Good day, and thank you for standing by. Welcome to the PAA and PAGP second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Blake Fernandez, Vice President of Investor Relations. Please go ahead.

Thank you, Daniel. Good morning. Welcome to Planes All-American Second Quarter 2026 Earnings Call. Today's slide presentation is posted on the Investor Relations website under the News and Events section at ir.planes.com. 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 two. An overview of today's call is provided on slide three. A condensed consolidating balance sheet for PAGP and other reference materials are in the appendix. Today's call will be hosted by Willie Chang, Chairman, CEO, and President, Al Swanson, Executive Vice President and CFO, and other members of the management team. With that, I'll turn the call over to Willie.

Thank you, Blake. Good morning, everyone, and thank you for joining us. This morning, we reported second quarter adjusted EBITDA attributable to Plains of $738 million, which puts us on track to deliver our full-year EBITDA guidance of $2.88 billion, plus or minus $75 million for 2026. Al will cover more details on our results in his portion of the call. The conflict in the Middle East and supply disruptions from the Strait of Hormuz illustrate the importance of reliable, secure, and responsibly produced energy. We believe this increases the value of existing infrastructure, and we are well positioned to help play a critical role in meeting global energy demand well into the future. While the macro environment has been volatile, we are successfully executing on our three key initiatives for the year. In May, we closed on the sale of our Canadian NGL business, bringing our leverage down to 3.3 times. Additionally, we have captured our targeted Cactus III synergies, which will enhance our connectivity to the Corpus Christi market in oil exports. Finally, we expect to realize $50 million of efficiencies across the organization by year-end 2026, along with an additional $50 million by the end of 2020. Strong fruit assertivity and customer demand, coupled with our premier crude oil footprint, are creating new organic investment opportunities. As we outlined in our June press release in detail on slide 5, we increased our growth capital spending for 2026 from $350 million to a range of $400 to $450 million. These are predominantly quick-hit projects that will contribute to the 2027 EBITDA and will generate a rate of return above our hurdle rate. This includes a further build-out of our Permian gathering system to service additional dedicated acreage in the Midland and Delaware basins. The acreage is backed by several high-quality producers and spans multiple counties. This brings our POPJV total dedicated Permian acreage to approximately 5.1 million acres. Additionally, we're expanding our Canadian gathering systems. Additional capacity and connectivity will support strategic projects in the Clearwater and the DuVernay formations and are backed by producer commitments. Finally, we have sanctioned a very capital-efficient expansion of the Cactus III pipeline, adding an additional 75,000 barrels a day capacity. This brings the total capacity of the line to 725,000 barrels a day. The expansion will come online by the end of this month and will support increased demand for export barrels out of the Corpus Christi. We continue to evaluate additional investment opportunities, both organic and inorganic, that strengthen our portfolio and complement our existing asset base. With regard to Permian production, we now expect approximately 100,000 to 200,000 barrels a day of growth in 2026 versus 2025 on an exit-to-exit basis. Upside from our previous forecast of relatively flat production is mainly due to natural gas egress coming online earlier than expected. Importantly, the ramp up in Permian Oil production will create meaningful momentum into 2027 while having minimal impact to EBITDA this year. Our capital allocation framework and efficient growth strategy remain intact. We have a commitment to capital discipline, to optimize our asset base, and maintaining a very flexible balance sheet while returning significant cash to shareholders. With that, let me turn the call over to Al to cover our quarterly performance.

Six and seven contain adjusted EBITDA walks that provide additional details on our performance. For the second quarter we reported crude oil segment adjusted EBITDA of $690 million, representing a significant increase from the first quarter level. This was driven by a combination of Cactus III synergies, efficiencies, market-based opportunities, and the absent of headwinds from the first quarter. I would note that second quarter results include approximately $14 million of one-off environmental remediation expenses. Moving to the NGL segment, we reported adjusted EBITDA of $40 million, which reflects the mid-May closing date on the sale of the business. We are contemplating removing NGL segment EBITDA from our reporting in the third quarter and instead reporting adjusted EBITDA with one segment. A summary of 2026 guidance and key assumptions are on slide eight. As Willie outlined, we raised growth capital to a range of $400 million to $450 million and increased our Permian production forecast to 100 to 200,000 barrels a day, exit to exit. Maintenance capital was decreased to $175 million, largely due to the timing of the NGL sale. Regarding our pipeline loss allowance revenue, we are approximately 70% hedged for the balance of the year at an average WTI price around $62. We plan to disclose our 2027 hedge position in February in conjunction with our full-year outlook. As illustrated on slide 9, we expect to generate approximately $1.75 billion of free cash flow in 2026 and return significant capital to unit holders while maintaining financial flexibility. Our pro forma leverage ratio at the end of the second quarter was 3.3 times, reflecting approximately $2.9 billion of debt reduction driven by the NGL divestiture. With that, I will turn the call back to Willie.

Thanks, Al. Slide 10 highlights the 7% compounded annual growth of our crude business over the past few years. Our efficient growth strategy and the sale of the NGL business position as well to execute through a range of market environments, generating a more durable cash flow and creating long-term value. We continue to build momentum into 2027 with increasing Permian production and a strong balance sheet with leverage of the low end of our target range. our capital allocation framework priorities remain the same one return cash to unit holders through our targeted 15 cent per unit annual increases to execute on a creative bolt-on acquisitions and organic capex and three maintain a strong balance sheet with financial flexibility we have already identified and expect to capture an additional 50 million of streamlining costs in 2027 and we are well positioned to capture potential tailwinds from the volatile oil macro environment with that I'll turn the call over to Blake to lead

us into Q&A thanks Willie as we enter the Q&A session please limit yourself to two questions this will allow us to address questions from as many participants as possible in our available time this morning with that operator please open the call for questions as a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced to withdraw your question please press star 1 1 again in the interest of time, we ask that you please lend yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Gabriel Marine with Mizuho. Your line is open. Hey, good morning, team.

I just wanted to ask about the revised CapEx, which I know came out a couple weeks ago. Can you just talk about this level of $400 million plus in investment capital, maybe how sustainable you think that will be, given that some of it's Canadian, some of it's Permian, some of it's Cactus. Just curious how you're thinking about in 27 and beyond.

Sure. Good morning, Gabe. It's Chris Chandler. So Willie laid out in our slides also show the drivers that led us to change the guidance for 2026. Some of those are typical 18 to 24 month projects. So the spend will carry into 27 and maybe a little in the 28. The way I think about it is i don't expect 2027 to look significantly different than 2026 but it is trending a little higher than our historical 300 to 400 million dollar range net to planes so we'll provide 2027 guidance obviously uh when we provide full year guidance in uh late january early february thanks chris and then maybe if i could just ask about the cactus expansion and adding the 75,000 barrels a day, just how long do you think that it takes to fill, and to what extent can you keep adding these bite-sized expansions to Cactus going forward before you have to

contemplate something much bigger than that?

Gabe, good morning. It's Jeremy Goble. To answer your question, our marketing affiliate can fill the space now and capture the volatility that we're seeing. The expectation is to contract that over time when we see the market. So, The reason we executed on it earlier than expected is you saw a lot of volatility, you saw growing production, you saw a really short time period, very capital efficient, and you see on the demand side new buyers on the market. So our marketing affiliate can fill that role until someone wants to take the space from us. So we can fill it quickly and then turn it to a term basis, which is our ultimate goal. And then your question on are there other opportunities? Our team continues to evaluate capital-efficient opportunities, and we'll update you as we have it.

Thanks, Jeremy.

Thank you. Our next question comes from Manav Gupta with UBS. Your line is open.

Good morning, guys. I wanted to go – I know it's a little early, but I was thinking maybe you could talk a little bit about how 2027 is shaping up for you, the puts and takes, especially given the number of new pipelines expected, which will alleviate the Permian-Negres problem so that crude could come to the market. So help us understand the puts and takes for 2027 versus 2026.

Manav, it's Willie. Let me try to address this. We're not going to give you guidance on 2027 because the world continues to evolve. What we really want to convey to you is that longer term, whether it's the end of 2026, early 2027, is really going to be determined by how things shape up in the Middle East. There remains a lot of uncertainty, as everyone knows. The oil markets are very extreme, but as we view this, the longer this goes, the more you draw global inventories to low levels, the more important North America is going to be to providing fuel for the rest of the energy to the rest of the world. So everything we're doing is positioning us to be able to capture that when it comes. And you tell me the oil price, you tell me when things resolve, we can easily put a number together, but that's probably the extent I'll share on what our views are, other than it being very constructive. And we've got a lot of momentum going into 27.

Perfect. My quick follow-up that I just wanted to understand from you is that your balance sheet is fixed, I think earlier in the year, last year, you were looking at more bolt-on opportunities. Now I think you are looking at more organic growth projects also. Can you help us understand the balance between future growth driven by bolt-ons versus organic opportunities?

Manav, this is Willie again. The answer is we look at all of them. We've got lots of levers to pull. The organic opportunities present themselves. We do it. If it's the bolt-ons, we execute on those. I'm really pleased where we are with our balance sheet, where it is, and the ability to pull the levers on lots of different things, whether it's bolt-ons, whether it's CapEx, returning more cash to shareholders, and even taking out the preps. Those are some of the options that we have. So it's a good position to be in, and we'll play the right card when the time comes.

Thank you so much.

Thank you.

Thank you. Our next question comes from Praneeth Satish with Wells Fargo. Your line is open.

Good morning, everyone. So just going back to the guidance, you raised the exit-to-exit Permian production growth by 100,000 to 200,000 barrels per day on improving gas egress. But I guess you're – and you kind of had strong Q2 results, but you left the 2026 EBITDA guidance unchanged. I guess intuitively, I would have expected at least some of those, you know, know flush volumes to reach your system and contribute to earnings upside this year so maybe you can just help us understand why the higher volume outlook doesn't necessarily translate into higher EBITDA guidance for this year and and how you're thinking about the timing of when you realize those benefits yeah this is Al one quarter first quarter crude was kind of the low point for us 2Q, we reported the $690 million I mentioned, which is up over $100 million from the first quarter.

Our guide at the midpoint currently for the second half is above the $690 million. The math is, say, it'd be in the low 700s. So we've modeled in a very strong kind of exit to the year. We do believe that we will be seeing and capturing volumes. We had a bit of that in already, but we do expect really that this sets us up for the momentum that Willie mentioned for 2027, more so than a quote, a raise for the second half of the year, since we've already modeled a pretty strong second half of the year.

Gotcha. That's helpful. And then maybe switching gears on the Cactus 3 expansion. So, you know, you guys have one of the last meaningful brownfield expansion opportunities in the Permian with Cactus. So I guess I'm just trying to understand how you balance adding incremental capacity versus just kind of maintaining a tighter market where you could benefit from stronger recontracting rates. It's been a tough slog the last few years. So, I mean, I'm sure you've done some internal analysis on that tradeoff. But I guess, you know, with you going forward with this expansion, can we assume that the expected returns are compelling enough, I guess, to outweigh the benefits of a tighter market? Just how should we think about that?

Bernice, good question. This is Jeremy. First of all, the 75,000 barrels a day won't change the market and is substantially higher. The market from us will be net tighter. The economic returns is very capital efficient. That's not in question. They'll be very good. From our standpoint, we're executing on it. Basin is very well-attracted. Cactus 2 is very well-attracted. We don't think this- Thank you.

Our next question comes from Jeremy Tonnet with JPMorgan Securities. Your line is open.

Good morning, team. Thank you for taking questions. This is Francina on for Jeremy. Just wanted to dig a bit deeper on the guide that appears to kind of present declines outside of regions other than the Permian. Can you walk us through what you're seeing with volume expectations and kind of where that leads us in terms of puts and takes to the current maintained guide? Thank you.

Sure. This is Jeremy. Look, we're seeing increased activity. The Permian has added 30 rigs from the trough. The Eagleford's added 10 rigs. It continues to grow. So we're seeing opportunities across the system as evidenced by the expansion capital. From our standpoint, we're cautiously optimistic that that will continue, and it should be good for both our assets in the Permian and outside the Permian. As for the guide, I think the most volatile piece was the second quarter. The third quarter, price volatility was margins across the regions, got pretty narrow. It was just a different quarter. The same situation, because ships are moving all over the place, could represent. We certainly expect it.

That's helpful. And then wanted to also touch on what you're seeing for the Canadian Organic Growth Opportunity Set and whether those opportunities more so present near-term or longer-term, if you could talk about that. Thank you.

Sure. We're very excited about Canada. The clear water around our rainbow asset, we are continuing to add capacity, and every time we add it, it gets full. So we're excited about it. And those are long-term contracts. Same with our Rageland an asset, which sits in the DuVernay, and we can bring those either north to Edmonton or south to the... There may be an opportunity to...

That's very helpful. Thank you, team. I'll leave it there.

Thank you. Our next question comes from Spiro Dunas with Citi. Your line is open.

Thanks, operator. Morning, team. I want to start off first with market-based opportunities. Can you maybe talk through the outlook into the second half of 26 and maybe where you still expect to see some areas for opportunities? And I'm just curious how you're thinking about differentials, volatility, curve structure, storage, and how much of that is contemplated in the guide here?

This is Jeremy. We're not forecasting market-based opportunities other than what we've captured. So I think from our standpoint, if those opportunities present themselves, we will. We can play time, quality, and locations. We feel very well positioned with where the guide is, and as volatility presents itself, we'll capture it just as we did in the second quarter.

Jeremy, second question, maybe just focusing on exports. I'm sure if you're seeing changes in customer behavior. Jeremy, I know you mentioned seeing new customers show up. I'm curious if that applies to exports here. And how are you thinking about flows to Corpus versus Houston into the back half of 26?

Yes, we are seeing different customers be interested instead of being spot purchasers or under term contracts only from the Middle East look to or some level of security to supply. I think you've seen it across commodities as well.

Spiro, this is Willie. You know our assets well, but I think the thing I wanted to highlight is on our visits with people, we've been talking about the market shifting to a demand pull model. We've been in a supply push model for quite some time with surplus supply in the world. I do think the question that you're asking is really hitting on a key thing, which we believe is happening. With de-inventoring of the global inventory of crude supplies, this is really shifting to a demand pull market. And your question about others wanting to come and get access to barrels really as a security of supply is very true. And if you look back in the second quarter, we actually had record crude exports out of the Gulf Coast. And as these things typically work, because you've got a long supply chain with ships, that shifted. And now we had more volumes going up to Cushing, but that can easily start shifting back as little events happen. So the key thing for us is we've got great assets that can play all these different options. Hard to exactly figure out what will happen, but when it will happen, we feel we'll be in the right place in time to be able to capture it.

Got it. Great to hear, Willie. Appreciate the caller today. Thank you, gentlemen. Thank you.

Thank you. Our next question comes from Keith Stanley with Wolf Research. Your line is open.

Hi. Good morning. Yeah, only one question for me. I wanted to dig into the Cactus III economics a little more. So your Permian CapEx this year is only up $35 million. You have the $40 million earn out. So it kind of implies the Cactus III project is call it $50 to $75 million, which would be a really high return for you guys. So looking forward, how can we think about the cost of future phases of expansion of Cactus III? Do they get a lot more expensive than this? or can you replicate this a few more times?

Hey, good morning, Keith. It's Chris Chandler. I'll take that. First, let's talk about the phase we just completed, 75,000 barrels a day. Without sharing the exact number, I think you're reading into our numbers well in that the expansion we just completed was highly economic. We were able to do it for far less than we anticipated when we acquired the asset, able to do it more quickly. I would think of it in terms of tens of millions of dollars. And that doesn't include the earn-out that we disclosed in the slide. So very, very economic and very quick to market, as Jeremy shared. We're taking a close look at future expansion opportunities. Those will have to be backed by customer commitments, of course. But I think it's safe to say that the costs for those future phases are looking more economic than we originally premised as well when we acquired the assets. So we're really pleased overall. we've been able to capture the synergies with Cactus 3 and expansion opportunities are ready to go and look very economic when the customer support is firmed up.

Thank you. Thank you. Our next question comes from AJ O'Donnell with TPH. Your line is open.

Hey, good morning, everyone. Maybe if I could just follow on to the last question a little bit. Could you talk a little bit more about just kind of the economics of the expansion just thinking I believe you said the affiliate could fill the space right now but as you work to contract that over the longer term where do you kind of see the rates on that project falling like largely where they're at right now or does that get a premium good question it depends on how when we did our recontract okay great and And then just one more on Cactus 3. I think in February, you kind of described stabilizing the base pipeline, then looking at capital-efficient expansions. And then in May, you said an expansion would kind of be phased and paced to demand. And now that the first 75 is sanctioned, you know, is the base pipeline fully recontracted and stabilized? and how soon could we expect to see additional phases?

Good question. So the directs will be longer. As far as the base contract, we have sufficient demand right now. We see sufficient demand.

What Jeremy was talking about is ideally a longer-term contract. It's the tenor versus the price. It would be scarce, and that's why we're pretty constructive with the market going forward.

Thanks for all the details.

Thanks, AJ.

Thank you. Our next question comes from Jackie Kalidus with Goldman Sachs. Your line is open.

Thank you so much for the time. Just thought I'd follow up on a question quickly. You reiterated your confidence in capturing the $50 million of cost efficiencies by the end of this year and then another in 2027. Can you just provide us a progress update here on where these savings are physically materializing and what could drive incremental efficiencies from here?

Morning, Jack. It's Chris Chandler. Yeah, we've made good progress on our commitment to capture $50 million in 2026 of efficiencies. Certainly, the NGL sale was a catalyst in that area, but not by any means the entire driver. We've made a number of changes that contribute to that $50 million and an additional $50 million that we expect to capture in 2027. But I think in terms of reassessing and streamlining our organizational structure looking at the number of employees we have in leadership and management roles you know we're more focused in you know crude old pure play companies so that demands a different level of oversight and a different approach to how we run the business and our business processes we've done some targeted right sizing of our trucking business closed and consolidated some marketing offices and And just taking a fresh look at everything we do and how we do it from a business process standpoint. So as to capture year-to-date, it's fair to say we've realized a little less than half of the 50 million so far this year. And we're on track to capture the remaining by year in 2026. And again, we feel good about capturing an additional 50 million in 2027. Hope that helps.

No, very helpful. I appreciate it. And then just a follow-up on the Canadian gathering system, just if I could talk a little bit more about the moving pieces are overall, the incremental Canadian egress, and, you know, a little bit more color on what you're thinking about, the timing there, and then potential size, you know, capacity on rangeland.

Oh, good question. So I think from our standpoint, think of rangeland as a gathering system. And so the expansions there are filling. The rainbow is an expansion of capacity of the main line and building. First, we'll look to fill up.

Our next question comes from Gabe Dowd with Truth. Your line is open.

Thanks, Operator. Hey, morning, team. Was hoping to maybe just ask another Permian macro question. Any views, just given conversations with producers now for 27, any views on where the rig count could go from here? And then just kind of frame when you think there could be an acceleration in crude volumes at a basin level, maybe approaching 8 million barrels per day. Because I think that's probably what the basin hits by 2030. But if crude remains elevated, I'd imagine you could maybe see some acceleration. So curious maybe what your overall views are on that.

First of all, the gas egress has seeing volume.

And there are many of the other producers that have really touted the ability to produce more. So that's good, right?

No, that's right, Willie. A lot of operators have highlighted surfactants and other technologies to improve productivity and recovery factors. So that could also be a tailwind, as you noted. But thank God. Maybe just a quick follow-up. So in the conversation, is there a specific price for 27 where you feel operators could be a bit more active? I see 70 on the screen now for 27. Is it, you know, 75, get folks more excited? Just curious from your conversations if there's a signal that seems, like, pretty obvious as to where producers could add.

I'll let Jeremy forecast the price. Less about price but more about activity. So your first question was where could you see incremental activity? I think you've heard a number of operators talk about deeper benches in the Midland Basin being very productive. And I think you'll continue to see capital move into those. in the Delaware Basin, New Mexico continues to expand in all directions. Vertically, they keep going to find other benches, and then horizontally, it keeps going north and to the west. And so from our standpoint, New Mexico continues to expand and surprise to the upside. You're even seeing some of the deeper benches work in areas like the Woodford-Barnett in the Delaware Basin in certain areas.

So I think the basin continues to expand its resource base. and we're excited about that because it's awesome great color thank you thank you our next question comes from teresa chen with barclays your line is open morning thank you for taking my questions uh willie going back to your comments about your organization's ability to capture tailwinds from this macro environment and some of i think jeremy's comments um to earlier questions Just looking at the past several months of heightened market volatility, has anything about the performance of your commercial organization exceeded your expectations? Are there specific examples where the team was able to capitalize on market dislocations or emerging opportunities in ways that surprised you?

Teresa, one, it's good to hear your voice. The answer is there's a lot of – we've got a good team that captures different opportunities. And while not getting into all of the different strategies we've had, I would point to the response and being able to get barrels down to the Gulf Coast. You know, we had record exports during the second quarter. We were able to basically source barrels and help facilitate moving those. So that volume, that's one of our strategies. We've been able to capture some values around the shape of the forward curve. That has been good. And the other piece of value that always comes, it's not the market opportunities, but it's the discussions that we have with our producer partners on where their pinch points are that set up for some of these capital projects that we are now putting into place. Oil price level itself, you know, we stand to gain on PLA. I think as Al's share, we've got a little bit of PLA left to hedge. We've captured – we hedged a good portion of that going into this year, and so we didn't have a lot much to play with, but we still have some barrels out there that could help us.

It does. Thank you. And in terms of capturing marketing-related earnings related to wide quality differentials, clearly there are a lot of variables at play here. Specifically, how do you think about the growing volume of Venezuelan barrels in the Gulf Coast, increasing heavy supply in Pad 3, coupled with incremental westbound egress for WCS over time, whether that be a TMX expansion or 1 million barrel per day West Coast oil pipeline, how does that change your views on heavy differentials across North America and your marketing and optimization opportunities there as results.

Teresa, good question. Our preference is first to move.

And Teresa, this is William. On the Venezuela question, if it was around our views on heavy barrels coming into the Gulf Coast, I think it's healthy because those barrels are originally designed for the Gulf Coast.

Thank you very much.

Thank you. Our next question comes from Sunil Sebal with Seaport Global. Your line is open.

Yes, hi. Good morning. So first of all, just a clarification, I think Al mentioned that in Q2 you had $14 million of environmental remediation expense. I was curious, you know, is there any impact of that in the second half also in terms of your efforts on that front?

This is Al. No, they were one-off. We do not expect that to recur in the second half.

Okay. Okay. Then obviously a lot of discussion on today's call on Permian as well as Canadian opportunities. I was curious, you know, as you think about the $400 to $450 million of CapEx spend that you incur in forward a year, are there other regions or any specific regions where you see outsized opportunities?

Sunil, this is Willie. The better chance to get higher returns are around, while we don't target assets only by region, if we've got strong returns anywhere along our value chain, we consider it. But the chances are it's going to be in the areas that have more activity. But we remain very, very disciplined on our thresholds, and it's more return-driven and strategy-driven than region-driven.

Okay, so you're implying, Willie, here that $400 million to $450 million, you can basically get through that in those two regions primarily, right?

That'd be a good assumption.

Okay, thank you.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Willie Chang for closing remarks.

Thanks, Daniel, and thanks, everyone, for joining us today. We look forward and are excited to see you on the road. Take care and have a safe weekend.

This concludes today's conference call. Thank you for participating. You may now disconnect.