PAGP - Earnings call transcript Q3 2018 | Plains GP Holdings, L.P.

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Operator

Good day, everyone and welcome to the PAA & PAGP Third Quarter 2018 Earnings Call. Today’s call is being recorded. At this time, I would like to turn the call over to Roy Lamoreaux. Please go ahead.

Roy Lamoreaux

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

of our SEC. today’s factors PAGP’s included the could are appendix our PAGP’s Today’s also Important included presentation we PAGP’s since are PAA’s contain differ results latest SEC the our cover results that provide in directly PAGP’s to comments will cause forward-looking During of that as on our call, most correspond schedules filings outlook. quarterly in adjusted PAGP’s in slide financial to information. include GAAP actual performance. additional EBITDA. do materially will with website. reconciliation see have some filings references not reference measures the to presentation specific be non-GAAP to and Also the intend non-GAAP with of Investor annual for we consolidated Information PAA’s results can separately call. included measures measures such to appendix the Relations comparable results. financial for financial these from Please within section materials A PAA’s found We Financial Instead, the

hosted Chief President Al Swanson, and Our by Executive Willie call Executive will Vice Chief be Chiang, Officer and Financial Officer.

turn that, Planning to available now Group President I Additionally, With for Strategic Officer, and Commercial, Acquisitions portion President, Vice the of Senior are Willie. Chris call members Chief present and management Harry today’s Senior of Goebel, the team and and President, and Pefanis, Jeremy our over will other Chandler, Vice Commercial call. Q&A senior

Willie Chiang

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

hitting the released the by information begin we of me Let today. highpoints

X reported third outlined and detail, our afternoon discuss results this Al we more expectations. quarter that solid exceeded as on will meaningfully in Slide As

preliminary both continued logistics growth to will XXXX of Al fee-based or in S&L. quarter for our reflects the segments continued quarter remains expectations the increased anticipate our guidance interest and after XXXX, updated fourth into supply our momentum from reflected We adjusting fee-based segments, prior over-performance in provided to Pipeline, in and sale continue and in through as and an Our we growth with in preliminary our line guidance of results a XXXX. our our our which these for update executed provide S&L for reflect BridgeTex recent the was XXXX and for XX% after which guidance. for trends

XXXX characterized have We as year execution. of a

we achieve guidance year on ahead and objectives XXXX. track our first within half remain have results So delivered of of far we to this our de-leveraging the

asset base largest American are are industry visible source across model holds execute and world years the excited as benefit. to the we our and what are stakeholders. to supply. well believe as to and The demand constructive. basins the to leads on continues to our In most positioned fundamentals about growth business Global and X, over next future grow this and our and Slide for anticipate multiple positioned production liquids we the the illustrated continue of crude oil North of several growing we are benefit U.S. that We the regard

million production Specifically, annual expect up forecast growth our in we or and similar rate a in we in to plus gains for production next Permian several continue Permian, expect barrels years. year with exit volumetric the X.X end to line day the be minus

on new Cushing, Eagle that regions, driving producing key activity for including Williston, opportunities. serve River Oklahoma. well to To market Additionally, Mid-Continent, systems. our U.S. should X, Slide capital continue takeaway expansion Diamond we optimization key we on capacity and increase options capacity as efficient in is Red combination illustrated to expect of is demand the other and which and progress Pipeline to to and a Rockies, including drive our increased through positioned that Ford, increased solutions flows system This existing centers, end

assets to and provide be plans largest driver plans potential are expansion line to current coupled owners pipeline, and purge growth connect remain Capline pipeline. at systems to for distance will our Diamond short The advancing with capital project the projects Permian are and leverage to business. to finalizing programs. reverse our solutions returns would into Meanwhile, Capline. the guidance of to existing These potential capacity relatively Pipeline incremental a efficient a extend our the the attractive transportation Additionally, be our the

our Permian of million the than slightly we activity more increase total, day, in-service by expect a As of X, partial Permian expect of we shown impacts in of BridgeTex year XXXX average X.X to approximately XX% barrels or X In full the day. the and than volumes barrels tariff full year sale Slide tariff are offset volumes earlier million Sunrise. less a completion partially timing timing

much of as we early team volumes publicly meaningful expect projects. this in quarter, happen. supported the add Permian expansion Permian fourth expansion well were we Sunrise commissioning our the bringing the I by needed service tariff of into continuation of project With respect our to to growth a would and production early, into Sunrise capacity market. project, acknowledge de-bottlenecking placement in the work, a multiple expansion early coordination By as hard the our to For Sunrise uplift to creativity able like service of making and

late XXXX balance XXXX. targeted continue by Construction April to service third the of good partial of on program. full II on also our our We of capital Cactus progress and in-service is with quarter pipeline make for track

with intra-basin advancing footprint of capacity projects Additionally, complementary expansions and multiple terminalling de-bottlenecking storage are and our on expansions the system schedule, throughout basin. gathering our along

anchored shippers to make commitments. also The ExxonMobil third-party ExxonMobil meaningful with to and we be additional We the continue by continue progress JV. project work on will on

We are also through commercial joint working finalizing agreements and documents. venture

and signed Letter Midland, Intent of system the As additional in participate Pipeline venture. to Midstream, which midstream from a the at including Lotus Centurion Petroleum, assets announced a has earlier, joint Occidental acquired terminal recently

are in turn With join the project the project on We the I future. Al. call the will have to pleased JV to over to look forward near sharing updates Lotus and additional that,

Al Swanson

Thanks, Willie.

mentioned, the exceeded is performance due Willie Permian the well to expectations a NGL the our As of business. This differentials performance strong segment. million as arrangement result $XX primarily third our recovery strong and to S&L our audit profit-sharing in primarily in in favorable our quarter results Canada S&L related regional in basis as one-time

we primarily asset transportation growth by X%. segment to partially was decrease offset segment facility adjusted in volume reflecting million EBITDA of well. year-over-year shown adjusted fee-based sales $XX of and Slide due transportation As Permian on asset by X, sales as or EBITDA Year-over-year, was growth primarily EBITDA reported million driven segment million $XX segment $XXX adjusted growth a of

interest net XXXX on $XX performance sale which September shown our The we $XXX billion a million. As BridgeTex quarter strong year. of We XXXX guidance of million. $X.XX balance Pipeline, our X, point to S&L the lowering our guidance third for minus previously generating gain proceeds driven through adjusted also I incorporates X% our Slide updated our stronger the sale of XXXX EBITDA increased reported or will million. in PAA our resulted in segment XX out guidance on closed or in the than anticipated of by of on plus fee-based expectation $XXX a by to and sale the million by impact $XXX results XX% that approximately

represents of to Retained million complete $X.XX. CapEx updated approximately operations. per due more year ensure This guidance reliable to the will our common we for billion common and DCF or pipeline. These XXXX approximately unit is million and repair certain be a to of of projects I $XXX during DCF part with flow segments our than X% Our that decision billion implied increased cash XXXX ongoing previously our unit unitholders, XXXX. work commitment per is XX% our to $XXX $XX replace are XXXX or to anticipated implied to safe of a to the maintenance by ability instead approximately over in note $X.XX expected available $X.XX increase also million. resulting $X.XX

indicated million, guidance result approximately In guidance provide $XXX our which XXXX XXXX And XXXX XX% approximately being to equated EBITDA which to performance that EBITDA $X.XX S&L billion, a to we guidance, also directional $X.X represents preliminary would was adjusted total up our guidance, over BridgeTex call, of growth S&L August to XX% guidance, sale I billion. our earnings an adjusted will for addition guidance. On $X.XXX of we previously provided. fee-based directional the The to XXXX XXXX update XXXX likely outperform billion. discussed reduction

based But outlook guidance as XXXX are S&L our definitive we as BridgeTex and CapEx continue intend to updating producers on for will as XXXX we their the Additionally, and preliminary more to well incorporate fee-based regarding for data assessment, current guidance current plans our February sale our completion follows. our timing call. and from provide we gather on

expect the EBITDA billion. minus We XX% sale. fee-based unchanged XX% to fee-based to year-over-year, minus to is XXXX segment increase our guidance BridgeTex plus $X.XX growth adjusted adjusted which This from equates previous or plus XX% essentially as or for

We to as be is slightly and expected our XXXX segment driven flat of growth expect our to outperformance to a to facility degree all be relative XXXX of initial reflect thus down this far guidance. results fee-based our by segment transportation

billion. would adjusted $XXX million. expect EBITDA plus or will total XXXX S&L minus minus $X.X outperform at XXXX likely We our or also guidance that plus Directionally place

the pipeline XXXX differentials level to Although upside lower and we comes expect in segment for as we Canadian a XXXX, capacity adjusted return potential into some EBITDA segment as of new we have service. this S&L our Permian both in narrow will to anticipate in

the S&L As to intend able capital. earnings, a either use generate proceeds to reduce fund are or reminder, debt such to we outsized extent to we

let call me a to the plan. update Before back handing de-leveraging Willie, brief our over on provide

Slide to total to total to ratio These a adjusted ratio debt a and X.Xx. X, XX, metrics closer to September being ratio are X.Xx a debt long-term ago. targets on and illustrated the at of with debt year PAA adjusted EBITDA down of our had X.Xx EBITDA from adjusted As EBITDA

expect remains note will that plan at billion. unchanged the our As capital XXXX. Willie to our mentioned, of de-leveraging complete half in $X.X program we XXXX/XXXX I combined first also

expected of February update JV However, we full our driven project addition year million in capital program ExxonMobil to sanctioning guidance XXXX on plan the level the projects. our an to call. to increase plans capital primarily $XXX provide XXXX of updating new conjunction with in the progression expect to other our on $X by We billion closer

share flow cash we the flexibility, eliminates plan completing that we limits, de-leveraging are come some distribution financial our are credit our plan, factors, time on with metrics operational equity Slide support to center to how programs. we retain and fund common significant level consider Multiple of and forward. board over that commitment BBB our on issue will consistent management going ratings on and thoughts to level to of not summarized As and need manage if XX maintain wanted routine closer to capital a the a mid growth to

With in the as back over to first de-leveraging of to upon these that, factors the potentially Willie. turn call With distribution in to plan, we be soon expect payable I mind, increase the May. the distribution a position as quarter XXXX in completing will

Willie Chiang

Thanks, Al.

time be meaningful goals. As each XX, our these to productive you a making pleased on progress can be Slide summarized and are XXXX see, organization we as it continues real to towards of for

the over trust built and I them entire opening business the we thank as the I Co-Founder X. me October CEO make transition. that team smooth for an had CEO and to acknowledge efforts sure effective have and incredible placed questions, the Armstrong, wanted XX-year Harry to retired of and in Greg, Plains to the and they a years Before for call thank want Greg

acknowledge recent we we As we industry the the company steps to taken the and forward, have for look the position future. cycle

continue to in portfolio while further on sharpening through advance organization to initiatives continue the focus the excellence, and multiple business operations to our improve future. We our cycle, our invest optimization for

emerging North that areas. As a we exceptional result, key American growth asset believe is in stronger a an as Plains footprint entity with

safe, reliable which said of we continue self our flexibility, financial capital plan results unit should XXXX of for business complete and routine in will I the to us over This de-leveraging position our strong to the expect in call will half XXXX All that drive growth our to XXXX. while over plan, equity growth time. to portion fund delivering the focused provide expect us We on turn first enabling programs, significant the Roy. execution partnership attractive be well DCF remain the beyond. responsible and and we to intensely of

Roy Lamoreaux

Thanks, Willie.

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

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

Operator

Instructions] from [Operator take Jeremy our with first you. Tonet will JPMorgan. Thank We question

Jeremy Tonet

Good afternoon.

Willie Chiang

Hi, Jeremy.

Jeremy Tonet

versus will upon Hi. you still Cushing, have here just XXX refineries, third higher now start the Sunrise off the of see how guess is is online there think you and XXX capacity a the got takeaway a was EBITDA you provide can And or flowing. in Anything day Valero if XXX,XXX XXX I seems that’s quarter bit and to are could you barrels a I this that was I with into seeing here? the fourth how to just other from on see there, wanted I much you like there you And level? it more expand quarter. quarter what in detail said, wondering ramp moving

Willie Chiang

cover Harry, you want to that?

Harry Pefanis

Sure.

day. commissioning So, probably October, generators full day. barrels around or be developed in XXX,XXX a few to operations more in with we a Wichita at XXX,XXX XXX,XXX around It’s markets area. XXX,XXX started We the in would Falls Initially, a barrels takeaway saw of Sunrise sort out capacity we November.

So, but that takeaway we the day, about can that’s of the barrels move sort today. capacity see a pipeline XXX,XXX

goal try try additional and maximize options. Of is our course, throughput to takeaway find and and

Willie Chiang

Falls. markets So, initiative continue is to for downstream obvious Jeremy, an Wichita find to those us additional

the is going set forward. where So capacity using to today XXX a are opportunity the we math between

Jeremy Tonet

you helpful. there. Thanks. see I you couple up stepped part quarters maybe capital as just the the far around on And when talked is some front higher, when up you this and get And real for to just of There guide the can sketch NGL? this you thoughts as buybacks you super-sized What or composition? are reducing want earnings, bit very in or back is debt and one-time S&L lift know quick like. And to as but of of putting increasing crude dividend, more what kind the see any you S&L far more the as there year dips wondering of past it’s weighted the nature? it’s half about touch or what to hands kind a That’s I the get these smaller and trying this Canadian as it looks here business, our number just a wide funding of into kind

Willie Chiang

Four questions.

go Jeremy So, were I your on I – ahead, you particular will, talking maybe sorry. about XXXX am Jeremy,

Jeremy Tonet

else philosophically Yes. was I guide in thoughts? just S&L, of come share into XXXX also picture the particular half or on just being mean, weighted, a it buybacks front feel for the that get in there can but could to anything you for trying those

Willie Chiang

all in until the year. numbers think not or really So, expect we to differentials that shared let half here of with the the can I we jump and started Al me did the margins start to as S&L get off Harry the widen see back then the fit. When they year, and we

also is differentials And some So, primarily the we we fourth differentials capture. pipelines. the we able think quarter for I happens there differentials some. that constraints quarter. think been around you that maybe that into able And have and to fourth what’s primarily we that year are in with Canadian to Permian differentials There actually kind S&L come when the catch crude fruition to able about went the additional crude in out if were to year of is thought of most widened the obviously capture

lot value to capture Permian segment certainly of really there to this persist comes we’re flexibility to pointed XXXX a come the the really to this want buybacks, that amount is remarks, of the don’t the us into an I l what number able having going commitments time XXXX on on that up takeaway I capture to of period of starts a after out some you Pipeline of company allows So capacity as that S&L there hits bolster do his in of some once the during arbitrage quarter crude that our but Cactus this the to opportunistic of so that in prepared opportunities get online differentials pipelines, is third and by gives capacity from to there’s we to financial expect late different future. are message is limited options us for but our so until be view able flexibility think a the should it there’s take be don’t

Jeremy Tonet

across as sounds versus the it’s it’s the to just point past the ratability first the in not XXXX, on like S&L half? seasonality the seen And toward year clarify Great. second normal one with weighted we’ve for half

Harry Pefanis

necessarily more year than do of of months be market’s year for probably they the than to of second quarter’s the other year are just you they fourth year. the market obviously a Permian going impacts in of a half and of Not differentials as in if balance Canada, it’s the as you some in so going sort look much to there’s to market the probably definitely they the the so second might few curve wider that Permian, curve that it’s of pricing aren’t turnarounds the the are the if half weakest at year quarter next the first be of some outweigh heavily mixed look the quarter, at the pipes first to the so there’s the but or bag differentials contemplation the the compressed service in weighted it’s the of some the are

Willie Chiang

the but on based first seasonality differential our overlay and you’ll to seasonality a you’ve got NGL have that business do see fourth quarter still on Harry said, the we crude between NGLs. forget still some as portion don’t that Jeremy, And of

Al Swanson

I’d maybe the on And and focus increase the one clearly that those first Jeremy, answered Willie the is balance the be clearly, using add we ‘XX future, the our but capital to at buyback to did priorities some on just profits. would program first point follow-up excess mention I in point expect S&L our sheet. within S&L

Jeremy Tonet

this said queue. appreciate get back color. in Thanks. I the I will On the

Willie Chiang

Thanks.

Operator

Morgan Tom Stanley. We’ll to with go Abrams next

Tom Abrams

for that of are Thanks, that to there combining out your X at up guys. the additional wondering for and some just map projects all partners? of if partners end on Page line, looking If also the venture? I was may looking comments Permian your your of maybe graph all looking the joint pipes other just implied additional that Houston with

Willie Chiang

why you don’t Jeremy, that? take

Jeremy Goebel

historically, we I Exxon’s say looking really honestly, make but supply, are an as our plains at to concepts can’t would always projects in we’ll as third-party project for comment on liquidity on on call looking we’re go Yes, our the merging but foremost at you’ve look foremost shippers seen first shippers the Plains have this in have own we for third-party at looking we attractive and we’re we’re demand, have we advancing project the Exxon enough speculative with said we from with opportunities first and project time. and about we’ve Lotus

Tom Abrams

if about Houston know don’t over get in connection Your more but not St. talking to James? Houston friends I I Corpus. a or about wanted need of crude ask toward from coming in through a follow-up crude a Magellan the lot get there to a Is I to area?

Willie Chiang

tell questions yes. but will different you two [indiscernible] differentials

Tom Abrams

likely I’m future. trying the that in of think to are your projects additional

Willie Chiang

$X so St. changes is over East and and in James. differential LLS $X differentials -$X.XX clearly it’s Houston’s demand $X about so there’s WTI The

Jeremy Goebel

Canadian way that run those, barrels of to so well two are is think be James there dependent get that the get to for them. and most be St. looking the could there efficient excited would both of components Some home in I as to about a we’re projects for grade and

Tom Abrams

queue I come will asset thanks. back later sales [Indiscernible] and turn back on in

Willie Chiang

Thank you.

Operator

We’ll UBS. go next to Shneur Gershuni with

Shneur Gershuni

Good afternoon.

Willie Chiang

Shneur. Hi

Shneur Gershuni

only that how XX to Just that guys? the but into questions service capital it here CapEx ‘XX roll XXXX impacts growth, being a differently, of benefit and will of as are XXXX? in of I’ll suite going, is much material your terms how XXXX try into increase working we it placed FID much can how’s parts EBITDA on? for to Just into a XXXX the and couple current fee-based and keep projects being only said future You partially capital you’ve in invested not of well see given

Willie Chiang

going there’s up think that I then XXXX II in Willie here do road lot that because of for of queue don’t to number message should I forward in to number currently Capline drive the and projects is the keyed of can the we I we’ve XXXX XXXX projects takeaway there’s projects a want we full plus particularly in diamond up and so growth XXXX be, into and the sanctioned, of in between we Shneur the project about get growth get around a talking is a we’ve which have. QX, take projects this with a aren’t that number should you starting of late a think reversal that are or got have got kicking shortage Cactus now the we’ve Bakken no

Shneur Gershuni

color fair extension believe enough. Wichita take Day, kind could as Falls the follow-up projects you James are you that? other still there all at of those about of theoretically the in Cactus I a Analyst that sort as of around a a sort hopper are way talked ideas, I you the your wondering as pipe can St. that give are you well in they to considering potentially us And III bullet Okay, or just some was a developing, if they have

Willie Chiang

one project Longview say into we that Baton energy laid given them Cushing, to projects actively being I we’re Exxon sets it it are the fact the alternatives actually backburner advanced our the into pipeline, would Willie could thing allocating III is just still more out is those east Rouge cost-effective our going is shorter-term a of add lines B a the up with to there more strategies come take we for projects and certainly lot of our the other extend accomplish the Longview from makes and system, one, A things new from versus of to of more Cactus and another which just to announcements a of resources that some this may sense. River to of dots between do extend to same then talk system existing us, system Falls, one alternatively if out solution that our are Red Wichita and solution so connecting existing transfers complete there the connecting be to new two pipes how the tie pieces of to just is hopefully

Shneur Gershuni

makes back Pipeline sense. storage. will for And queue. totally maybe and Thank the That I about color jump the in you the ask [indiscernible] Exxon

Willie Chiang

Thanks, Shneur.

Operator

next We’ll with go to Barclays. Christine Cho

Christine Cho

Hi, Memphis everyone Like, going were in with much years? parties, how and to down months do that reverse how an from time to would and all agreement connection? you if or do time just tomorrow to you you Are your need capline we to this do the commercialize? or talking for the need from much extension Patoka reverse reversal, be and is it

Harry Pefanis

on a faster probably timeframe months accomplished longer a where that a XX-month it’s be timeline. in be into XX-month service months to started the of in the have system the some if the Collierville extension we purge North is south so we a placed close could bit we will maybe little equipment, it so from need the XX of the XX end end, an end to of pipeline little reversed phases It’s not probably of south we be would in to something need process to bit Memphis today, be line, system could

Christine Cho

And down when okay? are you or talking South Memphis like what’s south, say you from

Harry Pefanis

South. Yes, Memphis

Christine Cho

from then Okay. And you down? when north part the Patoka all the is say way

Harry Pefanis

too control. not our Correct. in it’s Patoka And need the connecting so work carriers at all some

Christine Cho

that guys full, to how in pipeline should to your been the them running Permian the think with to over of you long-haul that Okay moving conversions and how crude announced or the then of risks the some your that with to we and pipes transportation place we should any volumes NGL on the then have mechanisms in your think the about that have, excess MBCs happens, for system that S&L? on volumes extent next protections view? to year? SKU? Are the about does How keep there impact And in

Harry Pefanis

it year. best on in I service given projects that relative think our lines is, about reflects how to way comes our do guidance think view the all next our forecast the

Willie Chiang

kinds also there Christine, to different of And as don’t which you we’ve chatted next commitments, a acreage are falls of lot system forget minimum got number of right? the dedicated be the is and there’s years. volume a in so dedication, contracts our you’ve commitments, which addressed are off nothing longer that So, we’ve got before, there would cliff tenured

Harry Pefanis

had ship or We walk our can pipes, you that those legacy volumes. today view carrier are just common ship systems some our and today on reflects up not so guidance

Christine Cho

Fair you. thank enough

Operator

We’ll Fargo. go next to Michael Blum Wells with

Michael Blum

Hi, good evening, everybody.

also up be be source come and barrels light question the So sooner? theoretically from so could three could sourcing with Just Bakken on or from reversal Capline sync would Patoka, those would you suite you heavy one and barrels to barrels Canada? that part sort line having of

Harry Pefanis

in volume by be than Bakken Well, connecting earlier could as assets had it portion that Canadian it south mentioned why it carriers will on be a I Memphis probably from receive conceivably reversal but timeframe a Canadian and by the will barrels longer well. driven dependent that’s sources is

Michael Blum

at get is, guidance assume that’s you years? in? locked to gives put Should trying I thank that had in you helpful, either I’m what and that’s position the change you is S&L we out effectively In then question second Okay, hedge what XXXX? words, for ‘XX to just on the for to QX your other basically, there or for both confidence wanted know, any

Harry Pefanis

same we are say our always the are our the it’s portion not would reflects and was obviously active in our hedge call. I and view that for guidance that last the position it so market of unhedged the the market position

Michael Blum

you. thank Okay

Operator

to We’ll Salisbury next go Bernstein. Ann Jean with

Jean Ann Salisbury

of a XXXX of guess I the for said couple XXXX of I that spell would just from was? fourth it a me that guidance million out the from for what think guess kind you guidance quick be higher came just ones can BridgeTex, that quarter from had out you I out estimate of you which bit coming Just seems XX little

Al Swanson

math, with pipe of principally the to If is if had you XX BridgeTex out the obviously the closer you that’s principally just through vast the the coming X.XX numbers BridgeTex the walk logistical XXX to full right. constraints the was you so the it of take majority

Jean Ann Salisbury

us seems on give expectation go you. of on be kind the that And had for actually which pretty risk an path I all pricing from once be, be more to Gulf are to to Cushing in maybe Gulf? more barrels Permian, the Cushing for a draw is doesn’t differential the think you bit there like flow a it can curve of the the forward than thank get the will to estimate direct long-term basin Permian won’t pipelines the at Okay, the of will a Cushing way once much and how then

Willie Chiang

is put a go hard Willie happens barrels barrels answer it’s to but this it’s a what answer, to the it. it at a that’s tough definitely hard risk because question better arbitrage to number down, really is depends has Cushing what unless think on are there and Jean as Harry on really I

Harry Pefanis

move has historically, but there we Permian but has in there’s a basin been back plan a crude. pull refiners still basin exactly premium to There you volume Permian been volumes the it’s if when are have barrels from and certain hard the been Cushing Mid-Continent definitely significant times at the just Permian risk look that to Mid-Continent there’s Midland pinpoint for

Willie Chiang

we some hedge movement contracts And ourselves of that movement as for we that for well. also and have

Jean Ann Salisbury

That’s Great, thanks all for me. lot. a

Operator

Tudor, Bean Pickering, to Company. next go & Holt We’ll Colton with

Colton Bean

or any looking barrels afternoon River ticked clarity quarter-over-quarter, light that like to so in Milk of is Trying Good the moving capture spread to portion volumes that S&L they tied some there? up just on Aurora? with Canadian there

Willie Chiang

The not driven Canadian. to Canada in Canadian that S&L by are mainly our production impacts so volumes tied it’s

Colton Bean

just, us that then and process it prop Got can thought update XXX, PRB your Saddlehorn potential around a on give to thoughts extension? impact you that I guess, an around pending of does the capture growth? extension

Willie Chiang

have river already Saddlehorn. that the We into out pipeline of volumes can source a

Colton Bean

to Powder ahead, to were Got maybe it increase pipeline? would to and to be capacity primarily a is the if need the you anything River Saddlehorn repurpose proposition do go to there

Willie Chiang

we’re be capacity Powder are the of totally at that but there a position add anything else volume River Saddlehorn some into in enhancements the be couldn’t to you want Jeremy, Saddlehorn Powder to potential could committed expanding there the good capability pretty think has we we that? you pipeline as Saddlehorn do so are capture well shippers in accomplished to and increases a do it have have of River.

Jeremy Goebel

could we I No, as that on the loop customers budgets so, to are, the a have make we’ll our but pumps there’s expand we’re more term possible from area area I as to our our then some possibility it to Guernsey demand sure additional honestly optimize spend from barrels. as think, River segments depending Powder in barrels and Saddlehorn we the with so options just through demand of actively shots to demand spot capacity basis our the watching what existing capacity in we’re watching longer a think on that in market have multiple and many enhance footprint create get system, demand terminal you line if we’re to there’s contracting you but move capital capital liquidity relative those today pipelines of and on and to the

Colton Bean

That’s helpful you. thank

Operator

Suisse. to Dounis Credit go with We’ll Spiro next

Spiro Dounis

forward first you mechanism not you wanted going just us how or ahead on but or the Hi, can a increase of specifics good there? want can’t increase like and get increase from with what start the just coming don’t any distribution say increase brighten annually to you quarterly afternoon I and sort to I it you what much like realize looks blueprint potential off here but on decide of too whether that with looks

Al Swanson

of which mid-triple want on operational credit the as flexibility, supporting B on we liquidity numbers, sure basis, metrics did to denoted maintaining Clearly, to or flexibility, a annual minimize quarterly clearly, in if but and back, a specific we denoted quarter capital increase are all assuming can you but made we we equity as made May thought more recall we markets for provide share. and ‘XX a look that a either get decisions through we consider need we is normal closer of to both thoughts slide all no reduction, going that for we the time kind as basis approach the as that’s a that leaning were August the commercial numbers our will far versus the step process those and it combination when first all to any so, on we of payable haven’t dial change increases can’t that be toward or we we clearly tenets was slide make make with would focus starting specific comment in we’ll well period at really

Spiro Dounis

seems just here around heard guys peers projects, fair. pipelines think there’s that the you And of natural a quarter extension are your just curious just lot crude Okay on from a that’s really export where on it LCC this major to side? lot if tailored a have like risk but a maybe to overbuilding we the export expansion your of curious you

Willie Chiang

of then at and can pipeline pipeline, trying looked when projects, expense a shippers our like not docks. that the make Cactus are different different is all dock. with I’d we to you a significant look had follow-up. And but a we announced these combining only in maybe been are to I’ll deep-water Clearly, Chris a are takeaway that comment lot found there at Chandler VLCC projects what big interested we

and those. and docks kind are view happens. what there we get flexibility of pike, – beneficial going return it’s access is the watch the it’s plenty number that different to all get there’s a strong that to for see to our built should we to is of and participate, barrels we’re So can we And can us, otherwise, if have and may a get the coast, being we of

Chris Chandler

believe sense In crude monitoring. load for point add Willie closely we’re most more It’s projects one of I’d large way efficient thing scenario forward to only said oil the make grow. is The that we as of Yes. volume going do like or a do continue a export. oil crude mooring that single exports course to

Spiro Dounis

everyone. color. that Appreciate Great. Thanks,

Chris Chandler

Yes.

Willie Chiang

to we go back to Hey, before on want to circle the just clarify. next call, I

volume pipelines We our through volume, in system. come the there are Corridor huge that into a volume comes like not border more It’s more down our Western across seeing River little Milk some Milk through River. is but a cross-border

question. Next

Operator

go next to America. We’ll Coleman of Dennis Bank with

Dennis Coleman

size questions. to I Thanks projects you’ve Yes, talked impacts in little the you we of if there normalizing good debottlenecking with a as guess about plays terms a Obviously, into guess, for S&L about how there there on well. push you of from the should can description say coming some in everyone. taking of start I in just you bit evening and and terms that volume role I terms of question talked lack What can more. that better the are Canada about? competitors for XXXX. sort a – that? guess that of projects my Anything big assumed have Al, talked I you

Al Swanson

Yes. ‘XX. now we a likely to to million, million, We is out up going try number make to just $XXX think $XXX wouldn’t we slowly for it yet. $XXX put there trying XXXX What we’re put exceed $XXX S&L, million – to at obviously and year million this in specific for is do it S&L the be sure took started

may as probably anybody that all little sure sized segment they’re modeling go a pipes There built, gets these be us. be that of that recognizes longer, Canadian less make a to some opportunities trying down. for it little get Permian but that’s just We’re the material

meaningful would million sure you you’re at think looking a you from So want make reduction when the would XXXX. $XXX to we model

Dennis Coleman

Okay.

Al Swanson

how the And as run leverage, thinking company of we’re that’s how distribution to as coverages. far we’re going

to XXXX thinking assume to contribution fund S&L line opportunity and debt, going the things. reduce fairly nice a capture got it, we’ve amount us for to company projects, about in a it’s going we’re run with but we’re We’re helping modest of how

Dennis Coleman

very helpful. and any quarter and up were comment volumes can more that in ramp James that St. you crude-by-rail, that give to was there expectation comments switching, up just the that, that’s Great. Maybe a but there? continue would perhaps seemed That’s any

Harry Pefanis

we in strong St. think continue rail mean, at we’ll see XXXX demand to I James.

by as at to pipeline due for steady James, it’s driven lines pipeline largely will we’ve think constraints constraints. just long it the St. accelerated constraints. pipeline likely business I ease, the some. had a time subside been rail But And

Dennis Coleman

have excess capacity So that do Is something that you continue there? to could ramp?

Harry Pefanis

capacity. additional have we yes, Oh

Willie Chiang

has access been to that’s it. point The and cars through car prices the markets XXXX of what’s that have rails, been been fixed limit rail – rail the additional been and course, directed prices to need limiting

Dennis Coleman

Thank Okay. you.

Operator

Goldman with Holder Jerren to next Sachs. go We’ll

Jerren Holder

in What Canada? is to potential the capacity latest takeaway Thanks. on your increase Bakken the of

Harry Pefanis

out Canada? the Bakken or of Canadian the Bakken Out of and

Jerren Holder

Bakken and Western Canada.

Harry Pefanis

in is takeaway. some pipes Bakken. So, consisted and our smaller It’s mainly the significant not footprint of rail

not project we of the advantage going one take a the So of and to out infrastructure obviously limited takeaway we’re devolves but be we the Bakken. that of try significant have, parties

Willie Chiang

more are we cross-border We on systems, those do and two have Rangeland how two Wascana we are connections, volumes working that do but get on fairly capacity limited. the

Harry Pefanis

be in bidirectional – higher Yes. into had that you the could move there be if where there the higher a Canadian into demand you And ideally, volumes that’s if infrastructure Bakken. the demand pipeline was or infrastructure Bakken could would system

Jeremy Goebel

And that’s in the being the Wascana bidirectional. piece not Rangeland piece, on

Jerren Holder

the that to outstanding at are this waiting guys BridgeTex? point? we there Are any more? follow-up to then Where you And looking just do are on sales. asset Yes. following Are close

Willie Chiang

that why Chandler, one. don’t Chris you take

Chris Chandler

is this Jerren, Sure. Chris.

we to and achieve was sales $XXX goal. XXXX for asset in goal million that exceeded Our have

We any portfolio warranted. assets. on evaluate we’ll updates something and will valuation changes but going additional our to forward to as pressure we feel If sell fit, continue provide based strategic don’t there,

Jerren Holder

anything closed no And yet haven’t that pending that? deals or like

Chris Chandler

That’s correct.

Jerren Holder

Thank Okay. you.

Operator

Tristan to next go SunTrust. Richardson We’ll with

Tristan Richardson

Afternoon, guys.

intra-basin on give set the to debottlenecking. for as the Just Wink your and McCamey II? of table you an side sort project Cactus on Can update you

Jeremy Goebel

multiple one projects. Yes. of That’s

it be Western capacity Wink is month Wink. year. within or more in coming basin the the sometime Wink we in the need first Delaware will up capacity historical as lot on Basin. have production the last year online next because a that what We system. frees then importantly, and out our month of of does the well of And on But capacity that’s in there’s this of That Midland in

basin So us having give it that capacity leg of will lot the part on – first help just a the to keep debottlenecked. of that

on Cactus rest that if – of don’t additional from the II. even it So, us have time at Cactus we barrels creates tariff

Willie Chiang

Willie. is this Tristan,

of McCamey but piece, to Jeremy should I else. was mind, on, – You the of think thinking Wink something headed never

Tristan Richardson

Thank then – and Okay. you. – And

Jeremy Goebel

barrels those Wink here and Midland go then McCamey. over to currently we down of to Couple from

triangle the hypotenuse flow easier the – it taking a basically just by it you makes so And from perspective.

Tristan Richardson

the presumed quickly, That’s fee-based guide generally visibility have of Thank on respect where come in you online. tariff it’s these some talk on and preliminary in about then side to XXXX as you. with long-hauls preliminary And ‘XX just the you your volumes see as you helpful. volumes the Could guide? tariff

Al Swanson

We detail intend look February, the until with to forward, EBITDA don’t to we’ll that go then. so provide provide volume a

Tristan Richardson

Thanks, Al. Okay.

Operator

Wolfe to Keith with Research. Stanley next go We’ll

Keith Stanley

evening. good Hi,

bit strong Just the wanted segment Transportation a in acceleration than pretty clarify guidance. seen QX, on more It a implies few quite to in the what past you’ve quarters.

think and other about BridgeTex, it’s it’s QX you’re that debottlenecking million – up $XX like quarter. in So it any third looks and the so to versus losing color big or like really million system up uptick in causing or the nice then more Is $XX a Transportation? the just it’s drivers for Sunrise there

Willie Chiang

an Willie. for as prepared Yes. it, in we there the stated Sunrise lull clearly Clearly, production slight in to – We saw volumes expectation but pushing a barrels volumes comments, This back. incompletions is is a increase. of piece is

the growth We so expect piece. that lot that’s a to the component of come of in fourth a quarter, definitely

Keith Stanley

to assuming Okay. it to I’m And in like And is reduction sustainable million model that’s it collateral that a about forward? you? just level a coming short-term debt. $XXX then looks going back hedge

Al Swanson

What the would quarter. cash bit with short-term between I long-term had of a the the little BridgeTex say end of at closing the do flips and is, to

So the the fourth what short-term our we is to margin have quarter to of level, metric, borrowed same lot normal understated I as what hedged to done a versus and have seen Clearly, could expected. numbers the we the under come what back But first inventory we had relative say is for margin. i.e. X which was hedging mentioned. would months year a we pretty we’d more X probably

the to you So cash you out would from that expect look now months below came or you X probably what X that’s timing months and that. due what tell if the I BridgeTex is from would in

Keith Stanley

was received October in it at cash early that though, or – right, in And QX? was

Al Swanson

in was it No, September. Yes. [ph]. QX was it No,

Keith Stanley

Okay. you. Thank

Operator

with Baird. to next go We’ll Wang Patrick

Patrick Wang

for good Hi, question. afternoon. Thanks my taking

funding? look in of you how does fit equity growth into or toward those As picture preferred XXXX, source doesn’t of the distribution resuming

Al Swanson

today with is, what be – our our view equity funded you that principally retained portion we’re be will is when look next requirements would clearly cash CapEx at flow. the of year, Well, –

thought We the program. in that fund as would preferred left type of see have use on in our grows we room Clearly, capital be or “basket” valuation for far or as would XXXX to common any agencies hybrid for securities. rating not acquisitions if preferred our But the we that today’s look would our raise units, we preferreds. program capital to

Patrick Wang

it before crude Got takeaway will it. takeaway. relief picture new That’s helpful. Permian, And in come like the looks gas then bigger

the about about think risk a you XXXX, now when gas-induced levels between you activity of oil think on do the side? then how So and constraints clearing

Jeremy Goebel

Jeremy. monitoring That NGL the ahead the is little on is of like fractionation risk gas of is all a but also We bit probably fractionation There’s side. above. risk. we’re feel a risk, This

that a I infrastructure. until a think of to see presumption to going – on of producers and I as continue much volumes not run Harry rate a debottlenecking going our pointed predicated line are they they’re is of out view think completions than to at faster to rigs sight

the in half other takeaway. there’s with second of move and being the oil, line So to we one, others, interim NGL some oil solutions feel are of there year a there into flaring as towards ways just sight ramp there with But like is NGL. completions gas, a of next are

them, all cadence see to think reflects attention I paying year. our our guidance we’re we for view next the but So completion of of

Patrick Wang

Great. that Alright. for Thanks detail.

Operator

We’ll go Securities. Sibal Seaport Sunil to next Global with

Sunil Sibal

back just good I XX. afternoon, thanks out to all metrics the on for laid go And clarity. that you hi, Yes, guys. wanted credit to the Slide

looking triple target consistent out metrics the B mid the the rating at the that that on there, that’s triple agencies, rating look you’re I looking extreme right, when that rating B from you’re for or lay you with numbers leverage So correct?

Al Swanson

targets? You mean our

Sunil Sibal

Yes.

Al Swanson

time the won’t rating adjusted where few they triple of recent sure will But get agencies B years. clearly, the look past. how be intent our has have at to the over we our but and leverage is they we our But Yes, kind changed to over things instantaneous But consistent. make we they but again, are be performance bar it mid last over view, are.

Sunil Sibal

of do And of is a that level pretty then or Is much within that about minimal number? like S&L out EBITDA the you kind calculation, how contribution? nailed think kind it

Al Swanson

how we think metrics? In of leverage

Sunil Sibal

Yes.

Al Swanson

no. Yes,

clearly S&L I profitability. mean, the to there of is because we’ll the debt – generate calculation include in will of S&L side metrics the some the that is numerator We in

the make right? can’t taking without So advise drop is But and sense. it the do XXXX. reality to EBITDA any try is, S&L’s what eliminate you in look, we and recognize the the comment really of won’t debt – we part of and out, that That going

that thinking back So we how a level. dial assume can’t lower that into sit to and got of to that to we’re going we more normal or our revert leverage, it’s

the I that so we’re and but open hope regard our fact to eyes going And decrease it, going not in sense. to makes have we’re the XXXX. to on it’s to with going exclude headlights

Sunil Sibal

the of you we Permian? a these does. about and two say question. next think rolling closely barrels impact then Could like cascading one two over follow-up next years. you Thanks then to When years of million it at three previous of MVCs the that. Permian volumes over from us X of tariff for a of Yes, to give MVCs your look kind off sense And in four in

Al Swanson

gathering supported large contracts I years. We got is few clearly, you’ve our Yes, do any amount MVCs, roll-offs on next clearly more not dedications acreage by that. on material long-haul on of side, over the a no, substantial supporting mean, MVC the probably our have

Sunil Sibal

Thanks, it. Got guys. Okay.

Al Swanson

Thanks. – think Yes, I yes.

Operator

Payne Ross to Wells with next go Fargo. We’ll

Willie Chiang

Ross. Hi,

Operator

are you. hear Mr. to unable Payne, we

checking picking handset. You mute or try button might your up your

Willie Chiang

must have left. He

Operator

Capital to caller. Elvira to go We’ll no to response, on move Scotto the Due Markets. next next we’ll with RBC

Elvira Scotto

quick questions for of Couple afternoon. clarification Exxon good JV me Hey, project. on the

would shippers ultimately wanted you Plains’ So for just to additional JV are looking be? interest ownership partners? And or clarify, what additional third-party

Harry Pefanis

– you and the downstream on pipelines you and in whichever often equity. upstream both companies commit that pipelines cases, imagine to disclosed all companies haven’t ownership, ultimately but take can we shippers So,

So in both. many it’s cases,

So sheet, good and we candidly, make to quality, has many talking we’re really we and a partners in in and a partner be and parties be think balance project looking that, cases. preserves would the judicious we’re want for that they’ll that parties long-term who talk owners actually the sense, it to in equity so to shippers we’re but long-term short-listed

Willie Chiang

Elvira, this Willie. is

consider – position you think You that should than before. We’ve should as about our meaningfully less XX%. made comment

Elvira Scotto

maybe Great. bigger then provide more longer term, the a to bypassing and reversal? Cushing. around Canadian pipelines its moving of Gulf Capline crude on in little Thanks. the picture and barrels especially you Cushing, relevance of view with your more especially a And the Cushing potentially just question color Permian context Can Coast

Willie Chiang

Yes.

Al Swanson

you’re have in, you changing. even to local It coming if through production X over Mid-Continent. I it, at that have fewer is volumes going million day Cushing, that a moves Permian barrels don’t see more materially in When look you the

to going more the production have into You’re Cushing. coming of Rockies

Canadian in our connection, be continue production at to hub. it’s potentially And a down So Cushing move Cushing you pretty small more through production. down a going look is move the very viable through than total could of to reverse to going relation system that when Much is system. Capline Capline to what

Elvira Scotto

that. for you Thank Okay.

Al Swanson

question? Is your that answer

Elvira Scotto

you Thank very helpful. very much. That’s Yes.

Roy Lamoreaux

the mostly Anne, at it’s of hour. top Hey, the we’re

and Those I individually point. that appreciate we’re are this today back But going off to think the at for queue, everybody to address being we’re time and on of circle you your questions. those questions remaining Anne, go you we and cut I going you can you and in – thank Brett the call. ahead with

Operator

today’s does your for participation. you conference. We That conclude thank

You now disconnect. may

Plains GP (PAGP) 7 Nov 182018 Q3 Earnings call transcript