Gabriel Moreen

Gabriel Moreen asked about Kinetik's commodity sensitivity, the fixed-fee versus commodity gross margin percentage, and confidence in hedging Gulf Coast pricing exposure. He also inquired about the 40-megawatt behind-the-meter power generation project, potential third-party power sales, and its capital/timeline.

Answer

Trevor Howard, Senior Vice President and Chief Financial Officer, clarified that elevated commodity contribution in 2026 is due to Gulf Coast transport hedges, expected to normalize in 2027. Kris Kindrick, Senior Vice President of Commercial, highlighted the strategic use of Gulf Coast capacity for new business and hedging. Jamie Welch, President and Chief Executive Officer, confirmed the 40-megawatt project is for self-consumption at Diamond Cryo, with a $25 million capital cost and late 2026 in-service, noting potential for future expansion and third-party sales.

Gabriel Moreen asked about the commodity sensitivity of Kinetik's gross margin, the future trajectory of fixed-fee versus commodity contributions, and the confidence level in hedging exposure to Gulf Coast pricing. He also inquired about the 40 MW behind-the-meter power project, its self-consumption versus third-party sales, and the decision points for future replication.

Answer

Trevor Howard, SVP and CFO, explained that the commodity contribution to gross margin remains elevated in 2026 due to Gulf Coast transport marketing gains, but is expected to reduce in 2027. Kris Kindrick, SVP of Commercial, highlighted the use of Gulf Coast capacity as a commercial tool for new business and contract restructuring, acting as a hedge against Waha volatility. Jamie Welch, President and CEO, confirmed the 40 MW project is for self-consumption at Diamond Cryo, with potential for combined cycle conversion and third-party sales not factored into current numbers. He noted its attractive $25 million capital cost and expected in-service by year-end.

Gabriel Moreen from Mizuho inquired about how downstream NGL expansions affect Kinetik's re-contracting strategy, whether EPIC Crude distributions are expected, and the potential impact of steel tariffs on CapEx.

Answer

CEO Jamie Welch responded that downstream expansions and lower rates create re-contracting opportunities as their own commitments roll off, but they feel no pressure to act hastily. He confirmed that EPIC Crude is expected to make distributions this year due to its improved financial stability. Welch estimated the impact of potential steel tariffs on 2025 CapEx to be between $15 million and $20 million, primarily affecting the ECCC pipeline and other development projects.

Gabriel Moreen asked for a deeper dive into de-risking the Great Basin project's costs, including engineering, compressors, and pipe, and the current status of locking down these variables. He also inquired if upstream constraints on procuring gas or capacity were a limiting factor for customers signing up for the 800 million cubic feet per day of capacity during the open season.

Answer

Justin Brown, President of Southwest Gas Corporation, explained the proactive approach to supply chain management and mitigating project risks through firm precedent agreements. He noted that the current cost estimate is considered good, with an updated estimate to be provided with the formal FERC application at year-end. Jay Foer, Senior Vice President and Chief Financial Officer and Treasurer, Southwest Gas Holdings, added that spending is balanced to minimize pre-certificate costs while mitigating supply chain issues, supported by shipper surety. Justin Brown also stated that customers have not expressed any restrictions regarding upstream constraints, and there appears to be sufficient capacity from upstream suppliers.

Gabriel Moreen inquired about the company's progress in locking down and de-risking cost variables for the Great Basin project, such as engineering, compressors, and pipe, and whether upstream constraints on gas procurement were a factor for customers signing up for capacity during the open season.

Answer

Justin Brown, President of Southwest Gas Corporation, explained that the company is proactively managing supply chain risks and that the current $1.7 billion cost estimate is the best estimate, with an updated cost to be provided with the formal FERC application later this year. Jay Foer, Senior Vice President and Chief Financial Officer and Treasurer, added that the precedent agreements include surety from shippers to mitigate early spending risk. Justin Brown also stated that customers have not expressed any restrictions regarding upstream gas procurement, and the company believes there is sufficient upstream capacity.

Gabriel Moreen asked about AmeriGas's performance during recent extreme winter weather, including delivery capabilities and margins, and the potential benefit to the Midstream and Marketing business from natural gas price volatility. He also inquired about the rationale for UGI's recent Pennsylvania rate case filing, its timing relative to historical cadence, and any structural changes or trackers being requested. Finally, he asked for an update on the progress and timing of discussions (NDAs) regarding increasing natural gas demand in Pennsylvania from power providers and data centers.

Answer

President and CEO Bob Flexon reported that AmeriGas has shown substantially improved performance this winter with record safety, higher Net Promoter Scores, and fewer customer service calls. He acknowledged system stress in certain extreme weather areas due to road conditions impacting deliveries but noted resources are being redeployed from warmer western regions to the colder east to meet strong demand. CFO Sean O'Brien added that utilities benefit from colder weather, and while Midstream and Marketing typically benefit from volatility, capacity is prioritized for the utility during extended cold periods. Regarding the Pennsylvania rate case, Bob Flexon stated there are no extraordinary requests, emphasizing UGI's long-standing focus on affordability and OpEx efficiency, which directly benefits customer bills, and that UGI remains competitive on affordability compared to other state utilities. For natural gas demand in PA, Bob Flexon confirmed significant discussions with power providers and data centers are progressing, with some moving to advanced stages, and he hopes for announcements within the current fiscal year, also noting recent White House directives on emergency power as an added benefit.

Gabriel Moreen inquired about AmeriGas's performance during recent extreme winter weather, focusing on delivery capabilities and margins. He also asked about the impact of natural gas price volatility on the Midstream and Marketing business. Additionally, Moreen questioned the rationale behind the recent Pennsylvania rate case, its timing relative to historical cadence, and whether any structural changes like trackers were being sought. Finally, he asked for an update on the progress and timing of increasing natural gas demand opportunities in Pennsylvania, specifically regarding non-disclosure agreements (NDAs) with power providers and data centers.

Answer

President and CEO Bob Flexon stated that AmeriGas showed substantially improved performance with record safety and higher Net Promoter Scores, despite stress in certain areas due to road conditions impacting deliveries. He noted resource redeployment from warmer western regions to colder eastern regions to meet demand. CFO Sean O’Brien added that utilities benefited from weather trackers, and the Midstream and Marketing business typically benefits from weather, though capacity is prioritized for the utility during extended cold. Regarding the Pennsylvania rate case, Flexon clarified that no extraordinary structural changes were requested, emphasizing the company's long-standing focus on affordability, OpEx efficiency, and infrastructure CapEx, noting UGI's competitive position on affordability within the state. For natural gas demand in PA, Flexon reported that discussions with power providers and data centers are progressing, with some moving to advanced stages, and he hopes for announcements within the current fiscal year, also citing recent White House and gubernatorial directives on emergency power as a positive factor.

Gabriel Moreen asked for comments on media reports regarding a potential sale of the electric utility and the broader strategy for continued portfolio optimization across UGI's utility, midstream, and LPG businesses.

Answer

Robert Flexon, President and CEO, stated that UGI continuously evaluates its portfolio for optimization opportunities, as demonstrated by past LPG divestitures, but declined to comment directly on specific assets. He highlighted the company's focus on intrinsic value growth through low-risk, high-return opportunities across the portfolio, including ongoing improvements at AmeriGas.

Gabriel Moreen asked about the expected growth from the midstream and LPG businesses within the five-year plan, seeking clarification on whether continued growth is anticipated. He also inquired about updates on NDAs related to activity in Pennsylvania, potential data center adjacent growth within the midstream or utility plans, and commented on media reports regarding the potential sale of the electric utility and broader portfolio optimization.

Answer

CEO Robert Flexon stated that all business lines are expected to show low double-digit growth over the planning horizon. CFO Sean O'Brien clarified that the 5%-7% EBIT growth guidance is consistent and not back-end loaded, with confidence in both natural gas and LPG segments, especially AmeriGas. Robert Flexon further updated on NDAs, noting increased activity and over 50 discussions, and mentioned continuous portfolio review for value optimization, without commenting directly on specific divestitures, emphasizing intrinsic value growth opportunities.

Gabriel Moreen of Mizuho Financial Group, Inc. asked about the key performance indicators for AmeriGas heading into the winter season and the status of the LPG divestiture program. He also inquired about producer activity and contract expirations in the Midstream segment.

Answer

President and CEO Bob Flexon explained that AmeriGas is focused on safety, customer service metrics, and delivery efficiency after exiting the low-margin wholesale business. He also highlighted the improvement in AmeriGas's leverage ratio. CFO Sean O’Brien addressed the midstream question, stating no significant contract expirations are expected in the next 12-18 months. Flexon added that the pro-investment climate in Pennsylvania is creating substantial opportunities for the midstream business.

Gabriel Moreen inquired about AmeriGas's performance, key learnings from the winter, and future targets, along with an update on the refinancing of its 2026 maturities. He also asked about UGI's positioning to capitalize on rising natural gas demand in the Appalachian basin.

Answer

President and CEO Robert Flexon detailed plans to improve AmeriGas's business processes, including routing, propane purchasing, and customer segmentation, expressing confidence in strengthening the business before the next winter. CFO Sean O'Brien confirmed that the goal to refinance the 2026 maturities remains, highlighting AmeriGas's strong cash generation and improved leverage metrics. On Appalachian gas, Robert Flexon affirmed that UGI's Midstream and Utility assets are well-positioned to serve growth from new generators and data centers.

Gabriel Moreen inquired if using AmeriGas's free cash flow for the intercompany loan repayment would preclude asset sales, and whether the new 'pod' structure revealed regional performance differences. He also asked about AmeriGas's operational performance during the January cold snap, the Midstream segment's performance amid market volatility, and the potential for further acquisitions.

Answer

CFO Sean O’Brien confirmed that the loan repayment plan does not preclude asset sales at AmeriGas or UGI International. President and CEO Robert Flexon added that any divestiture proceeds would accelerate the loan paydown and that the company is analyzing its portfolio for underperforming assets. Regarding operations, Flexon noted that while AmeriGas benefited from the cold weather, the system was strained, underscoring the need for process improvements. He praised the natural gas utility's seamless execution. O'Brien attributed the lower Midstream margin to a renewed contract and the Hunlock asset sale, both of which were anticipated in guidance. Flexon stated the company remains opportunistic about synergistic Midstream acquisitions.

Gabriel Moreen of Mizuho Securities USA LLC inquired about the EPS impact from the dock damage in France, the progress of strategic initiatives at AmeriGas following the removal of its EBITDA covenant, and the outlook for further asset sales.

Answer

Interim President and CEO Filho Longhi clarified that while insurance covers the capital cost for the dock repair, there will be an operational EPS impact as logistics are adjusted. He affirmed that the AmeriGas stabilization strategy is unchanged and that removing the covenant allows for better focus. Longhi also confirmed that portfolio analysis is an ongoing process to optimize value, with more updates to come.

Gabriel Moreen asked about the outstanding performance of Energy Services, inquiring if the revised guidance captures potential future weather events and further upside. He also questioned the Leaf River expansion, seeking confirmation on contracts for the 43-55 BCF portion, potential for growth beyond 55 BCF, and if current economics support greenfield development.

Answer

Stephen D. Westhoven, President and CEO, clarified that the guidance for Energy Services was based on results through January and does not incorporate future events. Regarding Leaf River, he confirmed contracts for compression and existing capacity expansion (up to 43 BCF) but not yet for the fourth cavern (to 55 BCF), noting constructive market interest and that future expansions would be driven by signed contracts.

Gabriel Moreen asked about the outstanding performance of Energy Services, inquiring if the revised guidance captures future weather events or if further upside is possible. He also questioned the S&T capacity expansion, specifically regarding contracts for the fourth cavern, potential for growth beyond 55 BCF, and the economics supporting greenfield development at Leaf River.

Answer

Stephen D. Westhoven, President and CEO of New Jersey Resources, clarified that the guidance raise for Energy Services reflects results through the end of January and does not incorporate future weather events. Regarding S&T, he confirmed contracts for compression and existing capacity expansion but noted that the fourth cavern expansion is still in progress, driven by constructive market interest and the company's strategy to back-to-back investments with signed contracts.

Gabriel Moreen of Mizuho Securities questioned the pacing of Clean Energy Ventures (CEV) capital expenditures against the full-year target and asked for an update on plans for a successor to the Infrastructure Investment Program (IIP).

Answer

CFO Roberto Bel confirmed that the company expects to meet its full-year CEV CapEx guidance, which represents an acceleration over the prior year. Executive Patrick Migliaccio noted that the current IIP runs through fiscal 2025 and that the company will evaluate a potential follow-on program, highlighting the recent approval of a record $386 million SAVEGREEN energy efficiency program.

Gabriel Moreen asked for an update on Spire's financing mix and timing for the Piedmont Tennessee acquisition, specifically regarding common equity issuance. He also inquired about O&M expense assumptions for 2026 and beyond, and potential O&M-reducing best practices from utility integration.

Answer

Executive Vice President and CFO Adam Woodard confirmed confidence in a balanced debt and equity financing mix for the Tennessee acquisition, noting the ongoing evaluation of the storage business sale. President and CEO Scott Doyle stated that O&M expense is targeted to remain below the rate of inflation, consistent with historical performance, and highlighted that integration planning will focus on incorporating best practices to manage O&M costs.

Gabriel Moreen asked for an update on Spire's financing mix and timing for the pending acquisition, particularly regarding the 'minimal common equity issuance.' He also questioned the sustainability of O&M assumptions (below inflation) and potential best practices from utility integration to control O&M expenses.

Answer

Scott Doyle, President and CEO of Spire, confirmed no significant changes to the financing plan, reiterating confidence in a balanced mix of debt and equity to recapitalize Tennessee's rate base. He highlighted the ongoing evaluation of the storage business and strong market interest. On O&M, Mr. Doyle stated the guide for the year is below the rate of inflation, consistent with historical performance. He added that integration activities are in early stages, with a focus on identifying and incorporating best practices across both organizations to manage O&M.

Gabriel Moreen from Mizuho inquired about the potential timing for future Missouri rate cases under the new Senate Bill 4 legislation and asked about the expected process for negotiating reforms to the weather mechanism in the current case.

Answer

CEO Scott Doyle explained that while the company is focused on the current rate case, the new legislation (SB4) allows for filing a future test year case starting in July 2026. Regarding the weather mechanism, Doyle described the process as a negotiation where both parties bring issues to the table to find a constructive solution for both the company and its customers.

Gabriel Moreen inquired if the negative impact of warmer Q1 weather could be offset by colder weather in Q2 and asked for an update on the Gas Marketing segment's performance amid recent market volatility.

Answer

EVP and CFO Adam Woodard acknowledged that much of the winter season remains, suggesting a potential for reversal. He also affirmed confidence in the Gas Marketing segment achieving its annual guidance, noting a constructive market backdrop to start Q2 and that performance is not expected to be linear quarter-to-quarter.

Gabriel Moreen asked about the strong performance of the equity income line, specifically the sustainability of its current run rate. He also questioned the overall water landscape, including new competitors, opportunities, and the impact of recent mergers and IPOs on Delek Logistics' three-stream strategy. Finally, he sought clarification on the timing for Libby 3 expansion and whether Libby 2's AGI disposal capabilities would suffice for future Libby 3 volumes.

Answer

EVP and CFO Robert Wright attributed the strong equity income to Wink to Webster's performance, suggesting the year-to-date JV results are a good run rate. President Avigal Soreq noted favorable gas/oil and water/crude ratios, emphasizing the timely and cost-effective H2O and Gravity acquisitions, and the challenges of obtaining SWD permits in the Delaware Basin. Regarding Libby 3, Avigal Soreq indicated that detailed plans would follow planning sessions, stressing the market's demand for their sour, gas, and water treating capabilities. EVP of Investor Relations Mohit Bharadwaj confirmed satisfaction with permitted acid gas capacity, seeing no near-term restrictions.

Gabriel Moreen sought clarification on the timing implications of Reuven's earlier comments regarding Libby 3's expansion occurring sooner than expected, and whether the current AGI disposal capabilities for Libby 2 would suffice for future Libby 3 volumes.

Answer

President Avigal Soreq reiterated the market's demand for their sour gas, gas treating, and water treating capabilities, promising detailed planning and execution updates in future calls. EVP of Investor Relations Mohit Bharadwaj confirmed satisfaction with their permitted acid gas capacity, indicating no near-term restrictions for future volumes.

Gabriel Moreen of Mizuho Financial Group, Inc. asked about Delek Logistics' M&A strategy given its enhanced liquidity and what the company is seeing in the market. He also inquired about conversations with producers amid commodity price volatility and the company's confidence in its full-year EBITDA guidance of $480 million to $520 million.

Answer

President, CEO & Director Avigal Soreq stated that any M&A must be accretive to free cash flow, leverage, and coverage, emphasizing that the company is focused on value creation and could be a buyer or a seller. Regarding guidance, Soreq reaffirmed the $480-$520 million range, expressing strong confidence due to the quality of their assets in the Permian, mature customer base, and low breakevens. He also noted a positive trend with an uptick in Q3 crude gathering volumes, contrasting with guidance reductions seen elsewhere in the sector.

Gabriel Moreen of Mizuho Financial Group, Inc. asked about Delek Logistics' M&A outlook, given its significant liquidity, and questioned the company's confidence in its full-year EBITDA guidance amidst commodity price volatility and its impact on producer plans.

Answer

President and CEO Avigal Soreq stated that while the company has strong liquidity, any M&A activity must be accretive to free cash flow, leverage, and coverage ratios, and fit their strategy. He emphasized that DKL is focused on value creation and would consider being a seller as well. Soreq reaffirmed the full-year EBITDA guidance of $480 million to $520 million, citing a strong start to Q3 crude volumes and the low breakeven costs for producers in their operating areas, which provides resilience against price fluctuations.

Gabriel Moreen of Mizuho Financial Group, Inc. asked about Delek Logistics' M&A outlook given its increased liquidity from a recent high yield offering. He also inquired about producer activity amid commodity price volatility and its potential impact on the company's ability to meet its full-year EBITDA guidance of $480 million to $520 million.

Answer

President & CEO Avigal Soreq stated that any M&A must be accretive to free cash flow, leverage, and coverage, emphasizing that the company could be a seller as well as a buyer to create value. Regarding guidance, Soreq expressed high confidence, noting DKL is one of the few in the sector to reiterate its forecast. He pointed to a strong start to Q3 with rising crude volumes and low producer breakeven costs in their operating areas as reasons for this confidence.

Gabriel Moreen of Mizuho Financial Group, Inc. asked about Delek Logistics' M&A strategy following its recent high-yield offering and inquired about producer activity and its impact on the company's confidence in its full-year EBITDA guidance amidst commodity price volatility.

Answer

President & CEO Avigal Soreq explained that their M&A approach is disciplined, focusing on opportunities that are accretive to free cash flow, leverage, and coverage, and that they are open to both buying and selling assets to maximize unitholder value. He reaffirmed the full-year EBITDA guidance of $480 million to $520 million, citing strong producer relationships, low breakeven costs in their operating areas, and a noticeable uptick in Q3 crude gathering volumes.

Gabriel Moreen inquired about the extent to which recent deeply negative Waha gas prices have been incorporated into the 2026 guidance and the company's Waha outlook for the rest of the year. He also asked about the drivers behind the raised long-term gas price assumption in the five-year outlook, beyond the forward curve, and if this impacted the CapEx CAGR or customer build views.

Answer

President and CEO Kevin Akers stated that the company does not incorporate volatile Waha gas prices into its five-year plan, assuming normal activity, but will continue to monitor them. Senior Vice President and CFO Chris Forsythe added that 35% of any Waha impact benefits customers. Kevin Akers clarified that the raised long-term gas price assumption is based solely on the forward curve, emphasizing that natural gas remains the lowest utility bill and is significantly more affordable than electric counterparts, with affordability being a key consideration in investment planning.

Gabriel Moreen questioned the extent to which recent deeply negative Waha gas prices were incorporated into Atmos Energy's fiscal 2026 guidance and the company's Waha outlook for the rest of the year. He also asked about the drivers behind the raised long-term gas price assumption in the five-year outlook, beyond the forward curve, and its potential impact on the CapEx CAGR and customer builds.

Answer

Kevin Akers, President and CEO, stated that the company does not incorporate extreme price fluctuations like negative Waha prices into its five-year plan, assuming normal activity and monitoring the situation. He clarified that the raised long-term gas price assumption is based solely on the forward curve, noting historical trends of actual prices coming in under projections. Mr. Akers emphasized the company's focus on affordability, highlighting natural gas as the lowest utility bill and significantly more affordable than electric counterparts. Chris Forsythe, Senior Vice President and Chief Financial Officer, added that 35% of Waha price impacts flow back to customers.

Gabriel Moreen inquired about the BridgeTex pipeline acquisition, asking about its contractual status and strategic fit, and questioned the drivers behind the increase in growth capital expenditure guidance.

Answer

EVP & CCO Jeremy Goebel stated that Plains is working with its partner ONEOK to optimize the BridgeTex pipeline's cost structure and commercial strategy to maximize throughput. EVP & COO Chris Chandler explained the higher CapEx guidance is driven by new, high-return opportunities for lease connections and terminal expansions in the Permian and South Texas, reflecting both basin growth and new business capture.

Gabriel Moreen from Mizuho Financial Group asked about the potential for further consolidation of private water systems in New Mexico following the ARRIS acquisition and sought views on the state's regulatory environment. He also questioned if the early FID on the North Loving II plant signaled a more aggressive growth strategy and asked about producer commitments.

Answer

President and CEO Oscar Brown responded that ARRIS was their primary target and largely completes their Delaware system, reducing the need for further inorganic water acquisitions. He affirmed WES's comfort with the New Mexico regulatory landscape. Regarding North Loving II, he confirmed it is a more proactive strategy based on strong producer forecasts and increasing GORs, rather than waiting to fill an offload portfolio.

Gabe Moreen of Mizuho inquired about the financial impact of recent ethane export issues and any resulting changes in market strategy. He also asked for more detail on the commercial drivers for making the Hugh Brinson pipeline bidirectional.

Answer

Co-CEO Marshall "Mackie" McCrea confirmed the ethane export issue had no financial impact but acknowledged it could make future contracting with Chinese entities more difficult, prompting a focus on other countries. For the Hugh Brinson pipeline, he explained that the bidirectional capability adds supply optionality for Texas markets, boosting the project's revenue potential and returns, particularly for serving data center demand.

Gabriel Moreen of Mizuho Financial Group, Inc. asked a follow-up on Lake Charles LNG, inquiring about the scale of upstream pipeline opportunities needed to supply the facility and the potential sources of that natural gas, such as the Haynesville or Permian basins.

Answer

Executive Mackie McCrea described the upstream pipeline opportunity for Lake Charles LNG as 'huge,' with the intention of moving all gas on Energy Transfer's pipelines. He stated that while system expansions will be necessary, their extensive network provides a unique ability to source gas from diverse, low-cost basins including the Permian, Haynesville, and Katy, with final plans to be determined alongside the project's FID.

Gabriel Moreen of Mizuho Securities asked for details on the commodity price and spread assumptions within the 2025 guidance and requested an update on the South Mississippi products pipeline project.

Answer

Executive Dylan Bramhall explained that 2025 guidance is based on forward curves, acknowledging that compressed Waha basis spreads are a headwind but also present potential upside. Executive Marshall "Mackie" McCrea added that the South Mississippi project had a successful open season and remains a bullish long-term prospect, though it has not yet secured sufficient commitments to reach FID.

Gabriel Moreen asked about the cadence of future Permian processing capacity announcements for 2026 and beyond, and whether guidance embeds a volume recovery in dry gas basins like the Haynesville.

Answer

Executive Mackie McCrea detailed a pipeline of near-term Permian processing projects (Badger, Red Lake 3 & 4, Mustang Draw) and stated ET focuses on its own contracted growth rather than competitor announcements. Regarding gas prices, executives highlighted the company's diversified asset base, where volume increases on pipelines like Panhandle and Trunkline offset declines on dry gas-exposed systems like Tiger and Rover. They remain confident in the long-term outlook for the Haynesville assets.

Gabriel Moreen asked about Plains' capital allocation strategy, questioning if the current market volatility might shift the focus from distribution growth towards more opportunistic unit buybacks.

Answer

EVP & CFO Al Swanson confirmed that distribution growth remains the primary method for returning cash to shareholders, with unit repurchases serving as an opportunistic tool for market dislocations. He noted a small buyback of $7.5 million occurred in April but reiterated there is no fundamental change in their capital allocation thinking.

Gabriel Moreen sought clarification on the 'decisive actions' Archrock would take in a market downturn, asked about pricing assumptions in the updated guidance, and questioned why growth CapEx was not increased following the NGCS acquisition.

Answer

President and CEO D. Childers highlighted that in a downturn, Archrock has significant visibility and flexibility due to its highly variable OpEx and CapEx structure. CFO Douglas Aron added that the pricing strategy remains unchanged despite moderating increases, and the NGCS newbuild backlog was absorbed into the existing CapEx plan, underscoring the transaction's accretive nature without requiring additional capital investment.

Gabriel Moreen of Mizuho Securities asked about recent activity in dry gas areas and the current status of power provision in the Permian as a potential challenge for deploying new electric units. He also asked if preserving TOPS's manufacturing slots was a key part of the acquisition.

Answer

President and CEO D. Childers noted that while most dry gas plays are flat, the Haynesville saw measurable growth. He confirmed power availability is a gating item in the Permian but said the order book remains strong as customers typically secure power before contracting. He clarified that acquiring manufacturing slots was not a driver for the TOPS deal, as Archrock has no supply constraints, though they value the high-quality supply chain they inherited.

Gabriel Moreen asked about the risk management strategy for the Socrates and other data center projects, specifically concerning the long-term fixed-price power contracts and gas costs. He also requested an update on the gas storage business and potential expansions.

Answer

EVP Chad Zamarin clarified that the power contracts provide a fixed return on capital with a pass-through for fuel costs, mitigating commodity exposure, and are backed by high-credit counterparties. On storage, he highlighted the Pine Prairie expansion is underway to meet strong Gulf Coast LNG demand, with expectations for continued strong recontracting and additional future expansion projects.

Gabriel Moreen questioned the 2025 guidance, which appears flat when annualizing Q4 results. He also asked about the 2024 CapEx cadence and sought clarification on what management meant by "adjacent business opportunities."

Answer

CFO Chris Paulsen clarified that Q4 results included a one-time $3 million sales tax credit and that 2025 guidance reflects current pricing, modest CPI-linked increases, and back-end loaded new horsepower delivery, creating potential upside. He also noted a better handle on 2025 CapEx costs to avoid repeated guidance raises. President and CEO Micah Green explained that "adjacent business opportunities" refers to growing their third-party service division for customer-owned equipment.

Gabriel Moreen from Mizuho Securities asked for context on the 2025 guidance, which appears flat when annualizing Q4 results. He also questioned the 2024 CapEx cadence and sought clarification on what the company considers 'adjacent business opportunities'.

Answer

CFO Chris Paulsen clarified that Q4 results benefited from a one-time $3 million sales tax credit and that 2025 guidance reflects back-end loaded new horsepower delivery, creating potential upside. He also noted a better handle on 2025 CapEx costs to avoid repeated guidance raises. President and CEO Micah Green specified that 'adjacent opportunities' refers to the expansion of their third-party services division for customer-owned equipment.

Gabriel Moreen asked for more specifics on the planned Energy Transfer shared services model, including its potential scope, timing, and financial impact. He also inquired about the company's appetite and approach toward larger-scale M&A within the compression sector.

Answer

President and CEO Clint Green responded that the shared services initiative is in its early stages but is seen as a way for Energy Transfer to provide support while USAC operates separately, with more details to be provided with Q1 guidance. On M&A, he declined to comment on specific deals but affirmed that the company continuously evaluates opportunities.

Gabriel Moreen of Mizuho asked about the two-year construction timeline for the MSX interstate project and if it could be expedited under a new administration. He also questioned why the company's natural gas price sensitivity is higher in the 2025 guidance.

Answer

Kimberly Dang (Executive) explained the timeline reflects a typical four-year process for interstate pipes (two for permitting, two for construction) and that while a faster, dependable FERC permit would be welcome, they are not changing the schedule. She clarified that the natural gas price sensitivity is not new but that the company was able to better quantify it for investors this year.

Gabriel Moreen of Mizuho Securities USA LLC inquired about the recent large acquisition in Arizona and New Mexico, the outlook for third-party propane M&A, underlying cost inflation trends, and the potential impact of the new U.S. administration on tax credits for the Renewable Natural Gas (RNG) business.

Answer

President and CEO Michael A. Stivala explained that the New Mexico acquisition fills a strategic gap in a growing market and represents their largest single acquisition since 2012. He affirmed the company's continued focus on propane M&A. Stivala also noted that cost infrastructure has stabilized, praising the field team's performance. Regarding the new administration, he expressed cautious optimism for a more 'all-of-the-above' energy approach and believes key provisions of the Inflation Reduction Act, like production tax credits, are likely to remain due to broad support.

Gabriel Moreen inquired about the progress of the asset divestiture program and whether the bullish Permian gas outlook could lead to increased CapEx in 2025.

Answer

CEO Mickey McKee confirmed that Kodiak is continuously evaluating its fleet and has a few more small divestitures planned but does not intend to exit any basins. He emphasized that the capital allocation strategy remains unchanged, focusing on a growing dividend and reinvesting within cash flows. CFO John Griggs added that new horsepower additions in 2025 are expected to be at or slightly below 2024 levels.

Gabriel Moreen asked about the potential impacts on legacy NuStar assets from refinery closures in California and new competition in the Denver market. He also inquired about the status of a major upcoming contract renewal for the Corpus Christi assets.

Answer

Chief Operations Officer Karl Fails stated that California refinery closures could present an upside for Sunoco's storage assets and that the company's infrastructure is well-positioned against new competition. Regarding the Corpus Christi contract, he declined to discuss specific customer negotiations but expressed confidence in the terminal's long-term value. President and CEO Joseph Kim added that despite various commercial factors, the company is very bullish on all three business segments for 2025.

Gabriel Moreen asked for more color on the drivers of the increased Columbia Gas CapEx and how the lower natural gas forward curve affects both the capital plan and the ability to maintain low customer bill increases.

Answer

EVP and CFO Shawn Anderson described the gas CapEx increase as a 'glide' into system hardening requirements like bare steel and plastic pipe replacement, rather than a sudden step-change. He explained that their financial forecast already incorporates a significant rise in gas prices based on the NYMEX curve, providing headroom against current market prices and supporting the sub-5% bill increase target.

Asked about the impact of extreme weather in the Permian, the timing for the next plant relocation, and details on the 2024 hedging program.

Answer

The company was not impacted by extreme weather. The next plant expansion is expected beyond 2024. Nearly all of the 2024 natural gas exposure has been hedged to de-risk the first three quarters of the year.