Enterprise Products Partners L.P. Q3 FY2020 Earnings Call

Thank you, Branna. Good morning, and welcome everyone to the Enterprise Products Partners conference call to discuss third quarter 2020 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprise's General Partner, Jim Teague and Randy Fowler. Other members of our senior management team are also in attendance for the call today. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, based on the beliefs of the Company, as well as assumptions made by and information currently available to Enterprise's management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. And with that, I'll turn the call over to Jim.

Thank you, Randy. In the third quarter, we reported adjusted EBITDA of $2.1 billion compared to $2 billion for the same quarter last year. Our DCF totaled $1.6 billion and provided a solid 1.7x coverage. We retained around $669 million in the quarter now totaling $1.8 billion for the first nine months. Our businesses continue to perform well even as the U.S. and the world are still dealing with the COVID pandemic, the oil price crash and the ensuing oil inventory overhang. In addition to our integrated business model, our profits continue to be protected by a strong base of firm customer obligations coupled with our activities around our marketing and storage systems. The petrochemical industry is reporting strong demand for our products, especially ethylene, driven in part by individual serving-type products as the world deals with the pandemic. Propylene is also strong as strong demand manufacturers badly needed PPE. Bob Patel, the CEO of Lyondell, said it best on their second quarter earnings call when he said the pandemic has generated a renewed appreciation for the value of our chemical and polymer products for society. Total capital investments were $705 million in the third quarter and $2.7 billion for the first nine months of the year. During the third quarter, our commercial team responded to customer requests and changing industry conditions to amend agreements that enabled us to increase volume commitments over the long-term by utilizing existing pipeline capacity. We were able to cancel the Midland-to-ECHO 4 crude oil pipeline. In total, we have reduced our planned growth CapEx for 2020 and 2021 around $1.5 billion. We've also focused on cost control. In the first nine months of this year, Enterprise’s operating costs were $260 million below budget and our sustaining capital expenditures for the year are expected to be $100 million lower than our original budget. We are turning over every rock in order to manage cost, but we are doing so without sacrificing safety or reliability. And discussing our performance in capital reductions, I think it also goes without saying that our people matter. We are extremely proud of the way our folks have responded in the face of the pandemic and all the chaos we've had this year. Early on in the pandemic, we went to a skeleton staff in our headquarters consisting of management, our marketing desk, and a few of our operations folks with everyone else working from home. We made adjustments to be able to open back up and protect our employees, including social distancing guidelines in common areas and installing plexiglass around the building. The biggest change we made was requiring face coverings at all times. We also had a steady stream of employee communications emphasizing that none of these measures work unless each of us also take personal responsibility in the decisions we make when we are away from work. Our employees responded. Since the second half of June, we've been pretty much fully staffed in our offices and our case count has been minimal thanks to the safety measures put in place, and our people accepting personal responsibility. We don't believe that our performance would come close to matching today's announcement without the kind of collaboration that comes from actually being together, especially during times of chaos, which create their own opportunities. Several storms impacted our people, our operations, and the operations of many of our customers. The loss of power was a major event for people and businesses, especially refiners and petrochemicals along the upper Gulf Coast. Despite this, our people have shown resilience, and we have been able to respond effectively to these challenges. I’ll spend a few minutes discussing our views of the global energy environment. Near-term, the global economy is reopening from a self-imposed sudden stop due to COVID-19. The pace of the recovery varies. But with the exception of air travel, much of Asia has returned to near normal, while U.S. and European energy demand still lags. Air traffic, particularly international travel continues to lag worldwide, and several industries need to return to normal to get the economies moving again. The development of a vaccine is progressing rapidly, and treatment for the virus continues to advance. Although the pace of the pandemic and the recovery is somewhat uncertain, the economic recovery thus far has led to a remarkable rebound and the demand for energy and energy products from the lows of the second quarter. We think it's pretty clear we are not going to shut the world down again and that not one, but several vaccines will soon be available. We've also been very outspoken that we believe a price signal for crude oil is coming. Given the combination of recovering demand worldwide and the base of record retrenchment and drilling and completion activities by U.S. producers with steep decline curves and the lack of oil and gas investment worldwide, we believe a price signal for higher crude oil prices could occur as early as the second half of next year. While the forward curves remain muted, we are not alone in looking for a rebound. Finally, I'd like to cover our initiatives on sustainability and lower carbon energy. We published our sustainability report in July, and I think that it's worth your time to take a look at it. I struggle with the term that I hear a lot, energy transition. In my mind, energy evolution is more appropriate as we gradually move to a world where renewables will complement, but not replace oil and gas. We understand that access to affordable, reliable energy available at scale is what will continue to advance a higher quality of life worldwide. The world is still adding a billion people every 12 years, and populations in developing countries want access to more convenient sources of energy. We believe demand for reliable U.S. energy, petrochemicals, and related products will continue to grow. Without U.S. shale light oil, NGLs, natural gas, and our energy markets, the world would have to rely on countries like Russia and Saudi Arabia, which would again control the price of oil leading to a lesser quality of life for people in underdeveloped countries. It's clear from what's been going on at our docks that even in the middle of a pandemic, the world wants U.S. oil and gas.

Okay. Thank you, Jim, and good morning. I'd like to start with the income statement. Our net income attributable to common unitholders for the third quarter of 2020 was $1.1 billion or $0.48 per unit on a fully diluted basis. This compares to $0.46 per unit for the third quarter of 2019. When we adjust earnings for non-cash asset impairment charges, earnings per unit on a fully diluted basis was $0.51 for the third quarter of 2020 versus $0.48 for the third quarter of last year. Moving on to cash flows. Cash flows from operations were $1.1 billion for the third quarter of 2020 compared to $1.6 billion for the third quarter of 2019. Substantially, all of this decrease in cash flow from operations was due to cash used for working capital purposes. Based on current expectations, we believe our working capital usage peaked during the third quarter. Free cash flow, which we defined as cash flow from operations minus investing activities plus contributions from joint venture partners was $430 million for the quarter, which again was impacted by the cash used for working capital purposes. Free cash flow was $2.1 billion for the 12 months ended September 30, 2020. We defined payout ratio as the sum of cash distributions and buybacks as a percent of cash flow from operations. Our payout ratio was 68% with respect to the trailing 12 months. If we normalize working capital uses, it was closer to 61%. We declared our distribution of $0.445 with respect to the third quarter, which will be paid on November 12. The distribution is the same as the prior three quarters. As we stated on the last two quarterly calls, given the continued state of the macroeconomic backdrop, our Board elected to maintain the current distribution rate, and we will continue to evaluate any increase to the distribution on a quarterly basis. During the third quarter of 2020, we bought back an additional $34 million, or 2 million common units under our buyback program. Year-to-date, we have bought back $174 million or 8.3 million common units, which equates to approximately 4% of year-to-date cash flow from operations. We exchanged another 1.1 million common units into preferred units in September 2020. Additionally, EPD’s distribution reinvestment plan and employee unit purchase plan purchased a combined 33 million or approximately 1.8 million EPD common units in the open market during the third quarter. Year-to-date, these programs have purchased $104 million or approximately 5.1 million EPD common units on the open market. Now moving to capital investments. We have placed approximately $1.4 billion of assets into service since the last call and have another $4.1 billion of projects still under construction. As Jim mentioned, our capital investments were $705 million during the third quarter, including $83 million for sustaining capital. For the nine months ended September 30, capital investments were $2.7 billion, which included $226 million of sustaining capital. We anticipate approximately $3.2 million in capital investments for 2020, which would include $300 million for sustaining capital expenditures. For 2021 and 2022, we currently anticipate growth capital investments to be approximately $1.6 billion and $800 million respectively. Our capital expenditure forecast excludes our proposed SPOT offshore crude oil terminal, which is subject to government approvals that we do not expect to receive this year. Our total debt principal outstanding was approximately $30 billion as of September 30, 2020. Assuming the first call date of our hybrids, the average life of our debt portfolio was 16.5 years. Assuming the final maturity date of the hybrids extends the life of the portfolio out to 20.6 years. Our effective average cost of debt is 4.4%. Adjusted EBITDA for the trailing 12 months ended September 30, 2020 was $8 billion, and our consolidated leverage ratio was 3.5x after adjusting debt for the partial equity credit of the hybrid debt securities by the debt rating agencies and further reduced for unrestricted cash. Our consolidated liquidity was approximately $6 billion as of September 30, including availability under our existing credit facilities and approximately $1 billion of unrestricted cash on hand. As mentioned, we likely reached peak use of working capital for the year in the third quarter, but anticipate somewhat elevated uses for the next quarter. On allocation of capital, beginning with the fourth quarter, we currently expect some of the cash flow from operations that has been used for working capital purposes will begin to reverse and will become a source of cash flow from operations. Based on current expectations, this should continue to reverse in 2021. The magnitude of EPD’s discretionary cash flow for 2021 and 2022 will depend on our earnings and the continuing recovery of the global economy and energy demand.

Okay. Thank you, Randy. Branna, we are ready to take questions from our listeners.

Your first question is from Jeremy Tonet. Your line is now open.

Hi, good morning.

Good morning, Jeremy.

I just wanted to start off with the last point that you touched on there. With the reduction of CapEx next year, we see some real notable positive free cash flow generation. And just wondering how you think about deploying that as far as setting formal ties to free cash flow, if that's something that you might look to do. Is it fair to think that acquisitions are less likely? Did you look at Dow selling those assets to Vopak? Just wanted to touch base on that side. Should we think about the positive free cash flow more going towards buybacks versus other uses at this point? Just trying to dig in a little bit more.

Okay. Jeremy, I'll handle the first part of that question on capital allocation. Then, Jim will speak to the M&A aspects of it. I think one, coming in and going to a formulaic approach seems to be pretty restrictive. Just because there are so many variables that we consider that could influence how we would allocate capital. So it's probably not appropriate to speculate right now on what we might see on all of these variables next year. We would rather take a look at what the facts look like in 2021 as we continue to see economic recovery, and then at that time see what makes the most sense as far as how we allocate capital at the margin. Jim?

You gave me maybe the good part. Yes. We look at a lot of opportunities that come in – they come through the front door every week. We haven't seen any that makes sense for us, and we did not look at the assets that Dow sells.

Got it. Thanks for that. And then just want to touch on ethane supply and demand there, possible how much ethane rejection do you currently see and how much potential ethane is recoverable at these production levels, and how do you see demand trending over time here, given kind of all the cracker additions this year, as well as downtime due to hurricanes and some of those returning? Thanks.

I'll start – this is Tony. Ethane rejection has been all over the map, year-to-date, variable on things that have been pushing and pulling on it, storms, the price of natural gas, and the price of ethane. So it's been highly volatile, but let's call it, 500 to 1 million barrels just depending on when you look at it. On the day, I'm sorry, but I can't respond to your number. Again, it just depends on what's happening with gas prices in any area of the country. Relative to trends, maybe Randy or Justin would want to talk about how you see ethane market balancing.

Yes. Assuming we get back to some normal ethane demand outlook going into 2021, I think with what our supply picture looks like, you're going to get to a point where as we get more balanced on ethane, ethane has to be incentivized to be recovered at further away places. Generally, that's how you start to paint a more constructive view of ethane. As Tony alluded to, outlier events like hurricanes can throw a wrench in that base case.

This is Brent. There's probably going to be questions about the supply and what happens in 2021. There are probably some downsides to that, but one of the positives is certainly ethane for 2021.

Got it. Thanks for that.

Your next question is from Shneur Gershuni of UBS. Your line is now open.

Hi. Good morning, everyone. Glad to see everyone is well. Maybe we can start off on the cost control items that you talked about in your press release and highlighted in your prepared remarks. I was just wondering if you can talk us through how sustainable these cost reductions are. And then, are you just scratching the surface on these cost reductions and optimization opportunities? Is there a trend where we can see more and more of this over the coming quarters? Just trying to understand how sustainable it is, and is there a potential, let's say, to remove another $200 million from the cost structure?

Yes. This is Graham. In terms of the sustainability, there's a good portion of them that are sustainable. Some of them are – I don’t have the percentages right off the top of my head, but probably a mix of sustainable reductions as well as some short-term deferrals into next year. But when we look at the trends over time and our operating costs, operating as we've continued to bring on new assets, our overall cost structure has continued to improve year-on-year. The point you look back at three or four years ago, our cost structure today is where it was then even with the assets we've brought on. We continue to maintain costs inline with years ago. I think Jim hit on it. We continue to turn over every rock and work to get better every day and manage our costs and improve our reliability. We've got a lot of good engineering talent. Some of that's being redeployed from capital projects to focus on cost reduction as we've responded to growth. I think probably 50% to 60% of those are probably sustainable costs.

Okay, great. Appreciate that. And maybe as a follow-up, and just start to continue on Jeremy’s question about return of capital opportunities. Randy, I recognize the reluctance to set a formal target out there, but you kind of have a 2% of CFFO target out there. You have the CapEx stepping down next year. Any thoughts around maybe taking that to 5% or 10% as a target? And then secondly, when I start to think about the $3.9 billion annual distribution payment, if you lower your unit count by say 10% through buybacks, the claim on cash flows would fall by 10% or $400 million. So I guess kind of the second part of my question is, given that your leverage is at a very comfortable level right now, would you consider temporarily taking up your leverage, let's say by a quarter turn to permanently reduce your distribution cash outflow? And I can imagine that that would be credit-enhancing over the long run. Just kind of curious on your thoughts, both inside the box and outside the box, in terms of ways to reduce the unit count outstanding.

Shneur, I congratulate you for that follow-up question. You've turned in about five or six. Let me see if I can address some of that. You're right at the beginning of the year, frankly pre-pandemic, we came in and said, we would use 2% of our cash flow from operations to come in on buybacks. We've surpassed that year-to-date. We're at 4%. Coming into 2021, we do have a substantially lower growth CapEx budget going into next year. We don't see – there may be a couple of projects out there, but we've really raised the return rate on our projects. So really, for the most part, we may not see that growing that much. So I think it will put us in a position where we'll have a more discretionary cash flow next year. But again, trying to come in now and pre-commit on how we might spend that, I think there are too many unknowns. Coming into this year, we had some investors promoting taking leverage up $2 billion to do a buyback program, and we did not want to take above our 3.5x area debt-to-EBITDA leverage target. Good thing we didn’t follow that advice, especially with the pandemic that occurred. We maintained our financial flexibility, which is important to us. As we get out into next year, we will see our opportunities, how the business performs, and how the world handles what may be the second half of this pandemic. We don't see the world doing another shutdown like it did last time. There's little popular support for shutdowns in any country. We think the economy may be more resilient, but we really just need to get into next year and see what the facts are and make a decision at that time. We're pretty flexible and nimble in our decision-making, so we can choose quarter-to-quarter.

Perfect. Really appreciate the color today, guys. Glad to hear everyone is safe.

Your next question comes from Christine Cho of Barclays. Your line is now open.

Thank you. Good morning, everyone. So maybe I can start with the cancellation of Midland-to-ECHO 4. Even though you've taken that off, there is still overcapacity in the region. Do you think this sector will just continue to struggle until we get to a point in time when production approaches the capacity levels in that region? Or is there a need for different operators to come together to rationalize capacity in the near-term, whether it's idling up pipe and taking the volumes over to another pipe like UGI or something like that? Are there things that preclude that from really making sense?

You want to take a shot, Brent?

Yes, this is Brent. A lot of those conversations are probably happening more often than they have in the past in terms of what's the right thing for the industry. Enterprise is in a good position in terms of how we've contracted and the length of those contracts. There were probably concessions on both sides for the M2E4 piece, but I think that was a win-win solution for both parties involved. It's hard to argue that there is not excess capacity coming on in the Permian for crude oil. The take-or-pay contracts are the ones that are going to move. When it starts going above those types of volumes, it's tough to move a lot of spot volumes unless you're extremely competitive versus other markets. So I think everybody is trying to be creative, and I can tell you that as Enterprise, we probably spend more time trying to figure out how to optimize and be strategic than we have in the past.

Brent, are you fully contracted on your pipeline capacity?

Yes. If you look at, in terms of what we look at as fully contracted, there's always excess capacity that's pretty expensive. And every pipeline has a curve where the costs start going up. But in terms of what we have that we can efficiently move or fully contracted, our contracts don't start rolling off until 2027. So I like our position in terms of where the pipeline goes. The market has access to docks and that helps differentiate midstream crude service providers.

Okay. So it sounds like even if someone wanted to come to you with their volumes, you don't even have the capacity to share.

I don't think we ever tell people no; we'll figure out a way to do something.

Fair enough. And then there's been a wave of M&A at the upstream level with a lot of focus on the Permian. Do you guys have any initial thoughts you can share with us on the impact on midstream, and specifically if there is any opportunity to bring more incremental volumes onto your system, or has everything pretty much already been dedicated?

This is Jim. I think consolidation in upstream is probably over the long haul very good for the industry and frankly good for Enterprise. We like dealing with major players, and this gives—I think this fits our wheelhouse. I think it's necessary, and I think it's not over.

Okay. Jim, you were sure to say over the long-term. Does that mean you think there's going to be some near-term headwind?

I think there could be some headwinds for those who are not fully contracted.

Got it. Thank you.

Your next question is from an unidentified analyst. Your line is now open.

Good morning, everybody, and thank you. Quick two observations. One is really to compliment you on the ESG initiative. Jackie and team did a great job preparing the slide deck. It's the right thing to do and investors really want to see that initiative. So congratulations there. The second quick observation is, I think the winners in midstream will be the best allocators of capital, and you've distinguished yourself in that regard. So the question is, which came up before as you think of deploying capital, and you think of M&A, and you think of stock buybacks. How do you compare the two, especially from a risk profile because clearly a large M&A deal implies risk, while buying back your stock doesn't? Then how do you think of discrete assets versus M&A to Jim's point of evolution in the industry and the consolidation in the upstream? When does it happen in the midstream? Thanks.

Why don’t you take a shot first?

Yes. I'm going to take the easy part of that one, and then I'll give it back to Jim. I appreciate the comment. Some of it – Enterprise has been public since 1998, and we've been very disciplined and deliberate the way we've come in and spent our capital. Some of it was management owning 30% to 33% of the limited partner units outstanding. We eat our own cooking. It's not about a promote on limited partners; we're all in this together. I think we are careful where we spend capital, and it's in the projects or acquisitions that we believe in for the long-term, not the short-term. As far as whole company M&A or discrete M&A, I’ll turn that over to Jim.

Yes. Like I said earlier, I don't see anything that makes a lot of sense right now. If you look at where we have trended in terms of the CapEx that we do spend, to Randy's point, we’ve really been disciplined that it’s got to fit a value chain. You're not going to see us just go out and build something; it's got to add to what we already have. If you look at our CapEx for next year, over 50% is in the petrochemical sector. You get a good idea of what we're doing. We see how we are going to do projects. They must fit what we already have, and that's been like that since 1998.

Honestly, some of the M&A gets back to where the unit prices and the cash flow yield of our units. The way we view our equity currency from an M&A standpoint is really expensive currency right now. That's another element that enters into the thought process.

Yes. So I appreciate all of that, but the quick follow-up is would you agree that consolidation in the midstream space has to happen, especially following the consolidation in the upstream? From a strategic perspective, are you fine with letting competitors consolidate the industry?

This is Jim here. When we look at – we've got a pretty big footprint. So when we look at whole company M&A, in many respects, if we bought what we want, we'd have to sell everything we bought because the FTC wouldn't allow it. We're going to be limited, I think. Randy, you kick-in. We're going to be limited in our ability to consolidate given the footprint we have and antitrust issues. We've looked at a lot of companies, and there are companies out there that I personally would love to have, but there's no way we can do it because we'd sell everything we bought. Is that fair, Randy?

Yes. Okay. Thanks, guys. And Jim, I'd like to discuss that offline. I'd love to know what companies you would love to buy.

I bet you already know.

The way we view our equity currency is important as far as from an M&A standpoint, it's expensive right now. So I think that's another element that enters into the thought process.

Your next question is from Jean Salisbury of Bernstein. Your line is now open.

Good morning. Just one more on Permian crude. We thought it was a great decision to cancel ME4 and extend existing contracts. Can you provide any more disclosure around how much you added to the average duration of contracts out of the Permian from doing that?

This is Jim. Thinking in the neighborhood, five years.

And just as a quick follow-up. Can you remind us of how much EBITDA exposure you have to the Eagle Ford? I think there was a fair amount of MBC that underlied the Eagle Ford exposure, but if you could refresh me on that?

Brent or James, somebody.

This contract will roll off. Some rolled off this year. Some will roll off next year. The bigger contracts roll off in 2022.

We've done some work to restructure some of those deals to extend the time and make those producers more competitive. In every case, you talk about M-to-E 4; there’s not a system that we have that we're not trying to shore up for the long-term.

Thanks. And in terms of EBITDA exposure, is 5% to 10% of your EBITDA an estimate?

Yes. I don't have the calculated number in front of me, but just thinking about it, I think we're in low-single digits.

Great. Thanks. That's all for me.

Your next question is from Tristan Richardson of Truist Securities. Your line is open.

Hi, good morning. I appreciate all the overview of what you're seeing across the spectrum in this recovery and then also for the multi-year outlook on capital. Just a question there, should we think of the 2022 expectation largely as the remainder of the project budget for PDH 2? And then also to the extent the recovery accelerates and/or crude price response drives any rebound in production, could we expect a movement in capital upward as a result?

Yes. I believe that the 2022 significant part of that is the runoff on PDH 2. There may be a couple of other projects that would be completed in that year. We'll have to see what kind of–what the rebound looks like, but I think we have some flexibility in our existing assets.

Helpful. Randy, thank you. And then the follow-up was really around the supply side. Could you talk a little bit about what the earnings power of Enterprise is to the extent we stay sort of in a range bound crude environment, particularly as all the market dislocations this year really offered a lot of outside spread opportunities.

All I could do is tell you, 2019 was a record year for us, and we reported about $8.3 billion worth of gross operating margin, which is pretty close to EBITDA. If you look at LTM for the last 12 months through the third quarter, it's nine months of this year and a month of last year; we're still around. The variance from that $8.3 billion is probably less than 5%. So it's been pretty durable in here.

Thank you guys very much.

Your next question is from Pearce Hammond of Simmons Energy. Your line is open.

Good morning, and thanks for taking my question. I'm just curious, what do you see as the major puts and takes driving EBITDA next year for Enterprise? Can you provide any guard rails around the 2021 outlook?

You start, and I’ll finish.

One, it’s our practice not to give guidance, but at a high level, hopefully, a continuation of what we've seen really coming back since June is a recovery in energy demand globally. Jim mentioned our LPG export demand has remained resilient even through the second quarter. We're seeing a rebound in refined products' demand from the troughs of where we were; maybe back within 10% of where we were. Petrochemical demand has remained resilient. We think it will continue to rebound now that we're seeing more demand pull for those durable plastics. So we would think demand recovery should continue. The timing of this price signal will also be important.

To put it simply, price creates demand. We think price will create demand as we come out of this pandemic, and price creates supply. For all the reasons Randy said, we see for you a price signal coming. That doesn't mean the volume follows it immediately, but it will ultimately.

I think that's why a number of companies that usually provide guidance haven’t given guidance just because of the uncertainty of the timing on some of the recovery.

Thank you, guys. I could clearly understand, and congrats on a great quarter.

Your next question is from Ujjwal Pradhan of Bank of America. Your line is now open.

Good morning, everyone. Thanks for taking my question. Firstly, Jim, appreciate your comments around potential signals for higher oil prices next year, which I think are very constructive. As you also alluded, forward oil prices remain muted, and I think the forward WTI prices still remain below $45 level through 2025. From EPD’s perspective, what oil price levels are you assuming in this timeframe in evaluating your future plans? Perhaps if you could share what price level is needed for meaningful volume rebound.

I think the question is what price level do producers need? I think they're going to be – this consolidation we’re seeing is also going to lead to more discipline, and the more disciplined these producers are, I think the more constructive price will be.

Got it. I appreciate that. And secondly, regarding your comments on energy transition opportunities. I appreciate the details around renewables involvement as well as the hydrogen topic. In this regard, have you explored doing more as part of your future investments in renewables?

I think if we looked at it, yes, we see an immediate opportunity, no. First and foremost, any of these things have to be economic. This one is going to take a while to develop, and we'll see where it goes.

Branna, this is Randy. We have time for one more question. We can take from our listeners.

Okay, sir. Your next question is from Gabe Moreen of Mizuho. Your line is now open.

Hey, good morning, everyone. Thanks for getting me in. Just a question on some of the JV negotiations. I think you've talked to in prior quarters, are any of those discussions still alive and ongoing? Just looking for an update.

I think they're not nearly as strong as we thought they would be primarily because people are retrenching. Some of these projects that we were looking at, we've been able to do contracts that I think give us a better return than doing a joint venture. So right now, I think we have discussions with one company going on. I'm not sure where it is going to go, but they are retrenching.

Got it. Thanks, Jim. And then question, I guess, in terms of the spread income for this year. Randy, I'm just curious about the $600 million to $700 million. Last quarter, you mentioned being towards the upper end. It seems like the working capital use from our perspective is greater than we expected or maybe longer than expected. Can you talk about where you are in that $600 million to $700 million range? And also to what extent some of that spread income may be realized in 2021 as well? Does anything go out that far?

Yes, Gabe. I think on the $600 million to $700 million, I think we're still sort of comfortable with that range. There may be some that go into 2021, but the majority of it will be realized this year.

Okay. Branna, before you give our replay information to our listeners, we'd like to thank everyone for joining our call today, and we're going to sign off as a company right now, but Branna, if you would give them the replay information. Thank you.

The replay will be available two hours after the call has ended. Please dial this numbers (800) 585-8367 or (855) 859-2056 and enter the conference ID to listen. For the participants outside of U.S., please dial (404) 537-3406 and enter the conference ID to listen. This concludes today's conference call. Thank you for participating. You may now disconnect.