Q3 2024 Earnings Summary
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +20% | Higher commodity sales and expanded fee-based services drove the increase. Additionally, integration of Magellan assets boosted refined products and crude transportation earnings, offsetting lower commodity price impacts. |
Natural Gas Gathering & Processing | -6% | Decline primarily due to lower realized natural gas and NGL prices and the sale of certain Kansas assets, which reduced processing revenue. Higher volumes in the Rocky Mountain region partially offset these headwinds. |
Refined Products and Crude | +1,238% | The Magellan Acquisition significantly expanded refined products and crude assets, leading to a massive year-over-year increase. Additional synergies and higher transportation volumes also contributed to strong growth. |
Natural Gas Pipelines | +17% | Growth driven by higher firm and interruptible transportation rates, increased storage demand, and expansion projects in Texas and Oklahoma. These factors, along with strong market fundamentals, contributed to improved earnings. |
Net Income | +53% | Stronger results from all core segments—particularly Refined Products and Crude—plus a $53 million benefit from asset sales, cost efficiencies, and synergy capture from the Magellan integration. This more than offset higher interest expenses associated with the acquisition. |
EPS (Diluted) | +20% | Incremental operating income from acquired assets and increased volumes in G&P and Pipeline segments drove higher earnings per share, despite increased interest expense. The net impact of these factors resulted in a meaningful improvement in EPS. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted EBITDA (stand-alone) | FY 2024 | $6.175B | $6.275B | raised |
Adjusted EBITDA (consolidated) | FY 2024 | no prior guidance | $6.625B | no prior guidance |
Net Income (stand-alone) | FY 2024 | no prior guidance | $2.945B | no prior guidance |
Net Income (consolidated) | FY 2024 | no prior guidance | $3.0B | no prior guidance |
Capital Expenditures | FY 2024 | no prior guidance | $1.75B – $1.95B | no prior guidance |
Total Combined EBITDA | FY 2025 | no prior guidance |
| no prior guidance |
Leverage (Net Debt-to-EBITDA) | FY 2025 | no prior guidance | 3.9x | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Synergies from acquisitions | Consistently emphasized each quarter (Magellan in Q4 2023 , Q1 2024 , Q2 2024 ); EnLink and Medallion not discussed prior to Q3. | Expanded to include Magellan, EnLink, and Medallion, focusing on cost savings and low-capex growth. | Consistent theme across periods, with new deals mentioned in Q3 2024. |
Bakken volume growth | Highlighted in Q1 2024 (post-winter rebound) and Q2 2024 (steady growth, no mention of delays) ; not noted in Q4 2023. | Strong volumes but new caution on completion delays due to wildfires and temporary shut-ins. | Shift in sentiment from purely bullish to acknowledging temporary setbacks in Q3 2024. |
Ethane recovery and NGL price volatility | Recurring topic each quarter: Q2 2024 , Q1 2024 , Q4 2023. | Remains a key concern, driven by gas prices and regional economics. | Consistently important, with changing market conditions each quarter. |
The Saguaro Connector Pipeline and Overland Pass pipeline | Q4 2023: Discussed Saguaro permit approval and Overland Pass contract expiration. Q2 2024: Saguaro mentioned (FID pending), no Overland Pass update. Q1 2024: No mention. | No mention in Q3 2024. | No current details, earlier focus in Q4 2023 and partial update in Q2 2024. |
AI-driven demand for natural gas | Introduced in Q1 2024 , mentioned in Q2 2024 with 5 AI-related power projects ; no mention in Q4 2023. | Referenced as a factor in Louisiana power demand and data center growth. | Continues in Q3 2024 discussion, indicating growth potential from data centers. |
Ongoing capacity expansions | Q2 2024 highlighted fractionator rebuild and pipeline expansions , Q1 2024 ongoing expansions , Q4 2023 outlook for major projects but seeking smaller, high-return efforts post-2025. | Focus on low-capex, high-return projects, including expansions of West Texas NGL, Elk Creek, Medford fractionator, and refined products system. | Transition toward smaller-scale, profitable projects by Q3 2024. |
LNG export opportunities | No mention in Q2 2024, Q1 2024, or Q4 2023. | New emphasis on “last-mile” connections for LNG facilities in Louisiana. | Emerging growth frontier in Q3 2024. |
Projected EBITDA surpassing $8B | No mention in Q2 2024, Q1 2024, or Q4 2023. | First stated in Q3 2024: management expects combined EBITDA above $8 billion by 2025. | Potential major driver for the company’s future. |
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2025 EBITDA Guidance
Q: Is the over $8 billion 2025 EBITDA guidance conservative?
A: Management affirmed that the 2025 EBITDA guidance of over $8 billion is comfortably achievable, and did not dispute analyst estimates suggesting a potential run rate of around $8.3 billion. -
Acquisition Synergies
Q: How are the Magellan acquisition synergies progressing?
A: Management stated they are ahead of schedule on the Magellan synergies, expecting to meet or exceed initial targets. They are finding more opportunities, particularly low-capital projects, and anticipate benefits accruing in 2025 and 2026. -
Capital Allocation and Buybacks
Q: How do recent acquisitions impact your buyback plans?
A: Management remains committed to the $2 billion buyback plan through 2027, stating that the EnLink and Medallion transactions are approximately 20% accretive from a free cash flow standpoint. They plan to let leverage decrease before adjusting buyback predictions and note that they effectively conducted a $3.3 billion buyback through recent transactions. -
EnLink Acquisition
Q: Any updates on acquiring the remaining EnLink stake?
A: Management has not disclosed intentions to pursue acquisition of all outstanding public units of EnLink but mentioned they have cleared necessary regulatory reviews and will provide updates when appropriate. -
Bakken Volume Trends
Q: Can you discuss Bakken volume trends amid recent data?
A: Management observed consistent drilling activity in the Bakken, attributing recent volume fluctuations to temporary factors like wildfires and unplanned outages. They expect volumes to return to anticipated levels. -
Ethane Demand and Recovery
Q: How do weak natural gas prices affect ethane recovery?
A: Management confirmed that regional natural gas prices drive ethane recovery decisions. Depressed gas prices, especially in the Bakken and Mid-Continent, incentivize ethane extraction, a trend expected to continue into next year. -
Future Consolidation Opportunities
Q: Are there plans for further consolidation in the space?
A: Management is evaluating opportunities, particularly in the Mid-Continent on the gathering and processing side. The integration with EnLink and Medallion enhances competitiveness and positions them for additional growth. -
Medallion Assets and Growth Projects
Q: Any growth projects planned for Medallion assets?
A: While specific projects haven't been detailed, management expects to find low-capital opportunities once the teams collaborate, drawing from positive experiences with the Magellan integration. -
Natural Gas Infrastructure Demand
Q: How are you positioned to meet rising natural gas demand?
A: Management is engaged in discussions on 23 different projects, with 10 specifically targeting data center demand. They believe their assets, including EnLink's, are well-positioned to capitalize on natural gas growth. -
Bakken Lateral Lengths
Q: What's causing changes in Bakken lateral lengths guidance?
A: Changes depend on producers' drilling plans and acreage. Some delays may push activity into 2025, but advances in completion techniques are resulting in strong volumes from new wells.
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