Sunil Sibal

Sunil Sibal asked whether the low operating costs in the Logistics and Transportation (L&T) segment in 2025 were due to one-time factors or a secular trend. He also inquired about a way to conceptualize the total inventory of volumes from acreage dedications versus current volumes.

Answer

Jen Kneale, President, clarified that L&T operating costs are consistent with volumes and new assets, with lumpiness primarily due to turnarounds. Regarding acreage dedications, Jen Kneale emphasized that Targa has decades of drilling inventory on already dedicated acreage, supporting a strong medium and long-term outlook and necessitating current infrastructure investments.

Sunil Sibal inquired about the low operating costs in Targa's Logistics and Transportation (LNT) segment, asking if this was due to one-time factors in 2025 or a secular trend in cost control. He also asked for a way to conceptualize the total inventory of volumes from Targa's growing acreage dedications in the Permian relative to its current volumes and rates.

Answer

President Jen Kneale clarified that LNT operating costs are consistent with volumes and new assets, with any lumpiness primarily due to turnarounds. Regarding acreage dedications, she emphasized that Targa possesses decades of drilling inventory on already dedicated acreage, highlighting a strong position that necessitates current infrastructure investments and supports an exceptional medium and long-term outlook, even without further commercial execution.

Sunil Sibal asked for an update on Targa Resources Corporation's longer-term steady-state CapEx number of $1.7 billion, considering recent portfolio growth. He also inquired about the growing interest from the data center community in Permian gas and Targa's thoughts on this opportunity.

Answer

Jen Kneale, President, stated that the February 2024 CapEx framework remains helpful, but costs are modestly higher due to tariffs and a larger footprint, with residue and CCUS spending now included. Matt Meloy, CEO, clarified that the $1.7 billion was a multi-year average, with short-term spending higher (through Speedway completion) and then lower. Jen also confirmed Targa is having many conversations regarding data center demand, seeing it as a tailwind for natural gas demand, and is well-positioned to supply it.

Sunil Sibal asked for an update on Targa Resources Corporation's longer-term steady-state capital expenditure number, previously estimated at $1.7 billion, given recent portfolio growth. He also inquired about Targa's interest and thoughts on the growing demand for Permian gas from the data center community.

Answer

President Jen Kneale stated that the February 2024 framework for multi-year average CapEx remains helpful, though current costs are modestly higher due to tariffs and a larger footprint, plus new residue and CCUS spending. CEO Matt Meloy added that the $1.7 billion was a multi-year average, with short-term spending elevated due to Speedway, then expected to be below average. Jen confirmed Targa is having many conversations with data center companies, seeing the increasing demand for power generation as a positive tailwind for Targa's natural gas aggregation and transport capabilities.

Sunil Sibal asked about the capital costs for the next wave of processing plants in an inflationary environment and the potential impact on project returns.

Answer

President Jennifer Kneale acknowledged that costs have risen, estimating new plants at $225 million to $275 million, but stated that Targa's engineering team is effectively managing these increases. She highlighted strategies like using standard designs and co-locating facilities to leverage shared infrastructure, ensuring they continue to build at best-in-class costs and generate attractive returns.

Sunil Sibal asked about the capital costs for the next set of processing plants given inflation and the potential impact on returns.

Answer

President Jennifer Kneale acknowledged that costs have risen, providing a current range of $225 million to $275 million per plant. However, she emphasized that the engineering team is effectively managing these costs through standardized designs, co-locating facilities to share infrastructure, and proactive supply chain management to maintain best-in-class costs and returns.

Sunil Sibal asked if Targa has layered on additional hedges recently and at what crude oil price level producers might change their drilling plans.

Answer

President Jennifer Kneale confirmed that Targa is always adding hedges as part of its disciplined program and is more likely to add than reduce exposure, on top of the protection from fee floors. Regarding producer plans, she noted that each producer's decision is different and based on their specific economics and board discussions. While Targa has seen mixed minor changes from smaller producers, the larger, needle-moving customers have not indicated any changes to their multi-year drilling programs at this time.

Sunil Sibal asked how Targa manages project returns amid inflation and potential tariffs, and whether costs can be passed on. He also inquired about the competitive landscape for NGL exports and any shifts in target markets.

Answer

CEO Matt Meloy described rising steel costs as a manageable headwind, as steel is a modest portion of total project costs and the procurement team is actively managing sourcing. On exports, he and President, Logistics and Transportation, Scott Pryor noted the market remains competitive but that Targa's brownfield expansion is attractive and needed to service its own system's growing volumes for a robust global market.

Sunil Sibal inquired about ethane recovery trends given weak pricing, the volume outlook for the Daytona pipeline, and the sustainability of the recent uptick in crude volumes in the Badlands system.

Answer

Executive D. Pryor stated that despite weak prices, Targa remains in full ethane recovery mode in the Permian to feed its integrated system. Executive Patrick McDonie attributed the Badlands crude volume increase to specific producers receiving permits and ramping activity, and he expects 'good activity' to continue, though not necessarily the same robust growth rate.

Sunil Sibal from Seaport Global Securities sought clarification on whether the 150% distribution coverage threshold reflects any changes in how Plains manages other assets in terms of contracting, and requested details on the Wildhorse Terminal acquisition, including its cost and capacity.

Answer

Al Swanson, EVP and CFO, reiterated that the 150% coverage is comfortable for the stable crude segment, including the highly contracted EPIC Crude pipeline, and remains a conservative level that funds routine investment capital. Jeremy Goebel, EVP and Chief Commercial Officer, described the Wildhorse Terminal as 4-5 million barrels of functional storage adjacent to existing facilities, acquired for a net cost of $10 million, noting it's a low-cost basis addition to their fully contracted Cushing facility.

Sunil Sibal from Seaport Global Securities sought clarification on whether the 150% distribution coverage threshold reflects any changes in how other assets are managed or contracted, and asked for details on the Wild Horse Terminal acquisition, including its storage capacity and approximate cost.

Answer

Al Swanson, EVP and CFO, reiterated that the 150% coverage is comfortable and conservative, reflecting the stable crude segment cash flow, including the highly contracted EPIC Crude pipeline, and is sufficient for routine investments. Jeremy Goebel, EVP and Chief Commercial Officer, described the Wild Horse Terminal as 4-5 million barrels of functional storage adjacent to existing facilities, acquired for a net cost of $10 million, which is significantly below replacement cost.

Sunil Sibal sought clarification on the BridgeTex acquisition structure and asked about the long-term strategy for the small U.S. NGL business that Plains is retaining.

Answer

EVP & CCO Jeremy Goebel clarified that the BridgeTex interest was purchased directly by Plains and not through a joint venture. He further explained that the retained U.S. NGL assets are minor, kept for tax and operational efficiency, and are more likely to be divested in the future rather than forming part of a core strategy.

Sunil Sibal asked about the expected cadence of Permian volume growth in 2025 and the potential upside if basin growth is at the high end of the range. He also inquired about Plains' competitive position in the Canadian NGL market.

Answer

Jeremy Goebel, an executive, projected a 2025 Permian growth cadence similar to the prior year, weighted to the second half. He noted the company's guidance already encompasses the full 200k-300k bbl/d basin growth range. Regarding Canadian NGLs, he asserted that Plains' position is secure due to its unique, non-replicable assets, and is not significantly impacted by recent competitive shifts.

Sunil Sibal asked if Plains' Permian system volumes and cash flows would grow in line with the overall basin growth forecast of 200,000-300,000 bbl/d and questioned the reasons for higher cash taxes.

Answer

Executive Jeremy Goebel confirmed that Plains' system is a "good proxy for the basin's overall growth." CFO Al Swanson explained that higher cash taxes were driven by increased income (especially from Canada), a one-time withholding tax on repatriated cash, and other estimate refinements, with taxes expected to decrease in 2025.

Sunil Sibal asked for clarification on the rationale behind lowering the distribution coverage to 150%, specifically if there are other asset management or contracting strategies beyond the Cactus acquisition contributing to this comfort level. He also requested details on the Wildhorse Terminal storage acquisition in Cushing, Oklahoma, including its capacity and approximate cost.

Answer

Al Swanson, Executive Vice President and CFO, reiterated that the 150% coverage is comfortable, viewing the crude segment as a stable cash flow stream and the EPIC Crude Pipeline as highly contracted, maintaining a conservative coverage level that funds routine investment capital. Jeremy Goebel, Executive Vice President and Chief Commercial Officer, stated that the Wildhorse Terminal adds 4-5 million barrels of functional storage adjacent to existing facilities, with an anticipated net cost of $10 million, which is significantly below new construction costs.

Sunil Sibal sought clarification on the 150% distribution coverage, asking if other asset management or contracting strategies should be considered. He also inquired about the Wildhorse Terminal storage acquisition, specifically its 4 million barrels of storage and approximate cost.

Answer

Al Swanson, Executive Vice President and CFO, reiterated comfort with the 150% coverage, viewing the crude segment as a stable cash flow stream and EPIC Crude Pipeline as highly contracted, maintaining that it remains a conservative level that funds routine investments. Jeremy Goebel, Executive Vice President and Chief Commercial Officer, described the Wildhorse Terminal as 4-5 million barrels of functional storage adjacent to existing facilities, with an anticipated net cost of $10 million, noting it's a low-cost basis for expanding customer relationships.

Sunil Sibal sought clarification on the Permian production sensitivity, asking about assumptions for the marginal barrel and the time frame for the sensitivity. He also asked about the seasonality of NGL spec sales.

Answer

Executive Jeremy Goebel stated the sensitivity is for the full year and that in a supply-push market, prices dictate where the marginal barrel goes. Regarding NGLs, Goebel and CEO Willie Chiang noted that storage is used to optimize sales timing, with propane sales typically higher in colder months, and directed him to Investor Relations for more detail.

Sunil Sibal asked if the LNG opportunity with Woodside is a one-off or an opening into a larger business for Williams. He also inquired about cost inflation in the power innovation supply chains and how Williams manages counterparty concentration as that business grows.

Answer

President and CEO Chad Zamarin stated that the Woodside LNG opportunity is not necessarily an opening into a larger international LNG marketing business for Williams, but rather a unique integrated opportunity to leverage a small LNG position for pipeline infrastructure, gathering, and storage expansion. CFO John Porter acknowledged cost inflation in supply chains, noting it's a market reality managed with customers. EVP of Corporate Strategic Development Rob Wingo addressed counterparty concentration, stating Williams focuses on 'best of the best' opportunities with hyperscalers (AA credits) and secures attractive credit protection beyond the high quality of the companies themselves.

Sunil Sibal from Seaport Global Securities LLC asked if the recent LNG deal with Woodside is a one-off opportunity for Williams or if it signifies an opening into a larger LNG business. He also inquired about the cost inflation Williams is observing in its power innovation supply chains and how the company is managing counterparty concentration as this business expands.

Answer

President and CEO Chad Zamarin clarified that while Williams is not aiming to become a larger international LNG marketer, it remains open to unique, integrated opportunities like the Woodside deal that allow for small LNG positions to drive pipeline infrastructure expansion and align storage assets. CFO John Porter acknowledged that Williams, like others, is experiencing cost inflation in its power innovation supply chains due to high demand for electricity generation, but stated that this hasn't made them less competitive. EVP of Corporate Strategic Development Rob Wingo added that Williams is focused on "best of the best" opportunities with hyperscalers (AA credits) and is securing attractive credit protection beyond the strong credit profiles of its counterparties.

Sunil Sibal asked if the midpoint of ONEOK's full-year guidance ($8.25 billion adjusted EBITDA) remains a good anchor point for fourth-quarter goals, especially considering the MB4 incident. Sunil Sibal also sought clarification on the Bakken rig count, noting an increase to 16 rigs, and asked how this number is expected to trend into 2026.

Answer

Walt Hulse, Chief Financial Officer, Treasurer, and Executive Vice President, affirmed confidence in achieving results within the stated guidance range for 2025, while acknowledging the need to observe how the fourth quarter unfolds. Sheridan Swords, Executive Vice President and Chief Commercial Officer, confirmed the increase of one rig in the Bakken to 16. He stated that producers are still in their budgeting process for 2026, but ONEOK has good momentum and is optimistic about future trends.

Sunil Sibal sought clarification on ONEOK's 2025 guidance, asking if the midpoint of $8.25 billion for adjusted EBITDA remains a good anchor point for fourth-quarter goals, especially considering the MB4 incident. Sibal also asked for clarification on the Bakken rig count, noting a slight increase, and how that number might trend into 2026.

Answer

Walt Hulse, Chief Financial Officer, Treasurer, and Executive Vice President, Investor Relations and Corporate Development, affirmed confidence in achieving results within the stated 2025 guidance range, noting that the fourth quarter is still playing out. Sheridan Swords, Executive Vice President and Chief Commercial Officer, confirmed a one-rig increase in the Bakken, stating that producers are still in their budget process for 2026, but ONEOK has good momentum and is optimistic about future trends.

Sunil Sibal from Seaport Global Securities asked about the hedging strategy for the butane blending business and how current hedging levels compare to prior years. He also sought details on the $365 million CapEx for the new Permian processing plant, including what it covers and its standalone economics.

Answer

EVP & CCO Sheridan Swords explained that hedging levels are in line with last year and that the company's access to 'butane on demand' allows for opportunistic hedging. He confirmed the $365 million plant CapEx includes the cryo plant, compression, and a CO2 treater. President and CEO Pierce Norton added that while specific returns aren't disclosed, the integrated value across the entire chain makes such projects highly profitable.

Sunil Sibal sought clarification that ONEOK's current system volumes are sufficient to fill its future LPG export dock capacity and asked if the Natural Gas Pipelines segment was on track to exceed its full-year guidance.

Answer

Chief Commercial Officer Sheridan Swords confirmed that the company already produces enough propane on its system to fill the future dock, which is currently sold into the open market. He also agreed the Natural Gas Pipelines segment had a strong Q1 and noted positive momentum from new storage contracts and active negotiations for industrial demand in Louisiana, expecting a 'good year' for the segment.

Sunil Sibal asked about the current utilization of ONEOK's Permian processing capacity and the extent of its control over downstream NGL marketing. He also inquired about the expected cadence of the share repurchase program given the improving leverage outlook.

Answer

CCO Sheridan Swords indicated that Permian processing capacity is expected to be fully utilized, justifying the relocation of a gas plant to the region. He confirmed ONEOK controls marketing for most new NGL volumes. CFO Walter Hulse stated that while the company intends to complete its $2 billion buyback program, the bulk of it will likely be back-weighted as they prioritize achieving their debt metric goals first.

Sunil Sibal of Seaport Global Securities asked where ONEOK stands on its Magellan synergy targets one year after the acquisition and inquired about future consolidation opportunities.

Answer

CFO Walter Hulse confirmed ONEOK is on track to meet or exceed its Magellan synergy targets. Sheridan Swords, Executive Vice President, identified future consolidation opportunities in the Mid-Continent G&P sector, the Permian Basin where an integrated value chain is advantageous, and the high-demand Louisiana corridor.

Asked for details on a recent noncore asset sale and its impact on capital allocation, and inquired about the regulatory status of the Louisiana CO2 pipeline project.

Answer

The company sold its Ohio River Valley assets for ~$59M, with proceeds going to debt reduction and potentially increased buybacks. The company continues to favor buybacks for capital return. The Louisiana regulatory environment for CO2 pipelines remains supportive and is not impacted by issues seen in other states.