Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you provide an update on the commercialization progress of the SPOT project since receiving the deepwater port license earlier this month?
A: (A. James Teague - Co-CEO) The commercialization of SPOT is ongoing and positive. We expect to finalize two contracts by next month and are in discussions with other parties. The project will not proceed until it is fully supported by contracts.
Q: Can you provide an update on the Texas Western products project after the initial phase began service?
A: (Tug C. Hanley - Senior VP, Hydrocarbon Marketing) Two terminals in West Texas are operational, setting new records for volumes loaded daily. Margins are meeting or exceeding expectations. Phase II, covering Albuquerque and Grand Junction, is on track for commissioning in the second to early third quarter.
Q: Could you discuss the projects added in the quarter on the Midland side, including any new dedications with existing or new customers?
A: (Natalie K. Gayden - SVP, Natural Gas Assets) The new dedications and gathering expansions in Delaware and Midland are supported by both existing and new customers. These expansions feed into the new plants, with over 91% of plant capacity currently utilized.
Q: How do you plan to reach the goal of exporting 100 million barrels a month without SPOT, and what changes with SPOT moving forward?
A: (A. James Teague - Co-CEO) The goal is based on a strong supply position. We don't need significant additional investments in our facilities to achieve this. SPOT will further enhance our export capacity and strategy.
Q: What are your expectations for domestic propane prices and the impact of international market spreads?
A: (Tug C. Hanley - Senior VP, Hydrocarbon Marketing) Domestic propane is expected to remain constrained until new export capacities come online. Lower freight prices are currently creating more SPOT export opportunities, benefiting our operations.
Q: What is the future capital allocation strategy, particularly regarding the balance between shareholder returns and growth projects for 2025 and beyond?
A: (Randy Fowler - Co-CEO & Chief Financial Officer) We aim to maintain a payout ratio of 55% to 60% of adjusted cash flow from operations. Growth CapEx for 2024 and 2025 is projected at $3.25 billion to $3.75 billion, with a normalized range of $2 billion to $2.5 billion expected in subsequent years. This strategy includes flexibility for buybacks and organic growth investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
