quarter, mean, at there's relative down.

Greg Armstrong

And asset sales.

Al Swanson

that was There minorly. sale year. asset closed an this during Just

a is bit little it. that So of

Becca Followill

And Willie. then final next ahead, go the -- question and

Willie Chiang

that I noise between say so impacts some and it is going as there of was quarters timing that to operating around costs well. also

Al Swanson

average Yes, within $X XQ, I million for the million probably average -- number. quarter of and $X XQ it's if second that you think them,

Becca Followill

the online, And is then putting within generators online so but get question the -- to Cactus by tariff. incurring II higher not it's pass-through these last you're earlier on expense a

you thing in customer else a or this goodwill is exchange? get is something there So that

Harry Pefanis

talking... you're Sunrise,

Willie Chiang

Sunrise, It's Becca.

Becca Followill

Yes, Sunrise…

Willie Chiang

Cactus, it's little all it's the Sunrise. above. said but You think bit a I of of Yes,

Harry Pefanis

customers systems well. it of our our takeaway think about it help. capacity, through that When on got help I you mean, does we've pulling lot business do gathering a as volumes, does so

Greg Armstrong

can more and the we our... gathering the can we move on mean, takeaway, I on our move more

Willie Chiang

Intra-basin.

Greg Armstrong

...intra-basin systems.

makes So basis, into assure incur And I play. again, the consolidated value to cost... on you it a comes sense incremental chain that

Roy Lamoreaux

think for look we the forward this call. close all it we're forward off coming updated We joining. keeping appreciate the to time, really go in At you I you months. to and going as Thank

Operator

participation. And once thank we conference again, conclude for that does all and your today's you

disconnect. now may You

Plains GP (PAGP) 12 Aug 182018 Q2 Earnings call transcript