Keith Stanley

Keith Stanley inquired about ONEOK's capital allocation strategy, specifically how excess free cash flow will be used for debt repayment, the expected leverage at year-end 2026, and the timeline to reach the 3.5x leverage target. He also asked about the Bakken's bundled NGL rate, which slipped to $0.27 in Q4, and the expectation for the 2026 rate.

Answer

CFO Walt Hulse stated the 3.5x target is self-imposed, with agency flexibility. He noted that lower EBITDA expectations mean reaching the target will take longer than expected, with significant debt reduction expected after projects complete in H2 2027. Chief Commercial Officer Sheridan Swords confirmed the Q4 NGL rate slip was due to increased ethane recovery and expects the 2026 rate to be in the '30-ish range,' driven by ethane recovery and contract differences.

Keith Stanley asked about capital allocation, specifically if excess free cash flow this year would go to debt repayment, where leverage is expected to end the year, and the timeline to reach the 3.5x leverage target. He also inquired about the bundled NGL rate in the Bakken, which slipped to $0.27 in Q4, asking if this was due to increased ethane recovery and the expectation for the 2026 rate.

Answer

CFO Walt Hulse clarified that the 3.5x leverage target is self-imposed, and the company has flexibility at higher debt-to-EBITDA ratios for its current credit rating. He noted that with lower EBITDA expectations, reaching the 3.5x target will take longer than originally expected. While debt was aggressively reduced in 2025, a strong CapEx backlog in 2026 means less debt reduction until the second half of 2027 when incremental free cash flow increases. CCO Sheridan Swords confirmed that the Q4 Bakken NGL rate slip was due to increased ethane recovery, and the 2026 rate is expected to be in the $0.30s range, influenced by ethane recovery and contract differences.

Keith Stanley followed up on the Sunbelt Connector, asking about potential partnerships with refiners or other strategics and any ongoing discussions. Stanley also asked about the Permian as a core strategic focus, the potential benefits of more scale, and an update on EnLink volumes transitioning to ONEOK pipelines.

Answer

Sheridan Swords, Executive Vice President and Chief Commercial Officer, reiterated ONEOK's openness to strategic partners who bring value for the Sunbelt Connector but declined to comment on specific ongoing conversations. Swords clarified that approximately 50,000 barrels per day of NGL volumes from legacy EnLink plants will transition to ONEOK's system between 2026 and 2028 as contracts expire. He affirmed the desire for scale in the Permian, prioritizing organic growth, and maintaining a disciplined approach to M&A.

Keith Stanley followed up on the Sunbelt Connector, asking about the potential for working with partners, including refiners or other strategics, and if any such discussions were ongoing. Keith Stanley also inquired about ONEOK's strategic focus on the Permian Basin, the potential benefits of increased scale in the competitive market, and the timeline for NLink volumes transitioning to ONEOK's pipeline system.

Answer

Sheridan Swords, Executive Vice President and Chief Commercial Officer, reiterated ONEOK's openness to strategic partnerships that bring value to the Sunbelt Connector project, but declined to comment on any specific ongoing conversations. He confirmed that approximately 50,000 barrels per day of NLink NGL volumes will transition to ONEOK's system between 2026 and 2028 as existing contracts expire. He affirmed ONEOK's preference for organic growth in the Permian but maintained a disciplined approach to M&A.

Keith Stanley from Wolfe Research, LLC asked for clarification on whether the midpoint of the 2025 EBITDA guidance is still the base case. He also inquired about the LPG export facility's contracted capacity and current market pricing for exports.

Answer

President and CEO Pierce Norton confirmed a clear path to the guidance midpoint, stating that achieving it depends on widening refined product spreads and producers executing their drilling plans. EVP & CCO Sheridan Swords reiterated that while specific contract details are not disclosed, pricing discussions for the LPG export facility are in line with the project's original economics, thanks to its premier location.

Keith Stanley asked for confirmation that ONEOK is still tracking to the midpoint of its 2025 EBITDA guidance and sought to clarify the scale of year-over-year growth uplift implied for 2027 on a presentation slide (Slide 5).

Answer

CFO Walter Hulse affirmed that the company is tracking in line with its full-year guidance as issued in February. He also confirmed the interpretation of the slide, explaining that the significant 2027 year-over-year growth reflects the 'stair step' impact of large-scale growth projects coming online, which is lumpier than the more linear progression of synergy capture.

Keith Stanley requested a specific number for incremental synergies expected in 2026 and asked for details on the LPG export facility, including expected returns, contract status, and its impact on M&A strategy in the Permian.

Answer

CFO Walter Hulse noted that 2026 synergies are baked into the outlook but declined to provide a specific number, as synergies from multiple deals begin to blend. CCO Sheridan Swords projected mid-to-high teens returns on the export project, framing it as a key part of their integrated strategy. CEO Pierce Norton stated that while the focus is on integrating current assets, ONEOK will remain 'intentional and disciplined' regarding any future M&A.

Keith Stanley from Wolfe Research inquired about the procedural status of the EnLink public interest acquisition and asked about the capacity for share buybacks given current leverage and recent debt-financed deals.

Answer

CFO Walter Hulse confirmed that Hart-Scott-Rodino review for the EnLink transaction is complete, leaving no further procedural hurdles. Regarding buybacks, he noted the capital allocation strategy is unchanged and the new deals are accretive, but the company will prioritize deleveraging before accelerating buybacks, while maintaining the $2 billion target.

Keith Stanley requested clarification on the $150 million marketing upside in 2025 and the assumptions for marketing in 2026, including potential opportunities. He also asked for a breakdown of Delaware growth drivers, distinguishing between overall basin growth and Targa's market share gains, given six new plants planned.

Answer

Jen Kneale, President, confirmed the $150 million marketing benefit in 2025, stating that 2026 guidance is conservative, but Waha pricing volatility could create incremental marketing opportunities. Matthew Meloy, CEO, noted it's difficult to quantify market share gains versus overall Delaware growth, but Targa has seen upward revisions from multiple producers, strengthening the 2027-2028 outlook. Jen Kneale added that Targa's dedicated acreage has shown resilience and consistency, contributing to better results from consistent activity.

Keith Stanley asked for clarification on the $150 million marketing upside in 2025, Targa's marketing assumptions for 2026, and potential opportunities. He also questioned the drivers of Targa's Delaware growth, specifically how much is due to the basin's overall boom versus Targa gaining market share or competitive advantages, given the announcement of six new plants in the region.

Answer

President Jen Kneale confirmed the $150 million marketing benefit in 2025 and stated that 2026 guidance conservatively forecasts marketing gains, with potential incremental opportunities from Waha price volatility. Chief Commercial Officer Bobby Muraro noted the difficulty in precisely attributing Delaware growth to market share versus overall basin expansion, but highlighted producer revisions to the upside. Jen Kneale added that Targa's dedicated acreage has shown resilience and consistent activity, contributing to strong performance.

Keith Stanley asked about potential headwinds for Targa Resources Corporation's Q4 EBITDA relative to Q3, given the guidance towards the top end of the annual range. He also inquired whether the significant increase in Q3 frac volumes represented a sustainable run rate or was boosted by unfrac'd inventory from earlier maintenance.

Answer

Jen Kneale, President, attributed the Q4 outlook to conservatism, October shut-ins from low commodity prices and storms, and expected November maintenance on natural gas pipes, noting a natural offset from Waha pricing weakness benefiting marketing. Ben Branstetter, Senior VP of Downstream, confirmed that Q3 frac volumes were boosted by facilities being fully back online after Q1 and Q2 turnarounds, operating at full capacity, and expects Trains 11 and 12 to be highly utilized upon startup.

Keith Stanley asked about the Q4 2025 EBITDA outlook, noting that the top end of guidance implies a sequential decline from Q3, and inquired about potential headwinds. He also sought clarification on whether Q3's sharply ramped fractionation volumes represented a sustainable run rate or if they were boosted by deferred inventory from earlier maintenance.

Answer

President Jen Kneale stated that Targa is conservative but well-positioned for another record EBITDA year, acknowledging potential Q4 choppiness from October shut-ins due to low commodity prices and expected November maintenance on Permian natural gas pipes. She noted Targa's ability to leverage its footprint to offset Waha pricing weakness. Senior Vice President, Downstream Ben Branstetter confirmed that Q3 fractionation volumes were boosted by facilities being fully back online after Q1 and Q2 turnarounds, and that Train 11 and 12 are expected to come online highly utilized.

Keith Stanley inquired about the competitive landscape in the Northern Delaware for sour gas treating and asked if accelerated 2025 CapEx would lower 2026 spending, given the company's growth.

Answer

President of Gathering & Processing Patrick McDonie and CEO Matthew Meloy detailed Targa's competitive advantages in sour gas, citing decades of experience, superior scale, and interconnected infrastructure that provides enhanced reliability. President Jennifer Kneale noted it is too early for a 2026 CapEx forecast but affirmed that growth projects are highly utilized and capital will be deployed efficiently to meet strong demand.

Keith Stanley inquired about the competitive landscape in the Northern Delaware for gas treating and AGI wells, and asked if accelerated 2025 CapEx would lower the 2026 budget.

Answer

President of Gathering & Processing, Patrick McDonie, detailed Targa's extensive and long-standing sour gas treating capabilities, calling it a core competency. CEO Matthew Meloy added that their interconnected complexes offer a competitive advantage in reliability. President Jennifer Kneale noted it was too early to provide a 2026 CapEx forecast but affirmed that current spending is on highly utilized, high-return projects.

Keith Stanley asked if new commercial agreements and plant startups in 2026 provide protection against a weak macro environment and sought color on the strong Q1 unit margins despite lower volumes.

Answer

President Jennifer Kneale confirmed that the commercial agreements signed in late 2024 are additive to the base growth expected, providing further support for 2026 volumes. CFO William Byers explained that the stronger-than-expected Q1 G&P margins were driven by a favorable contract mix and specific customer activity, where some higher-margin contracts delivered better results during the period.

Keith Stanley asked for clarity on the Targa Badlands buy-in, questioning if the timing was driven by a partner option or Targa's opportunism. He also inquired about capital allocation priorities, particularly the role of buybacks given the stock's appreciation and strong organic growth opportunities.

Answer

President Jen Kneale clarified the Badlands buy-in was an opportunistic move by Targa to leverage its strong balance sheet and refinance high-cost equity, generating significant cash savings. Regarding capital allocation, she reiterated an "all of the above" approach, emphasizing that the share repurchase program remains an opportunistic tool to be used when management sees a disconnect between Targa's intrinsic value and its market price.

Keith Stanley asked if the significant increase in the volume outlook could accelerate NGL pipeline spending into 2025 and sought to understand the drivers of the strong Q3 marketing results, questioning if it was due to LPG exports or gas optimization.

Answer

Executive D. Pryor explained that existing operating leverage and new third-party agreements provide the 'benefit of time,' deferring the immediate need for major NGL pipeline capital. Executive Jennifer Kneale attributed the strong marketing performance to a combination of factors across NGL, natural gas, and exports, which is a benefit of their large, integrated system and is not typically included in guidance.

Keith Stanley with Wolfe Research asked if Western Midstream plans to amend any other cost-of-service contracts following the modification of the Permian G&P contract with Oxy. He also inquired about the company's current perspective on distribution coverage, especially after the cash flow headwind from recontracting and the current down cycle, and the levers available to improve coverage over time.

Answer

Oscar Brown, CEO, stated that amending other cost-of-service contracts is not a high priority, as they now represent a very small portion (8-9%) of revenues and require significant effort for minimal impact. Regarding distribution coverage, Oscar Brown explained the strategy to grow distributions slightly slower than Adjusted EBITDA (e.g., 2% distribution increase versus 5% EBITDA growth for 2026) to naturally increase coverage. He highlighted disciplined capital deployment, organic growth, and potential inorganic growth as key levers to enhance distribution coverage and maintain a resilient business model.

Keith Stanley inquired about Western Midstream's distribution coverage strategy, given the upfront cash flow headwind from the Oxy recontracting and the current down cycle, and the levers available to improve it.

Answer

Oscar Brown, CEO of Western Midstream Partners, reiterated the strategy to grow distributions at a slightly slower pace than Adjusted EBITDA to enhance coverage over time. He highlighted the recommended $0.08 annual distribution increase (over 2% run rate) against an expected 5% EBITDA growth for 2026 as an example. He also emphasized capital deployment discipline, evidenced by the reduced 2026 capital expenditure guidance, and commercial success as key levers for improving coverage.

Keith Stanley asked about the significant year-over-year decrease in Western Midstream Partners' O&M expense, inquiring about the sustainability of Q3 O&M levels (excluding Aris), the progress of cost management initiatives, and potential for further savings.

Answer

CEO Oscar Brown explained that cost reduction efforts began in March, focusing on process updates and zero-basing operations. He confirmed Q3 levels are sustainable with more improvements expected in 2026. COO Danny Holderman detailed initiatives including rationalizing maintenance, rental fleets, contract workforce, and supply chain strategies, all while achieving record operability.

Keith Stanley asked about the sustainability of Western Midstream Partners' (WES) third-quarter O&M expense, the progress of cost management initiatives, and the potential for further savings, excluding the impact of the Aris acquisition. He also inquired if discrete distribution step-ups remain on the table following major projects like Pathfinder or M&A, given the current high yield.

Answer

CEO Oscar Brown and COO Danny Holderman explained that cost reduction efforts began in March, focusing on process updates, streamlining, and zero-basing to enhance cost competitiveness. They believe Q3 O&M levels are sustainable, with further improvements expected in 2026, achieved alongside record asset operability. Oscar Brown confirmed that discrete distribution step-ups are possible, aligning with the MLP's purpose, but the primary goal is long-term mid-single-digit growth. He noted the need to balance yield with potential buybacks and accretive capital deployment, with decisions dependent on the market outlook and board discretion.

Keith Stanley of Wolfe Research questioned the financing decision for the ARRIS acquisition, asking why WES opted for significant equity issuance instead of using more cash, given its balance sheet capacity and high yield. He also inquired about the long-term target for the water business as a percentage of the company's overall mix.

Answer

President and CEO Oscar Brown explained that the leverage-neutral financing preserves balance sheet strength for upcoming organic growth projects and future M&A opportunities. He stated that while there is no specific target mix for the water business, the company is comfortable with it representing around 15-20% of the business, viewing it as a core midstream service.

Keith Stanley from Wolfe Research inquired about the status of the Pathfinder project, asking if its scope or timing might be reconsidered given market conditions.

Answer

Executive Kristen Shults confirmed that the Pathfinder project is moving forward as planned to address ore pressure issues in the basin. She stated the project's budget of $400 million to $450 million is fixed for the '25 and '26 budgets, supported by a large commitment from Oxy. Shults expressed optimism, noting significant excitement from other producers and midstream companies, with demand expected to grow as the issues Pathfinder solves become more widely recognized.

Keith Stanley from Wolfe Research inquired about any updates on contracts for the Pathfinder pipeline, how discussions with customers are progressing, and whether the company is targeting take-or-pay or fixed-fee commitments.

Answer

CEO Oscar Brown reported that conversations regarding Pathfinder have been positive and have developed better than hoped, with interest from both producers and other midstream providers. He explained that WES is seeking minimum volume commitment (MVC) type contracts and is exploring a range of commercial structures. Brown noted that the contracts are complex and will take time, but that time works to WES's advantage as the water disposal challenge in the Delaware Basin grows.

Keith Stanley of Wolfe Research asked for an update on the contracting progress for the Pathfinder produced water pipeline, including the types of contracts being pursued with third parties.

Answer

CEO Oscar Brown reported positive and developing conversations with both producers and other midstream providers for the Pathfinder pipeline. He explained that WES is seeking long-term, minimum volume commitment (MVC) style contracts and that while these are complex and take time to finalize, the growing need for water solutions in the Delaware Basin works to their advantage.

Keith Stanley sought clarification on the 2030 outlook represented by the green bar on slide 10, asking if a 7-8% CAGR through 2030 is directionally correct and if it includes a significant amount of unsanctioned projects. He also inquired about the expected timing for more clarity on the Midwestern expansion project, specifically if it's within the next six months.

Answer

David Slater, Executive Chairman and CEO, confirmed that the green bar on slide 10 boxes out to the updated $3.4 billion backlog. He stated that the projected growth is "exceeding our, the high end of our 5-7" percent guidance, but he refrained from putting a specific number on it due to market fluidity, preferring to let the market unfold. Regarding the Midwestern expansion, Mr. Slater indicated it is "definitely in front of us right now," with deep discussions ongoing with shippers, predominantly regulated entities, and that the company will move at their pace, describing it as a "hot topic."

Keith Stanley asked for clarification on the 'green bar' in slide 10 regarding the 2030 outlook, specifically if a 7-8% CAGR through 2030 is directionally correct and if it includes only sanctioned projects or a fair amount of unsanctioned ones. He also inquired about the timing for more clarity on the Midwestern expansion potential, including the need for an open season and a timeline.

Answer

Executive Chairman and CEO David Slater clarified that the 'green bar' reflects the updated $3.4 billion backlog and exceeds the high end of the 5-7% guidance, but he preferred not to cap it due to market fluidity. For the Midwestern expansion, Mr. Slater stated it's 'definitely in front of us right now' and a 'hot topic,' with DT Midstream moving at the pace of regulated entities and shippers.

Keith Stanley asked for details on Vector's proposed 400 million cubic feet per day expansion, specifically whether it would primarily serve Guardian or Indiana power demand, and inquired about the ultimate capacity increase potential for Vector. He also questioned if the significant increase in Haynesville volumes meant the system was now past its Minimum Volume Commitment (MVC) levels, suggesting that future incremental volume growth would directly boost EBITDA on a one-for-one basis.

Answer

President and CEO David Slater clarified that Vector's 400 MMcf/d expansion is generic and can serve multiple egress options in the greater Chicago area, including Guardian, Midwestern, and other utility loads, with a binding open season expected soon. Regarding Haynesville MVCs, Slater stated that DT Midstream does not disclose specific MVC levels but suggested that investors could infer the situation by analyzing past volume and gathering segment EBITDA data.

Keith Stanley inquired about Vector's 400 MMcf/d expansion opportunity, its primary service area (Guardian, Indiana power demand), ultimate capacity increase potential on Vector, and whether Haynesville volumes are past MVC levels, implying incremental volume growth boosts EBITDA one-for-one.

Answer

David Slater (President and CEO, DT Midstream) clarified that Vector's proposed expansion can serve multiple egress options in the greater Chicago area, including Guardian, Midwestern, local utility loads, and connections to other interstate pipelines, with an upcoming binding open season. He stated DTM does not disclose MVC levels but suggested investors could infer the situation by analyzing past volume and gathering segment EBITDA data.

Keith Stanley of Wolfe Research, LLC inquired about the new modernization investment, asking if the Guardian portion could be included in a 2026 rate case and whether this type of spending primarily grows EBITDA or maintains the existing rate base. He also asked about opportunities to expand DTM pipes to increase Appalachia takeaway capacity.

Answer

President & CEO David Slater confirmed the Guardian modernization capital is expected to be recovered in the next rate case, with rate adjustments occurring when the facilities enter service. He clarified that while regular maintenance keeps the rate base flat, this modernization program will predominantly grow the EBITDA of the regulated assets. Slater also affirmed DTM is actively exploring all options to use its assets, including NEXUS, to expand egress capacity from Appalachia.

Keith Stanley sought clarification on the 2026 CapEx guidance range presented on a slide, which appeared lower than the previous quarter. He also asked which of the company's pre-FID projects are closest to moving forward based on customer demand.

Answer

President and CEO David Slater and EVP and CFO Jeffrey Jewell both confirmed there was no change to the high end of the 2026 CapEx guidance and that any difference on the slide was a formatting issue. Regarding project timing, Slater declined to get specific but stated there is a 'green up arrow' on the $2.3 billion backlog, driven by opportunities on newly acquired pipelines and projects like the Millennium open season. He described a shift from a 'headwind' a year ago to a 'tailwind' for the business now.

Keith Stanley asked whether cost recovery for growth projects on the new interstate pipelines would come from bilateral contracts or FERC rate cases, and also inquired about the expected cadence of future rate cases for these assets.

Answer

President and CEO David Slater explained that such projects are initially supported by new incremental contracts, with the associated capital then rolling into the asset's rate base for future FERC rate cases. He noted that the timing of rate cases varies for each of the three acquired assets and deferred the specific details to a follow-up with investor relations.

Keith Stanley asked if the company plans to update its project backlog and medium-term growth targets with Q4 earnings. He also questioned how the Supreme Court's decision on EPA rule 111(d) has impacted discussions with data center customers.

Answer

David Slater, President and CEO, confirmed that a refreshed project backlog and more granularity will be provided on the year-end call, while reaffirming high confidence in the existing 5-7% long-term growth outlook. Regarding the EPA rule, he stated that while counterparties are monitoring the situation, it is not currently changing the nature or velocity of discussions for new power opportunities.

Keith Stanley asked for insight into Energy Transfer's medium-term EBITDA growth expectations, given that peers provide multi-year guidance. He also inquired about the recontracting outlook for the Mariner system, including potential pricing upside or downside, and its competitive positioning.

Answer

CFO Dylan Bramhall explained that the company's long-term annual distribution growth rate of 3%-5% strategically sets a floor for their long-term growth rate. Co-CEO Mackie McCrea expressed high confidence in the Mariner system's continued performance, expecting to maintain and grow throughput, and remain a dominant player in moving NGLs from the Marcellus Utica areas.

Keith Stanley asked for Energy Transfer's medium-term EBITDA growth expectations, given that some peers provide multi-year guidance. He also inquired about the recontracting outlook for the Mariner system, including potential pricing upside or downside, and its competitive positioning among NGL takeaway options for producers.

Answer

CFO Dylan Bramhall stated that the long-term annual distribution growth rate of 3%-5% strategically sets a floor for what Energy Transfer believes it can achieve for its long-term growth rate. Co-CEO Mackie McCrea highlighted the Mariner system as an 'incredible franchise' with expanding ethane export capabilities at Marcus Hook. He expressed high confidence in maintaining and growing volume throughput, asserting Energy Transfer's dominant position in moving NGLs out of the Marcellus/Utica areas.

Keith Stanley asked for clarification on Energy Transfer's 2025 guidance, specifically whether it includes SUN's Parkland acquisition. He also inquired about the progress and timing for Lake Charles LNG's Final Investment Decision (FID), focusing on contract firm-up and the equity sell-down process.

Answer

Dylan Bramhall (Group CFO) clarified that the 2025 guidance does not include Parkland. Mackie McCrea (Co-CEO) detailed the stringent conditions for Lake Charles LNG's FID, emphasizing the need for 80% equity partner participation, conversion of Heads of Agreement (HOAs) to binding Sales and Purchase Agreements (SPAs) by year-end, and the upcoming renewal of the EPC contract, all while maintaining financial discipline.

Keith Stanley inquired about Energy Transfer's updated 2025 guidance, specifically whether the 'slightly below the low end' projection included Sunoco's acquisition of Parkland. He also sought more details on the Lake Charles LNG project, asking about the number of remaining contracts needed and the timeline for the equity sell-down process to reach a Final Investment Decision (FID).

Answer

Dylan Bramhall (Group CFO) clarified that the 2025 guidance did not include Parkland. Mackie McCrea (Co-CEO) provided an update on Lake Charles LNG, emphasizing the company's financial discipline and the necessity of checking all boxes, including a favorable EPC contract and securing 80% equity partners. He noted they are very close to the 15-15.5 million tons of market contracts, with some HOAs needing conversion to SPAs by year-end. He stressed that FID is contingent on securing equity partners and that time is a factor for renewing the EPC contract.

Keith Stanley of Wolfe Research questioned what competitive advantages led to Energy Transfer winning the Desert Southwest Pipeline project. He also sought clarification on whether the projected mid-teens return implies a specific EBITDA multiple and how project cost risk is structured.

Answer

Co-CEO Marshall "Mackie" McCrea attributed the Desert Southwest win to his team's patience, negotiation skills, and the ability to offer synergistic supply sources from ET's vast asset base. He confirmed the project is a traditional structure where ET assumes cost risk and agreed that a 6x EBITDA multiple is a reasonable assumption for the project's economics.

Keith Stanley of Wolfe Research, LLC followed up on the CapEx outlook for 2026, asking for a rough estimate of sanctioned projects. He also sought clarification on the contracting position for NGL exports, specifically the mix between fixed-fee term contracts and spot agreements.

Answer

Executive Tom Long estimated that 2026 growth CapEx, based on currently sanctioned projects, would likely be less than half of the $5 billion planned for 2025, clarifying this was not official guidance. Executive Mackie McCrea explained that both spot and term NGL export contracts are at fixed fees, and specified that the new Flexport capacity is fully contracted under 3- to 5-year fixed-price agreements.

Keith Stanley from Wolfe Research asked for clarification on the $5 billion growth CapEx for 2025, including details on the midstream component, and inquired about the CloudBurst data center deal's structure and ramp-up timeline.

Answer

Executive Marshall "Mackie" McCrea clarified that the $5 billion budget is for sanctioned, high-return projects, with a large portion allocated to midstream investments like the Mustang Draw plant to meet Permian processing demand. Regarding the CloudBurst deal, he confirmed it will support a new gas-fired power plant and is expected to scale up over time, potentially reaching 450 million cubic feet per day.

Keith Stanley inquired about the timeline for bringing the full LPG export project capacity online and its contracting status. He also asked about potential Q4 EBITDA headwinds, as maintained guidance implied a sequential decline.

Answer

Executive Mackie McCrea confirmed the LPG export project is on track and expected to be fully contracted with 3-to-5-year agreements due to insatiable international demand. Executive Thomas Long addressed the guidance, stating there are no Q4 headwinds. He explained the forecast is conservative and excludes potential upside from optimization activities and favorable natural gas spreads, suggesting results could clearly reach the top end of the guidance range.

Keith Stanley from Wolfe Research sought confirmation on whether the 150% distribution coverage threshold implies a multi-year runway for $0.15 increases, asking about the growth drivers for 2027 and 2028, and inquired how Plains assesses coverage from a free cash flow perspective.

Answer

Willie Chiang, Chairman and CEO, confirmed the ability to grow distributions beyond 2026, citing self-help initiatives, additional Permian growth, and efficient growth synergies from the asset base. Al Swanson, EVP and CFO, clarified that the DCF coverage (150%) is intended to fund routine organic capital (the $300-$400 million range) plus small bolt-ons, rather than being a precise free cash flow percentage, allowing for self-funding of routine investments.

Keith Stanley from Wolfe Research sought confirmation that the 150% distribution coverage threshold implies multi-year $0.15 increases, asking about the growth drivers for 2027 and 2028, and how the company assesses coverage from a free cash flow perspective in addition to DCF.

Answer

Willie Chiang, Chairman and CEO, confirmed the intention to grow distributions beyond 2026, citing self-help initiatives, Permian growth, and efficient growth synergies from the asset base. Al Swanson, EVP and CFO, clarified that the DCF coverage (150%) is set to fund routine organic capital ($300-$400 million) and small bolt-ons, with larger investments potentially using the balance sheet, rather than a precise free cash flow percentage.

Keith Stanley inquired about the background and timing of the recent tuck-in acquisitions and the potential for more M&A activity in 2025. He also asked about the potential impacts on the NGL and crude businesses from possible tariffs on Canadian crude.

Answer

Willie Chiang, Chairman and CEO, explained that the recent deals resulted from a long-term, ongoing process and signify the company's strategic shift from "defense to offense." He confirmed that Plains is actively pursuing more bolt-on opportunities, guided by capital discipline. Regarding potential tariffs, Chiang stated that the company's 2025 guidance range already accounts for the most probable outcomes and that they have been proactively scenario planning.

Keith Stanley asked if the strong annual performance could lead to a larger or sooner-than-planned distribution increase and requested early thoughts on the 2025 Permian volume trajectory.

Answer

CEO Willie Chiang responded that if the company achieves sustainable EBITDA growth, an accelerated or larger distribution increase would "absolutely" be considered as part of their annual review. Regarding 2025 Permian volumes, Chiang reiterated the long-term expectation of 200,000-300,000 bbl/d of annual growth, noting it will likely be lumpy.

Keith Stanley sought confirmation that the 150% distribution coverage threshold provides a multi-year runway for $0.15 increases, asking about the growth drivers for 2027 and 2028. He also asked how the company assesses coverage on a free cash flow basis, given steady investment capital.

Answer

Willie Chiang, Chairman and CEO, confirmed the ability to continue distribution growth beyond 2026, citing self-help initiatives, additional Permian growth, and efficient growth synergies from the asset base. Al Swanson, Executive Vice President and CFO, clarified that coverage is primarily set based on DCF, with the 150% level allowing for funding of routine organic capital (in the $300-$400 million range) and small bolt-ons, with the balance sheet used for larger, non-routine investments.

Keith Stanley sought clarification on Plains All American's statement that the 150% distribution coverage threshold provides a 'multi-year runway for $0.15 increases,' asking if this implies at least two more years of such increases and what growth drivers in 2027 and 2028 would support this. He also questioned whether the company assesses coverage on a free cash flow basis, given the steady investment capital.

Answer

Willie Chiang, Chairman and CEO and President, confirmed that the message is about the ability to continue growth beyond 2026, supported by self-help initiatives, additional Permian growth, and efficient growth synergies from the asset base. Al Swanson, Executive Vice President and CFO, clarified that the DCF coverage (160% or 150%) is intended to fund routine organic capital (the $300-$400 million range) and small bolt-ons, with larger investments potentially using the balance sheet, rather than a precise free cash flow percentage.

Keith Stanley revisited the 2027 commentary, asking for details on the over $1 billion EBITDA growth, if it represents the fastest organic growth this decade, and the key projects contributing. He also asked if the Bahia UJI is treated on a net basis and about the drivers of strong NGL marketing in Q4 2025 and expectations for 2026.

Answer

A Company Representative (Daniel) confirmed the Bahia UJI is proportionately consolidated. Co-CEO Randy Fowler detailed contributions to 2027 growth, including full-year benefits from new Delaware and Midland processing plants, increased OxyRock benefits, Trigger 4 and 5, acid gas expansions, and downstream flow through Bahia, fractionators, and marine terminals. Justin Kleiderer, SVP of Pipelines & Terminals, added higher fees on the Acadian Haynesville system. Tug Hanley, a Company Representative, attributed strong Q4 NGL marketing to storage opportunities and high ethane export utilization.

Keith Stanley first revisited the 2027 outlook, asking for additional "big and chunky" projects contributing to the projected 10% EBITDA growth beyond LPG expansion and Neches River. He also sought clarification on whether the Bahia UJI is proportionately consolidated. He then followed up by asking about the activities driving strong NGL marketing in Q4 2025 and expectations for 2026, including potential upside.

Answer

Company Representative Zach Strait confirmed that the Bahia UJI is proportionately consolidated. Co-CEO Randy Fowler highlighted several contributors to 2027 growth, including full-year benefits from new processing plants in Delaware and Midland, increased benefits from the OxyROC acquisition and associated downstream flows, and full-year benefits from Frac 4 and Frac 5 expansions. Company Representative Justin Kleiderer added higher fees from the Arcadian Gainesville system. Company Representative Tug Hanley attributed strong Q4 NGL marketing to storage opportunities and high utilization of export assets, capturing standard market opportunities.

Keith Stanley of Wolfe Research, LLC sought clarification on whether the most significant recontracting headwinds for LPG exports are now over, and asked about the approximate capital cost for Phase 1 and Phase 2 of the Neches River terminal.

Answer

SVP Tug Hanley gave a direct confirmation that the meaningful recontracting headwinds are over. Co-CEO Randall Fowler confirmed that a cost of over $1 billion for Phase 1 of Neches River was 'in the ballpark' and that Phase 2 would cost less.

Keith Stanley of Wolfe Research, LLC sought to clarify if the meaningful recontracting headwinds on LPG export margins are now over. He also asked about the implied capital cost for Phase 1 of the Neches River terminal, given the change in the projects-under-construction balance.

Answer

SVP of Pipelines & Marketing Tug Hanley confirmed that the significant recontracting headwinds are over. Co-CEO Randall Fowler affirmed that the implied capital cost for Neches River Phase 1 was 'in the ballpark' of $1 billion or more, and that Phase 2 would not cost as much.

Keith Stanley asked if any potential projects could push 2026 growth CapEx materially above the $2.0-$2.5 billion guidance. He also inquired about the lower Q1 results in the crude segment and if this represents a new run rate.

Answer

Co-CEO A. Teague stated it is 'very unlikely' for 2026 CapEx to be materially higher, and Co-CEO W. Fowler highlighted the operational leverage of their existing asset base for future expansions. Executive James Bany explained the Q1 crude segment results were impacted by lower volumes and margins, partly due to a pipeline being in NGL service. He indicated that April was already showing improvement, suggesting Q1 was not a new run rate.

Keith Stanley requested an update on commercial progress for the SPOT deepwater oil export project and asked if the company could capitalize on the wide valuation gap between MLPs and C-corps.

Answer

Executive James Bany reported that commercial conversations for SPOT are extensive and ongoing, with customer feedback expected by early Q1. Co-CEO W. Fowler addressed the valuation gap, stating that selling assets is shortsighted due to tax implications and that such market dislocations tend to self-correct over time.

Keith Stanley sought clarification on the 2026 growth rate, asking if it's an 'above average' growth year or just faster than 2025, and if it includes the headwind from the Rockies asset sale. He also asked if the new FERC index change (PPI minus 0.6%) for the next five-year period is an expected headwind for the liquids business or already baked into plans.

Answer

Maryann Mannen (President and CEO) confirmed the 2026 growth expectation *is* inclusive of the Rockies sale headwind and that 2025-2026 growth is stronger than 2024-2025, but not 'completely outsized' given the $7 billion EBITDA base. Shawn Lyon (SVP of Logistics and Storage) stated the negative FERC adder was anticipated and baked into plans, not expected to impact the mid-single-digit EBITDA growth target. He added that about 33% of the COPLE segment and 20% of total MPLX is tied to FERC.

Keith Stanley sought clarification on the 2026 growth rate, asking if it's considered an 'above average' growth year or simply faster than 2025, and if it accounts for the headwind from the Rockies asset sale. He also asked if the new FERC index change (PPI minus 0.6%) for the next five-year period was an expected headwind already baked into MPLX's plans for the liquids business.

Answer

President and CEO Maryann Mannen confirmed that the 2026 growth expectation is inclusive of the Rockies sale headwind and is stronger than 2024-2025, but not 'outsized' given the $7 billion EBITDA base. SVP of Logistics and Storage Shawn Lyon stated that the negative FERC adder was anticipated and is already factored into plans, not expected to impact mid-single-digit EBITDA growth, noting that about 20% of MPLX's total business is tied to FERC.

Keith Stanley questioned whether acquisitions are now a necessary component for achieving mid-single-digit growth or if they should be considered incremental. He also asked about the contract duration for the Northwind assets and the mechanics of how MPLX would eventually control the associated NGLs.

Answer

President & CEO Maryann Mannen explained that both organic projects and M&A are evaluated against strict strategic and financial criteria, including mid-teens returns, to support growth, rather than relying on one over the other. She noted Northwind's contracts have an average life of 13 years with 80% of revenue under MVCs. SVP David Heppner added that as existing processing contracts roll off, MPLX will gain control of the NGLs, providing valuable flexibility and optimization opportunities for its integrated value chain.

Keith Stanley questioned whether acquisitions are now a required component for achieving mid-single-digit growth or if they should be considered incremental. He also asked about the contract duration for Northwind assets and the mechanics of how MPLX would eventually control the associated NGLs.

Answer

President and CEO Maryann Mannen explained that both organic projects and M&A are evaluated against the same strategic rationale and mid-teens return hurdles to support growth, without a pre-set allocation. She noted the Northwind contracts have an average life of thirteen years. SVP David Heppner added that as contracts roll off, MPLX gains control and optionality over the NGLs, enhancing the flexibility of its entire value chain.

Keith Stanley asked how much of MPLX's Permian NGL production is currently under its control to move through the new facilities and what percentage of the new frac and export capacity is contracted with MPC versus being available to the market.

Answer

EVP and COO Gregory Floerke explained that while NGLs currently go to third-party fractionators, MPLX expects to redirect these volumes to its new facilities as existing contracts expire. President and CEO Maryann Mannen reiterated confidence in their ability to supply the new assets. SVP David Heppner added that the 'vast majority' of the C3+ volumes from the fractionators will be contracted with MPC.

Keith Stanley sought clarity on the sustainability and time frame for the 12.5% distribution growth, asking about key guideposts like coverage or leverage. He also asked whether potential asset drop-downs from MPC are driven by MPC's cash needs or MPLX's growth requirements.

Answer

Maryann Mannen, President and CEO, linked the distribution's durability to continued cash flow growth from projects coming online in 2025-2026 and the company's financial flexibility, including a leverage ratio below its 4x target. She clarified that asset drop-downs are not a priority and are evaluated based on MPLX's strict capital discipline and return criteria, independent of MPC's capital return needs.

Keith Stanley sought clarification on the updated growth CapEx guidance of 'at least $3 billion a year,' asking if it solely reflects the current sanctioned backlog or includes future FID projects. He also questioned whether an earlier in-service date for Mississippi Crossing would immediately trigger full financial contribution from contracts.

Answer

CEO Kimberly Dang stated the $3 billion CapEx guidance is largely based on the $10 billion approved backlog, with a small portion from the opportunity set, reflecting continued backlog growth and natural gas demand. She clarified that for Mississippi Crossing, customers are not obligated to take capacity early, though they can, and early regulatory approval doesn't always translate directly to an earlier in-service date due to other factors like pipe and compression availability. Sital K. Mody added that any unused early capacity could be sold in secondary markets.

Keith Stanley sought clarification on the updated growth CapEx messaging of at least $3 billion per year, asking if it was solely based on the sanctioned project backlog or if it reflected future FIDs. He also followed up on the Mississippi Crossing (MSX) project's potential early in-service, asking if contracts would kick in for full financial contribution immediately or if it was project-specific.

Answer

CEO Kimberly Dang clarified that the $3 billion CapEx is largely based on the $10 billion approved project backlog but includes a small portion from the opportunity set, reflecting continued backlog growth and natural gas demand. On MSX, she stated customers don't have to take capacity early, and early regulatory approval doesn't always translate to day-for-day early in-service due to pipe/compression timing, but KMI can use available capacity or sell in secondary markets. President of Natural Gas Pipelines Sital Mody added that the macro environment presents opportunities to sell in secondary markets.

Keith Stanley asked about the structure of the Western Gateway project, specifically if Kinder Morgan's capital expenditure portion would be smaller than Phillips 66's, and if it would be a roughly 50/50 joint venture. He also inquired about the potential for Tennessee Gas Pipeline (TGP) projects to increase egress capacity out of the Appalachia region.

Answer

Kim Dang, CEO of Kinder Morgan, confirmed that the Western Gateway project would be around a 50/50 joint venture, and KMI's capital expenditure for new assets would be less than Phillips 66's due to KMI contributing existing assets. Sital Mody, President of Natural Gas Pipelines, stated that Kinder Morgan is diligently working on finding ways to get incremental egress out of the Appalachia basin, with rough estimates north of 0.5 Bcf, though it is still early in the process.

Keith Stanley asked about the structure of the Western Gateway JV, specifically Kinder Morgan's capital expenditure portion relative to Phillips 66, and the potential for TGP projects to add egress capacity out of the Appalachia region.

Answer

Kim Dang (CEO) confirmed the Western Gateway JV would be around 50/50, with Kinder Morgan's capital expenditure for new assets being slightly less than Phillips 66 due to KMI contributing existing assets. Sital Mody (President of Natural Gas Pipelines) stated that diligent work is underway to find incremental egress from Appalachia on TGP, targeting north of half a Bcf, though it's still early in the diligence process.

Keith Stanley of Wolfe Research, LLC asked for the timeline and volume ramp details for the new $500 million Haynesville gathering project. He also questioned if recent federal permitting improvements could meaningfully accelerate large project timelines.

Answer

Sital Mody, President of Natural Gas Pipelines, stated the Haynesville facilities would be in service by the end of next year, with volumes ramping up to meet significant producer growth. CEO Kimberly Dang responded that while a permanent waiver of the five-month construction waiting period would be beneficial, its impact depends on equipment procurement schedules. She noted the increased prior notice limit is already providing a clear benefit for smaller projects.

Keith Stanley asked if KMI's LNG feed gas opportunities are focused on new facilities or redundancy projects, sought an update on the Trident expansion, and inquired about the scope of contracts for the Double H NGL conversion.

Answer

An unnamed executive confirmed KMI is pursuing an 'all of the above' approach for LNG, targeting both new facilities and optimization for existing ones. He added that KMI is making 'significant strides' on the Trident project and hopes to announce positive news, possibly an expanded scope, in the next quarter. Regarding the Double H conversion, he stated KMI is looking to get molecules to both Conway and Mont Belvieu and is seeking to add incremental volumes, but declined to share further strategic details.

Keith Stanley of Wolfe Research inquired about Kinder Morgan's approach to incremental M&A given its expanded organic growth opportunities and improved stock currency. He also asked for clarification on the factors behind the Q4 EBITDA miss versus the initial budget.

Answer

Kimberly Dang (Executive) responded that M&A is viewed opportunistically and the company's criteria have not changed, noting KMI can fund its current projects with internally generated cash. David Michels (Executive) added that the Q4 miss was primarily due to commodity price headwinds, lower-than-expected RNG sales, and a delay in recognizing some RIN sales into the next year.

Keith Stanley from Wolfe Research asked if Kinder Morgan would consider exceeding $2.5 billion in annual growth CapEx and inquired about the company's strategy for managing increased legal and permitting risks for new projects.

Answer

President Kimberly Dang confirmed the company could fund CapEx above $2.5 billion by using its balance sheet capacity, noting its leverage is well within its target range, or by bringing in partners for very large projects. Executive Chairman Richard Kinder affirmed the ability to fund needs while maintaining a strong balance sheet. Regarding legal risks, Dang stated that challenges are not new and KMI's strategy already incorporates building legally defensible permits to overcome expected opposition.

Keith Stanley asked for confirmation that Williams' power strategy, having gotten ahead of equipment needs, means the company can maintain its current cadence of power projects from a supply chain perspective through 2030. He also sought clarification on the Louisiana LNG interest, specifically if the take-or-pay contract on the facility is directly subscribed with Woodside, given market perception of the terminal being largely uncontracted.

Answer

President and CEO Chad Zamarin confirmed that the company is working with customers and equipment suppliers to ensure it can deliver capacity for power projects through the end of the decade. Regarding the LNG interest, Mr. Zamarin clarified that it is a fully contracted LNG terminal, with the majority of the offtake held by Woodside, an investment-grade international LNG company. He noted that Stonepeak's 40% investment is due to the facility being fully supported by take-or-pay contracts, and Williams' equity ownership means a portion of the toll paid for its offtake returns as tolling revenues.

Keith Stanley from Wolfe Research, LLC sought confirmation on Williams' power strategy, specifically whether the company believes it can maintain its current cadence of power projects from a supply chain perspective through 2030, given its proactive equipment procurement. He also requested further clarification on the Louisiana LNG interest, asking if the take-or-pay contract on the facility itself is directly subscribed with Woodside, especially in light of market perceptions that the LNG terminal is largely uncontracted.

Answer

President and CEO Chad Zamarin confirmed that Williams is working with customers and equipment suppliers to layer in power projects through the end of the decade, confident in its ability to deliver capacity. Regarding the Louisiana LNG terminal, Mr. Zamarin reiterated that it is a fully contracted facility, with Stonepeak's 40% investment supporting this. He clarified that the majority of the take-or-pay contracts are with Woodside, a credible investment-grade international LNG company, and that Williams' equity ownership means a portion of the tolling revenues from its offtake comes back to the company.

Keith Stanley asked about the pace of data center projects, questioning the feasibility of the 1 gigawatt target by 2027. He also inquired about a potential large-scale project on the Northwest Pipeline to bring gas from Wyoming to the Pacific Northwest.

Answer

EVP Chad Zamarin confirmed that having 1 gigawatt of power solutions online by 2027 is a reasonable and achievable goal, supported by secured vendor slots. CEO Alan Armstrong addressed the Northwest Pipeline, noting a surprising surge in new project opportunities out West, driven by power demand for data centers in markets like Idaho and Utah, making such expansions increasingly likely.

Keith Stanley of Wolfe Research questioned whether the 5-7% long-term EBITDA growth would be linear or lumpy and asked for an update on the company's trajectory to becoming a full cash taxpayer.

Answer

EVP Chad Zamarin stated that growth drivers for 2027 and beyond are not fully reflected in current plans and that a significant pull on gas to meet demand could drive substantial EBITDA increases on gathering systems without major capital. CFO John Porter clarified that a 100% bonus depreciation extension would cut the 2025 cash tax bill of ~$300M in half. Without it, the company assumes a gradual ramp to becoming a full cash taxpayer in the latter years of the decade, a forecast he described as conservative.

Keith Stanley questioned the level of take-or-pay commitments for the Louisiana Energy Gateway (LEG) project and asked if management was surprised by competing Haynesville pipeline announcements. He also sought an update on the Regional Energy Access (REA) project's regulatory status.

Answer

CEO Alan Armstrong confirmed the "vast majority" of LEG capacity is secured by take-and-pay contracts and expressed no surprise at competing projects, citing the immense LNG-driven demand that will require significant Haynesville growth. COO Micheal Dunn reported that for REA, all legal filings are complete, and they are awaiting FERC action on a temporary certificate. He conveyed confidence in the project's ultimate approval, citing FERC's strong defense of its initial decision.

Keith Stanley of Wolfe Research, LLC asked for early thoughts on how capital expenditures might evolve over the next few years, given the numerous growth projects being discussed, including Kings Landing 2, AGI capacity, and a potential power plant.

Answer

CEO Jamie Welch acknowledged that the company must prioritize its many opportunities, highlighting the expansion of the ECCC pipeline and the Kings Landing 2 project with AGI as highly attractive, high-return investments. SVP & CFO Trevor Howard added that their broad opportunity set allows them to be patient and diligent in capital allocation. Welch reiterated a general target of reinvesting around 30% of EBITDA, with elevated spending in years when new plants are being built.

Keith Stanley of Wolfe Research asked if Q2 2025 EBITDA would be flat sequentially with Q1, implying all growth is back-half weighted, and questioned if selling non-operated pipeline assets is an option to fund other capital priorities.

Answer

CEO Jamie Welch confirmed that the analysis of flat Q2 EBITDA was 'pretty much the case,' with the 'real step change' occurring when the Kings Landing project comes online in the second half. He also affirmed that Kinetik is 'always open for business' to sell non-operated assets if they see compelling value, and would redeploy proceeds into high-value opportunities, including share repurchases.

Keith Stanley of Wolfe Research questioned the specifics of the potential power plant project, including ownership and return calculations, and asked for a breakdown of the 20% processing volume growth forecast for 2025.

Answer

CEO Jamie Welch clarified the power project would be for self-consumption of around 110 megawatts to optimize OpEx, with returns based on current costs, not speculative gas price optimization. Welch and CFO Trevor Howard explained the 2025 volume growth is driven by the return of curtailed Apache volumes and Barilla Draw volumes in the south, with the majority of the ramp occurring in the second half of the year as the Kings Landing complex comes online in the north.

Keith Stanley of Wolfe Research, LLC inquired about the company's increasing confidence in a favorable outcome for its Small Refinery Exemptions (SRE) and the potential use of proceeds. He also asked for an update on the Enterprise Optimization Plan (EOP), questioning if there is further room for upside, what drove the increased guidance, and the expected impact on sustaining capital for refining.

Answer

Avigal Soreq, President and CEO, expressed strong optimism regarding the SRE petitions, citing legal precedent and the clear economic harm to Delek. Regarding the EOP, Soreq described it as a continuous improvement 'lifestyle' focused on free cash flow, leading to the guidance increase. Mohit Bhardwaj, EVP of Strategy, Business Development & IR, added that the increased EOP target is driven by growing confidence in margin improvements rather than just cost reductions.

Keith Stanley of Wolfe Research inquired about Delek's growing confidence in a favorable outcome for its Small Refinery Exemptions (SRE) and the potential use of proceeds. He also asked for an update on the Enterprise Optimization Plan (EOP), questioning if there was further upside, what drove the increased guidance, and the resulting impact on sustaining capital.

Answer

President and CEO Avigal Soreq expressed strong optimism for the SRE petitions, citing legal precedent and the clear economic harm Delek has faced while remaining in compliance. Regarding the EOP, Mr. Soreq described it as a continuous improvement 'lifestyle' focused on free cash flow. EVP Mohit Bhardwaj added that the EOP guidance was increased to $130-$170 million due to rising confidence in margin improvements, not just cost savings, and confirmed $30 million in benefits were realized in Q2.

Keith Stanley inquired about Delek's growing confidence in a favorable outcome for its Small Refinery Exemption (SRE) petitions and the potential use of proceeds. He also asked if there was further upside to the Enterprise Optimization Plan (EOP) guidance and its impact on sustaining capital.

Answer

President and CEO Avigal Soreq expressed strong optimism regarding the SREs, citing legal precedent and the clear economic harm Delek has faced while remaining in compliance. Regarding the EOP, Soreq described it as a continuous improvement culture, leading to the raised guidance of $130-$170 million. EVP Mohit Bhardwaj added that this increase is driven by growing confidence in margin improvements, not just cost reductions.

On behalf of Doug Leggate, Keith Stanley inquired about Delek's growing confidence in a favorable outcome for its Small Refinery Exemption (SRE) petitions and the potential use of proceeds. He also asked for an update on the Enterprise Optimization Plan (EOP), questioning if there was room for further upside beyond the newly raised guidance and how it might impact sustaining capital.

Answer

President and CEO Avigal Soreq expressed strong optimism regarding the SREs, citing legal precedent and the clear economic harm to Delek, which he believes the EPA understands. For the EOP, Soreq described it as a continuous improvement 'lifestyle,' leading to the guidance increase to $130-$170 million ahead of schedule. EVP Mohit Bhardwaj added that the increased EOP target is driven by growing confidence in margin improvements, not just cost reductions.

Keith Stanley of Wolfe Research inquired about Delek's growing confidence in a favorable Small Refinery Exemption (SRE) outcome and the potential use of proceeds. He also asked about the drivers behind the increased Enterprise Optimization Plan (EOP) guidance and its impact on future sustaining capital.

Answer

President and CEO Avigal Soreq expressed strong optimism regarding the SRE petitions, citing legal precedent and the EPA's understanding of the economic harm, but did not comment on the use of proceeds. Regarding the EOP, Soreq described it as a continuous improvement 'lifestyle' and noted they were ahead of schedule, leading to the raised guidance. EVP Mohit Bhardwaj added that the increased EOP target is driven by growing confidence in margin improvements, not just cost-cutting.

Keith Stanley from Wolfe Research, LLC inquired about the remaining gating items for the Mainline expansion and the future opportunities for the Permian gas JV with Whitewater.

Answer

EVP of Liquids Pipelines Colin Gruending stated the primary gating item, a successful open season on Flanagan South, was achieved, with the next step being commercial agreements to roll the capital into the mainline rate base. EVP of Gas Transmission Cynthia Hansen noted the Whitewater JV continues to see expansion opportunities like the upsized Traverse pipeline, but CEO Gregory Ebel added Enbridge could also pursue Permian projects independently.

Keith Stanley asked for an impression of the staff report in the ongoing Ohio rate case and the company's confidence in reaching a constructive outcome. He also questioned if M&A is still a low priority now that the gas utility acquisitions are nearly complete.

Answer

Michele Harradence, EVP of Gas Distribution and Storage, acknowledged the staff report differed from the company's filing but noted this is not unusual. She expressed confidence in reaching a settlement that provides a fair return and falls within the transaction's economic model. President and CEO Greg Ebel confirmed that while the company always looks at M&A, he does not foresee any transactions on the scale of the utility acquisition, focusing instead on smaller, 'tuck-in' opportunities.

Keith Stanley sought clarification on whether the 585,000 bpd contractual commitment can be met physically through the affected segment. He also asked a theoretical question about how costs for a major pipe replacement would be covered in the future.

Answer

SVP and COO Richard Prior confirmed the company expects to physically move the 585,000 bpd of throughput without any synthetic arrangements. President and CEO Bevin Wirzba added that ongoing operational projects and maintenance, such as digs or partial pipe replacements, are typically flowed through the variable toll, consistent with industry practice, and would not be covered by insurance, which is reserved for incidents.

Keith Stanley questioned TC Energy's data center strategy, asking why a specific third-party project in Ohio was not a fit and what criteria (contract duration, returns) would be used for potential integrated power solutions in Canada. He also requested more specific details on the Northwoods project's scope.

Answer

President of U.S. Natural Gas Pipelines Tina Faraca explained their U.S. strategy prioritizes serving utility customers with long-term, take-or-pay contracts at 5-7x build multiples, which dictates their project selection. EVP Greg Grant added that any Canadian power projects must compete for capital against this existing high-return pipeline. Tina Faraca specified that the Northwoods project is a $900 million expansion on the ANR system involving a combination of looping and compression to serve Midwest demand.

Keith Stanley of Wolfe Research inquired about the growth outlook in Mexico following the completion of Southeast Gateway and asked for an update on the Coastal GasLink litigation and any expected cash flows.

Answer

CEO Francois Poirier expressed a bullish outlook on Mexico, anticipating low-risk lateral opportunities, but noted the company will manage its total exposure to the country to ~15% of EBITDA. Executive Stanley Chapman stated that on Coastal GasLink, the company continues to expect to be in a net recovery position from its cost claims, with no change to guidance.

Keith Stanley inquired about Cheniere's strategy for hedging its open LNG exposure for 2025 and asked for the company's outlook on European gas demand.

Answer

EVP and CFO Zach Davis revealed that Cheniere has already opportunistically sold over 1 million tonnes of its 2025 spot capacity, primarily from existing trains where production is more certain. He noted it's difficult to hedge uncertain commissioning volumes far in advance. EVP and CCO Anatol Feygin projected that European demand will remain stable in the 120-130 million-tonne range for several years, supported by stabilized industrial consumption and improved intra-Europe infrastructure, even as Russian pipeline flows are expected to decrease.