Plains All American Pipeline LP Q4 FY2022 Earnings Call

Good day and thank you for standing by. Welcome to the PAA and PAGP Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Vice President of Investor Relations, Blake Fernandez.

Thank you, Andrew. Good afternoon and welcome to Plains All American’s fourth quarter 2022 earnings call. My name is Blake Fernandez. I have recently joined Plains as Vice President of Investor Relations. The Company's attractive asset base, including its premier Permian operating system, coupled with a long-term capital allocation framework focused on increasing returns to equity holders, makes it an exciting time for the Company. I look forward to engaging with all of you throughout the year. In today's material, we are providing forward guidance for 2023. In an effort to improve communication and forecasting, we have made a few updates, including an adjusted EBITDA range, which reflects potential volatility in the underlying commodity market along with the volumetric outlook for each segment. The slide presentation is posted on the Investor Relations website under the News and Events section at plains.com, where an audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on Slide 2. An overview of today's call is provided on Slide 3. A condensed consolidating balance sheet for PAGP and other reference materials are located in the appendix. Today’s call will be hosted by Willie Chiang, Chairman; and Al Swanson, Executive Vice President and Chief Financial Officer. Other members of our team will be available for Q&A, including Harry Pefanis, President; Chris Chandler, Executive Vice President and COO; Jeremy Goebel, Executive Vice President and CCO; and Chris Herbold, Senior Vice President, Finance and CAO. With that, I will now turn the call over to Willie.

Thanks, Blake. We are very pleased to have you join the Plains team. To all on the call, good afternoon everyone and thank you for joining us. Today, we announced strong fourth quarter and full year results, exceeding our expectations in both our Crude Oil and NGL segments. 2022 represented a positive inflection point for Plains. We executed on our goals and initiatives for the year. We captured meaningful Permian production growth on both our gathering and long-haul systems, and our team was able to capture market-based opportunities via our integrated business model, flexible asset base, as well as commodity price upside. In summary, fourth quarter and full year adjusted EBITDA attributable to PAA was $659 million and $2.51 billion, respectively, with full-year results exceeding our February guidance by $310 million or approximately 14%. As a result, we achieved the low end of our targeted leverage range earlier than expected, which enabled us to announce our multi-year capital allocation and financial framework in November. Consistent with that framework, we subsequently announced a $0.2 distribution increase per unit or approximately a 23% annualized distribution increase in January to be paid later this month, bringing our yield to approximately 8.5% based on current trading levels. Additionally, we completed or announced several strategic transactions in both our Crude Oil and NGL segments, such as our Cactus II pipeline, Advantage pipeline, Empress facilities, and our Keyera Fort Sask minority JV interest sale, all of which further optimize our asset base and streamline our operations. We also achieved record health, safety, and environmental performance by achieving or exceeding our 20% reduction targets in employee recordable injury rate and federally reportable release metrics. While we have made great progress in both of these areas and have achieved top quartile performance, we remain focused on continuous improvement with zero as our ultimate goal for both of these metrics. Looking to 2023 and as highlighted on Slide 4, we provide an adjusted EBITDA attributable to PAA guidance in a range of $2.45 billion to $2.55 billion. This reflects year-over-year growth in our crude oil segment underpinned by continued Permian production and tariff volume growth on our gathering and long-haul systems. Our guidance also factors in a reduction in our NGL segments primarily driven by lower weighted average frac spreads and C3+ spec product sales volumes, as well as the Keyera Fort Sask which is expected to close this quarter. Al will provide additional color on our guidance in this portion of the call.

Thanks, Willie. We reported fourth quarter adjusted EBITDA of $659 million, which includes crude oil segments benefits from Canadian market-based opportunities and increased volumes across our systems, primarily within the Permian, along with NGL segments benefits from stronger seasonal sales. For the full year, we reported adjusted EBITDA of $2.51 billion, which was $310 million above our initial February guidance. Full year outperformance was primarily driven by market-based opportunities captured by our assets throughout the year, higher commodity price benefits, and increased tariffs volumes primarily in the Permian systems. Looking at 2023 compared to 2022 and as illustrated by the EBITDA walk on Slide 7, we expect adjusted EBITDA of $2.45 billion to $2.55 billion with year-over-year growth in our crude oil segment and a reduction in the NGL segment. Growth in our crude oil segment is primarily driven by anticipated tariff volume increases in our Permian gathering long haul businesses, due in part to our increased ownership in Cactus II, which is now consolidated into PAA's financials with volumes reported on a consolidated basis and earnings on a proportional basis. This is partially offset by an assumption of fewer market-based opportunities as well as lower assumed oil prices in 2023 for our pipeline loss allowance barrels. We expect lower year-on-year NGL segments adjusted EBITDA as a result of lower weighted average frac spreads and C3+ spec product sales volumes due to a planned third-party facility turnaround as well as our sales to KFS interest. I would note that our C3+ spec product sales volumes are approximately 80% hedged for the year. Regarding capital allocation, we remain committed to one, significant returns of capital; two, continued capital discipline; and three, maintaining financial flexibility. For 2023, we expect to generate $2.3 billion in cash flow from operations, which assumes approximately $200 million of working capital outflows and excludes approximately $225 million of anticipated insurance proceeds related to the settlement of a Line 901 class action lawsuit, which we now expect to collect in 2024. Furthermore, we expect $1.6 billion of free cash flow, inclusive of $270 million of asset sales. Intended uses of cash flow are as follows: one, allocate approximately $1 billion to common and preferred distributions, inclusive of the respective increases; two, self-fund $325 million and $195 million of approved investment and maintenance capital net to PAA, which includes the POP JV well connect and intra-basin debottlenecking to support future growth across our Delaware system; and three, retire $1.1 billion of senior notes through a combination of cash flow, asset sale, cash on hand, and available capacity on our credit facilities, bringing expected year-end leverage to approximately 3.5 times. As of today, we have repaid $400 million of the $1.1 billion target, with additional details in our capital program and balance sheet included on Slides 10 and 11.

Thanks, Al. Today's results are a critical inflection point for the business and a very strong year of performance and execution. I'd like to acknowledge and thank our Plains team members for their dedication and progress in all areas. We continue to believe that the world needs North American energy supply long-term and that our business will perform well in the current and longer-term environment. As illustrated on Slide 12, Plains is well-positioned to improve returns of capital to unitholders, through a capital allocation framework that targets multi-year distribution growth, an 8.5% current yield, significant free cash flow generation, and balance sheet flexibility built on the strength of our strategically located Crude and NGL footprint across North America. We appreciate your continued interest and support and we look forward to providing further updates in our earnings conference in May.

Thanks Willie. As we enter the Q&A session, please limit yourself to one question and one follow-up. For those with additional questions, please feel free to return to the queue. This will allow us to address questions for as many participants as practical in our available time this afternoon. Additionally, the IR team will be available throughout the week to address any additional questions you may have. Andrew, we are now ready to open the call for questions.

And our first question comes from Michael Blum with Wells Fargo.

Good afternoon, everyone. I wondered if I could just start with one item I guess related to the quarter. Can you quantify if you benefited from the fact that Keystone was down in December? And then I understand it's running at reduced pressures today. So does that benefit you at all in 2023?

Michael, hi. This is Jeremy Goebel. It happened in December, so it wasn't really impacting the trade month in December. It was more impactful to forward periods. The impact was modest, but you will see some from our Canadian group and some throughput impacts at our facility. But by and large, that's captured in our guidance. It didn't really impact 2022 as much as it will be the first quarter of 2023.

Okay, great. And then just wanted to ask about the capital budget. Maybe just, are there any major projects to flag in that number? And then it looks like maintenance is down year over year, so maybe can you talk to that as well? Thank you.

Yes, Michael, these are pretty consistent with previous levels, with a slight step up in the expansion capital piece. Chris Chandler, would you cover the key ones?

Sure, Michael. It's Chris Chandler. We are wrapping up the Wink-to-Webster project this year and that's a little higher year-on-year. We do have some additional well connects that are driving higher cost based on volume assumptions and producer forecasts. We are funding some incremental Permian debottlenecking costs primarily for station work and that's driven by supporting, of course, low assurance, reliability, and flexibility. There aren't any major projects included. And as Al mentioned, we're not currently including any costs related to the Fort Sask debottleneck projects.

Thank you. And our next question comes from the line of Brian Reynolds with UBS.

Maybe to start off on just the Permian growth expectations, it seems like there was a slight shift in cadence lower for up to 500,000 barrels per day from prior expectations. But it also seems like Plains is capturing a larger share of the gathering and long-haul volumes compared to the prior year. So I'm curious if you could just discuss the drivers around one the Permian growth guidance? And the second, Plains assumptions around market share and margin opportunities in 2023?

Hello, this is Jeremy Goebel. First on the production forecast. Last February, we got into roughly approximately 600,000 barrels a day of growth in 2022 and 2023. You're going to exit 2022 at roughly 5.7 million barrels a day, exit 2023 at roughly 6.1 million to 6.2 million barrels a day. That puts you in a range on target with where we were at last year. So we think the cadence is consistent. The 340 rigs that are working today is roughly 75 more than we're working in the prior periods contributing to growth today. So, we look at that plus a roughly 10% increase in the well connects across our systems throughout the year gives us good confidence on a top-down level as well as a bottoms-up build from producer forecasts in the 500,000 barrels a day outlook. Some of the offset as to potentially slowing down as well, we can foresee as incremental basin decline just from higher production. You've got a rebuilding of a modest level of depth across the system because you had some depletion last year. And then, the continued conversion of development programs to maximize the value of the inventory of the units as opposed to unbounded wells. So, that combination gives us a view that if you just ran off based on historical looks and every well gets completed, you would get higher than a 500,000 barrels a day of growth. So that's kind of some of the factors we considered and came out with our view of production for this year. As for the capture rate, we look at our individual producer contributions. And we analyze the bottoms-up forecast as well as the top-down view. That gives us confidence as to where our cash flow rate will look.

And then quickly, just on margin into 2023. Is it basically the same as 2022, or should we assume any changes upward or downward?

So, the incremental margins for spot capacity are more this year than they were last year if that's directly answering it. Contract roll-offs and step-ups can change it, but if you're looking at what the marginal capacities were this year versus next year, it's higher this year. And based on the way we're able to contract that space for this year, we've locked in largely all of our spot capacity to the Gulf Coast. And then going forward, we sold additional capacity in 2024 and 2025 at successively higher levels. Brian, these are levels consistent with what we talked about before.

And then just for a quick follow-up on the NGL segment, it just seems like the fee-for-service components seems to be trending higher. I'm just curious if you can talk about whether that's primarily driven from the asset sale? And looking forward, are there more opportunities to turn out this side of the business? Thanks.

I would think some of that would come from just a decline in commodity prices. So that contribution being lower, but as Chris talked about, we're advancing opportunities for potentially adding fee-for-service. So I think you may see that longer-term trend that way, but this year specifically has an erosion of some of the commodity-based margins, which is baked into the forecast.

Thank you. And our next question comes from the line of Keith Stanley with Wolfe Research.

So first, just on the guidance for the year, one of the drivers in the waterfall is fewer market-based opportunities in 2023 versus 2022. Can you talk just high-level on what you're assuming in the 2023 guidance for marketing and logistics opportunities? Are you baking some in, or are you staying pretty conservative? And if you are baking in some opportunities, where they may be beyond the Keystone outage that you already referenced?

Yes, Keith. This is Willie. On the guidance for market-to-market-based, what we've done is, as you know, we've got a complex system with a lot of flexibility to capture volumes when the arbitrage opportunities are there. We're not going to get into detailed assessment of where things are. What I would tell you is we put a level that we thought was probable that we could capture, and then there are a lot of variations. I think that was mentioned in the prepared scripts. We went with the range and it was actually a response to some of our conversations with analysts about not trying to be too precise on that. So I'm providing a long-winded answer saying we've got some baked in that we think we're going to capture and there's some upsides and downsides in the typical buckets that we capture these in, whether it'd be distressed crude into storage. We've got some time spreads, it's sometimes we're able to capture if the market is conducive from that. And then we've got some unhedged portions of our PLA as well as our frac spreads, not a lot. We've got the predominant amount of that hedge. That would give us some upside if oil prices are higher or lower.

In this area, also differentials, quality differentials can impact that.

Second question just on the NGL guidance for the year, down 100 million year-over-year. Last quarter, you pointed to that 100 million impact, but you beat pretty good in the fourth quarter, so 2022 actually came in higher. You also have the carousel. So is it fair to say the NGL business is improving in some ways? It just feels like the outlook has actually gotten a little bit better than your last update?

I think it's a fair assessment. And remember, we expect to close Keyera Fort Sask later this quarter. So you'll see that number wasn't included in anything past tense. It'll be prospective, but I think it's a fair assessment.

Thank you. And our next question comes from the line of Marc Solecitto with Barclays.

Maybe just a follow-up on the Permian production growth outlook. Is there any sensitivity you can provide from the Plains perspective to that 500,000 barrels a day number in terms of 2023 EBITDA guidance or any context around the embedded assumptions within your guidance range?

We view the gathering of long-haul business differently. A straightforward estimate would suggest that 100,000 barrels a day could lead to an EBITDA impact of approximately $10 million to $15 million for Plains. If we consider this from a gathering standpoint, the long haul's impact will depend on the market destination. Since we have hedged a significant portion, if that barrel goes to Cushing, or if our shippers on Cactus II decide to transport it at higher rates, it would increase margins. This provides a general perspective on the gathering side, assuming there are no market-related opportunities, just the gathering fees involved.

Great. That's helpful. And then on Slide 9, you referenced a net debt reduction in the context of the $600 million of free cash after dividend. And you also have the $400 million of cash from the balance sheet as of year-end. So just wondering if there's a particular target you have for net debt repayments this year in the context of the $1.1 billion you have maturing?

Yes. This is Al. The leverage we talked about going down basically from 3.7 to 3.5, that's roughly about $600 million we are assuming. So, it'll be partly a reduction using cash to reduce the gross debt, but the net debt we have modeled about $600 million. Again, there are things that can happen throughout the year that will change that, but that's what's embedded in our assumptions at this time.

Thank you. And our next question comes from the line of John McKay with Goldman Sachs.

Hey, everyone. Thank you for the time. I appreciate it. Maybe looking again at the Permian, just thinking about kind of barrels out of Houston versus Corpus, starting to see the Corpus bound lines start to fill up on a relative basis given export levels. Curious if you can share our view of what you think is going to happen in terms of the need potentially for more capacity or expansions on any of the lines going to Corpus and whether or not that could be in 2024 or 2025 or later conversations?

Hi. This is Jeremy Goebel. I'd say what you're seeing is the Corpus line filling up because international demand is waking up for crude oil. I'd say the Wink-to-Webster step-up is having a larger impact on the market centers at Houston, moving from market centers there to Webster and Midland. Then in the fourth quarter of this year, you will see a step-up in additional movements into the Beaumont from that same market. So, you will see more of an impact there. Corpus is continuing to draw barrels, but there is a lot of spot capacity moving into Corpus today, and those margins will move out over time just to get from the lower levels they are today to closer to new build economics. I don't think you are looking at an expansion in the near term. The markets have to move off incentive tariffs closer to where you could build or support additional construction. But Houston and other markets have strong markets and will pull barrels, and Cushing will continue to pull barrels based on the excellent crack spreads we're seeing in the market today. We see the Permian needs all of the above to clear, but at this point, the most efficient dock from a quality and logistics standpoint is Corpus. Net yields are premium to the other markets, so if it's an export barrel, it's going to look to price into that market. But there's low overflow capacity into the others and you'll see pull into those other markets. But for purely logistics and quality reasons and pricing, you will see Corpus pull that export barrel.

And John, you know this, but the markets change in different locations as Jeremy outlined. You can say there will be leaders and laggards, but there are times when we've got access to all those markets. So there are times where Corpus will be attractive and sometimes we end up with a pull on Cushing from our basin pipeline, and we're able to move volumes there. So, I think about it, if the market is generally dynamic and we have a system that can capitalize on really any of that to move barrels for our customers.

Maybe just on the gathering pickup, the 50,000 a day that's now going to be flowing onto your long-haul lines, are there more of these opportunities out there? Is this kind of a one-off? Anything you can share on again, any others we could see what that might mean for rates overall? Anything else would be helpful?

I think some of that is just a preference for producers to shift barrels. We just offer flexibility for our customers to go to specific markets. As we said earlier on the call, we continue to contract additional space opportunistically when it makes sense. And so, we've layered in contracts over time to Corpus, to Cushing, and to other markets, and we'll continue to do that. There are step-ups in our contracts on Cactus II and Wink-to-Webster this year, which will impact that. There are additional movements to Corpus as contracts roll off when we contract new pieces. It just changes the dynamics in the system. So for now, we're not going to disclose who the shippers are or how they move barrels, but that's something you would continue to see. We have an attractive gathering system, and people like to deal with one operator from wellhead to market, and we'll continue to capture opportunities that work for us and the customers.

And our next question comes from the line of Jeremy Tonet with JP Morgan.

Just wanted to come back to the assumptions in the Permian here, the 500 assume year-over-year growth as well as kind of on Slide 6, the market share of those gains across gathering intra-basin long haul. Are there any high-level thoughts you're able to provide as far as sensitivities, if we want to kind of overlay our own assumptions on those? How that might impact EBITDA in the year?

Well, I think Jeremy Goebel's earlier comment on the rough sensitivity is probably about as close as we can get. I mean, so that was roughly $10 million to $15 million in the gathering system for every 100,000 barrels a day of growth. It's hard to put a detailed number more on that because it depends on what system it's going on. And as you might understand, sometimes, if it's an NBC that's empty and the volume wants to go differently, it will be a benefit. And so, there are a lot of variables that play into it, but I'd probably go with that $10 to $15 per 100,000.

And Jeremy, just recognize on the long haul side, we feel very confident in the volumes that we put in here through the additional hedging and contracting of additional capacity. So, I’d say that for the long-haul system, some of this is flexible based on market demand, but we have a very good view of that. And I don't know that within a hundred thousand barrels a day of basin growth, you're going to see a lot of movement in what we think will capture on the long haul side this year.

One thing that's notably different this year than past years that you may have picked up is, we're coming into this year with a substantial amount of our long-haul volumes in the Permian and 80% of our frac spreads kind of locked in. So that gives us a little more confidence as we think about 2023. But that's different than what we've done in the past.

Good question. Yes, we've seen that same disclosure. Our current leverage targets we established in 2019, we lowered them during the pandemic. We've now got into them and have now migrated below. What we're communicating versus establishing a new target is that we intend to migrate further below the low end and operate there. And I think our view is we'll assess that. We do believe broader energy industry leverage probably needs to be lower than it's been historically. But we'll take a little time and assess that in the future, but for now, just kind of look at it and pass along the math we just intend to operate below the low end.

Yes, I think having additional financial flexibility is a good thing these days.

And our next question comes from the line of Neel Mitra with Bank of America.

First question, the frac spread, I know you've talked about that improving for ‘23 on the outlook. Could you maybe talk about what the moving parts were from the last outlook to this outlook since you’re 80% hedged when you look at the NGL basket versus AECO?

Sure. Neel, this is Jeremy. In the fourth quarter of November, natural gas prices were significantly higher than they are currently. We did not engage in hedging during that period in the fourth quarter. As natural gas prices like Henry Hub and later AECO changed, we were able to hedge into propane, butane, and condensate prices, which allowed them to remain stable relative to the spread of buying AECO and selling NGLs. We capitalized on this shift and hedged additional volume, which strengthened our pricing outlook. All of this is factored into the forecast we have provided today. Our outlook aligns with the hedging we currently have and the present forward market.

Second question, Jeremy, probably for you also. We had a lot of crude flooding the Houston area with the SPR release last year. Now that that's gone, it seemed to have affected a lot of exports and improved the outlook. Is the same push there for exports and subsequently movement to Corpus versus Houston this year?

I would say those are somewhat independent because last year light crude exports increased by just a bit more than light crude production growth from the light basins including the Permian. The SPR was 70% heavy and that more impacted imports from Canada and imports from other locations. So, the real need for replacement from those refineries, roughly the average of 450,000 barrels a day of SPR releases over the calendar year, is going to be on the heavy side. They’re going to need to find replacements for that distillate yield. So it's really not a replacement in yield here. We look at that more as an impact to the heavy markets than to the light markets. So, we still think the best logistics and the best quality will draw the additional barrels for export. So, we kind of look at those as independent because the domestic refiners increased last year exports of product and exports of lights. And so, we just look at those as independent.

Got it. And if I could just ask one clarification. So when you talk about hedging the spread, let's say, between the Permian and Corpus Christi market or Permian MEH, is that for your equity volumes that you are doing that now?

It's also a price based on pipelines. If you consider it on a prompt basis for the given month, the spread to the water could be $0.50 from MEH. It's different from Houston and Corpus, but from a Corpus perspective, it could exceed $0.50. Over the long term, if you're looking at the MEH market, it could easily be in the $0.30 to $0.40 range. So, looking at that as the marker, the relationship has changed somewhat since Wink-to-Webster began, and there is less liquidity in MEH. However, it still serves as a proxy, but there is definitely a premium for Corpus.

I'm not sure if your question was, we capture the margin on barrels that we buy and move. Was that your question?

That was it. But Jeremy's color was also very helpful. Thank you.

Thank you. And our next question comes from the line of Neal Dingmann with Truist.

Good afternoon guys. Thanks for the time. It's kind of been asked, I just want to ask maybe a different way. I'm trying to get a sense of, if you see any different win-win strategy now when I look at sort of simply growth versus distribution? And then maybe as part of that how you think about sort of minimum distribution growth coverage that you are comfortable with on either side of that if those things have changed?

Hi, Neal, this is Willie. The strategy hasn't changed. Capital discipline and discipline in everything we do continue. Our goal is to continue to generate lots of free cash flow, and continue to pay debt down. We have prepays that we want to deal with at some point in time when it's optimal. And as we go forward, we want to have that extra financial flexibility. We have got some very exciting opportunities for potential debottlenecks on some of our NGL assets. So if you do see us take on some more projects, we are going to be strong return and we are going to be very, very measured as we go forward, whether it be capital investments or even bolt-on acquisitions or anything else.

Very good. And then one last one, just you have mentioned, I know previously you had a little bit of downtime or offline in the Canadian facilities. I'm just wondering how that's trending down? Thank you.

Yes. This is Chris Chandler. I can take that. We did have a turnaround at our Empress facility late 2022. We completed that successfully and we are back at full strength across our Canadian assets, both on the Empress extraction plant and at the fractionation facilities at both Fort Sask and in the East.

Thank you. And our next question comes from the line of Sunil Sibal with Seaport Global.

Hi, good afternoon, everybody. So my first question was on the CapEx. So it seems like you have guided to CapEx a little bit higher than what you did last year. I was just curious since there are no specific big item projects, is this the kind of run rate we can assume going forward, especially if the Permian growth going forward remains in the same kind of range?

Yes, Neel, I understood your question; you're asking kind of trajectory of growth and run rate? Is that what you're asking?

Right.

Yes. So, we do have operating leverage. We have got capacity in the Permian gathering intra-basin, long haul multiple markets. So there'll always be some opportunities there. And then as I shared earlier on the NGL assets, there's definitely some opportunities there as well.

From our cash flow projections for 2023, we are assuming $270 million in asset sales, which would increase the total. However, the capital expenditures, including both the $325 million and the maintenance capital, would decrease it. Our calculation also includes distributions to non-controlling interests. This is based on the same formula we typically use. If you refer to our definition of free cash flow, you can sum up these components to arrive at the total. Does that make sense?

Yes. Got it. And then one follow-up from the previous question on leverage. I think you've also guided to mid-BBB kind of credit ratings. So does your previous range of 3.75 to 4.25 on the leverage metrics help you get there? Or considering the overall environment that we are in and what we are hearing from other mainstream producers, do you need to kind of lower that number, 3.75 to 4.25, to get to mid-BBB?

I would say probably not, other than we’d probably have to operate in the lower band of it and operate in the lower band of it on kind of a through-the-cycle basis. But again, as we've communicated on this call and the call in November, we intend to operate kind of at the lower band or below, and we've had the same dialogue and communication with the rating agencies. We believe the path that we plan to manage our financial capital structure at is commensurate with mid-triple BBB ratings, and it'll just take time and us executing against what we've laid out to get there. So, we're pleased with the progress so far. We did get one positive outlook recently and we're hopeful. Again, we just got to continue to execute and deliver like we think we will.

Thank you. I will now turn the call back over to CEO, Willie Chiang, for any closing remarks.

Thanks. I did want to add one thing. When we talked about looking at things with intense financial discipline, we talked about capital investments. We discussed some NGL expansions. The one other thing is, of course, acquisitions. You would expect us to apply the same level of financial discipline when we think about acquisitions. Considering our system and what we're ultimately playing for, we've got great assets. We're probably able to capture more synergies out of some of these, but we're going to be very disciplined and think about the valuation when they do come up. But again, anything you'll see us do is going to go through that threshold of financial discipline. Thanks everyone for your attention joining us this afternoon, and we'll look forward to keeping you updated as we go forward through the year. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.