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Okay, that's helpful, thank you. Second question on S&L. Basically, I just wanted to know, is there any change in your hedge position either for Q4 '18 or for 2019? In other words, what I'm trying to get at is, what gives you the confidence to put out the guidance you had for both years? Should we assume that that's ef... |
I would say that our guidance reflects our hedge position and our view of the market for the unhedged portion. And we are obviously are always active in the market so it's not the same position that it was the last call. |
We'll go next to Jean Ann Salisbury with Bernstein. |
Just a couple of quick ones from me. I think you said that 25 million came out of guidance for 2018 from BridgeTex, which I guess would just be for the fourth quarter. That seems a little bit higher. Can you just kind of spell out I guess what the estimate that you had coming out of 2019 guidance from it was? |
If you just walk through the math, principally the 25 was BridgeTex. The pipe is obviously closer to full with the logistical constraints. If you take the 255 to the 2.46 that's principally BridgeTex coming out of the vast majority of it. You had the numbers right. |
Thank you. And then it seems like once the pipelines to the Gulf are on from the Permian, that will be a bit more of a draw for Permian barrels than Cushing will be, which I think had the pretty long-term differential expectation in the forward curve. Can you kind of give us an estimate for how much of the flow on basi... |
That's a really tough question to answer because as barrels go down, it depends on what happens to Cushing and what the arbitrage is. Unless Harry has a better answer, I think it's really hard. There are definitely barrels at risk but it's hard to put a number on it. |
There are barrels at risk but there's a certain pull from the Mid-Continent for Permian basin volume. If you just look back historically, there have been times when the Permian has been -- the Midland has been a significant premium to Cushing and volumes still move. It's hard to pinpoint exactly but there's definitely ... |
We also have contracts for that movement and we hedge some of that movement for ourselves as well. |
We'll go next to Colton Bean with Tudor, Pickering, Holt & Company. |
Good afternoon. So with the Canadian volumes looking like they ticked up there quarter over quarter, is some portion of that tied to S&L barrels moving on Milk River in Aurora? Trying to capture that light spread or just any clarity there? |
The Canadian volumes are mainly tied to production in Canada. It's not S&L driven by that impacts our Canadian. |
Got it. And then just, can you give us an update on your thoughts around a potential extension of Saddlehorn to capture PRB growth? I guess, pending prop 112, does that impact the thought process around that extension? |
We already have a pipeline that can source volumes out of the river into Saddlehorn. |
Got it. And if the proposition were to go ahead, is there anything you would need to do to increase the capacity to maybe repurpose Saddlehorn to be primarily a Powder River pipeline? |
Saddlehorn has committed shippers so it couldn't totally be a Powder River pipeline. But we do have the capability of expanding capacity into Saddlehorn and there are enhancements that could be accomplished at Saddlehorn as well. We think we're in a pretty good position to capture some of the potential volume increases... |
No, I think we have multiple options. So, today barrels move from that area through Saddlehorn on a spot basis but longer term there's a possibility to expand what the existing footprint with pumps and then if there's more demand you could loop segments of the line to create additional capacity. So I think, depending o... |
We'll go next to Spiro Dounis with Credit Suisse. |
Hey, good afternoon. Just wanted to start off with a potential distribution increase. I don't want to get too ahead of us here but with the increase coming and I realize you can't say much on specifics but can you brighten any sort of blueprint on how you decide what that first increase looks like and what the mechanis... |
Clearly, we can't provide specific numbers. The thoughts were all denoted on that slide. If you recall back, August in '17 when we made the reduction we did make a comment that we would consider either starting with normal increases or a step change or a combination of both. We haven't made any decisions clearly as we ... |
But as far as specific numbers, no. Clearly, we want to focus on maintaining liquidity and commercial flexibility, operational flexibility, credit metrics supporting mid-triple B and to make sure we minimize the need for equity capital markets. And so, those will all be tenets that we kind of dial through our thought p... |
That's fair. And we've heard a lot this quarter from your peers just around major crude export expansion projects, really tailored to the LCC. Just curious where you guys are on that. It seems like a natural extension to a lot of your pipelines. But just curious if you think there's maybe a risk of overbuilding here on... |
I'll make a comment and then Chris Chandler I'd like to maybe you can follow-up. Clearly, there are a lot of deep-water VLCC projects announced. These are all big projects, a significant expense. When we looked at our Cactus pipeline, we had been trying to look at not only the pipeline takeaway but combining that with ... |
So our view is that we can get the pike, we can get the barrels to the coast, and there is a number of different -- there's plenty of docks that are being built and we should have the flexibility to get access to all those. And if it's a strong return and it's beneficial for us, we may participate. Otherwise, we're gon... |
The only thing I'd add is we do believe that one or more single point projects do make sense going forward as crude oil exports continue to grow. It's, of course, the most efficient way to load a large volume of crude oil for export. In a scenario like Willie said, that we're closely monitoring. |
Great. I appreciate that color. |
Before we go onto the next call, I want to circle back just to clarify. We are seeing a little more volume come across the border through our cross-border pipelines like -- it's not a huge volume but there is more volume that comes down in through Milk River into our western corridor system. |
We'll go next to Dennis Coleman with Bank of America. |
Yes, good evening to everyone. Thanks for taking my questions. I guess if I can just start with the S&L and push a little bit more. Al, you talked about sort of normalizing that volume I guess, for lack of a better description, into 2020. Anything you can say in terms of how we should size that? Obviously, there are so... |
Yeah, we wouldn't try to put a specific number for 2020 S&L out yet. What we're trying to do is just make sure -- we started this year at 100 million for S&L, slowly took it up to 175 now 350, we think the 350 is gonna be there and likely exceed it in '19. We're just trying to make sure that anybody that's modeling tha... |
That's how we're gonna run the company as far as how we're thinking of leverage, distribution coverages. We're gonna assume we've got a nice opportunity to capture it, it's helping us fund projects, reduce debt, but we're gonna run the company in line with a fairly modest amount of S&L contribution for 2020 and how we'... |
Great, that's very helpful. Maybe just switching -- there was a comment that St. James volumes were up in the quarter and seemed perhaps that's more crude by rail but any expectation that would continue to ramp up and any comments you can give there? |
We think we'll continue to see rail demand in 2019 at St. James. It's largely driven by the pipeline constraints. And as pipeline constraints, these rail lines will likely subside some. But we've had steady business for a long time at St. James, it just accelerated due to the pipeline constraints. |
So do you have excess capacity there? Is that something that could continue to ramp? |
Oh yes, we have additional capacity. |
The limit has been rail car access to rails, that's been what's been the limiting point through 2018 and of course, prices fix prices and additional rail cars have been directed to the markets that need it. |
We'll go next to Jerren Holder with Goldman Sachs. |
Thanks. What is the latest on your potential to increase takeaway capacity of the Bakken in Canada? |
Out of the Canadian Bakken or out of the Bakken and Canada? |
Our footprint is not significant in the Bakken. It's mainly consisted of some smaller pipes and rail takeaway. So obviously we try and take advantage of the limited infrastructure we have but we're not gonna be one of the parties that devolve of a significant takeaway project out of the Bakken. |
We do have two cross-border connections, Rangeland and WESCANA that we are working on how do we get more capacity on those two systems but the volumes are fairly limited. |
And ideally, that would be a pipeline system that would be bidirectional where you could move volumes into the Canadian infrastructure if you had higher demand there or into the Bakken infrastructure if there was higher demand in the Bakken. |
And that's in the WESCANA piece not on the Rangeland piece, bidirectional. |
And then follow-up on the asset sales. Where are we following BridgeTex? Are you guys looking to do more? Are there any outstanding that are just waiting to close at this point? |
Our goal for 2018 was to achieve $700 million in asset sales and we have exceeded that goal. We will continue to evaluate our portfolio going forward based on valuation and strategic fit but we don't feel any pressure to sell additional assets. If something changes there, we'll provide updates as warranted. |
And no pending deals that haven't closed yet or anything like that? |
We'll go next to Tristan Richardson with SunTrust. |
Afternoon, guys. Just on the intra-basin side and debottlenecking. Can you give an update on your Wink to McCamey project as you sort of set the table for Cactus II? |
That's one of multiple projects. We have capacity in the Wink and then out of Wink. That will be on sometime within the last month of this year, the first month of next year. But more importantly, we need capacity in the Wink as well because there's a lot of production that's coming online in the western Delaware basin... |
And what that does is it frees up capacity in the Midland on our historical basin system. It'll give us a lot of capacity just having the first leg on to help keep that part of the basin debottlenecked. So it creates additional tariff barrels from us even if we don't have the rest of Cactus II on at that time. |
You should think of the Wink to McCamey piece -- never mind. I was thinking of something else. |
Dare we go from Wink over to Midland and then down to McCamey. By basically taking the hypotenuse the triangle it makes it easier from the flow perspective. |
That's helpful. Just quickly, with respect to the preliminary 2019 guide on the fee-based side and the visibility you have on tariff volumes as some of these long hauls come online, could you talk about generally where you see tariff volumes in '19 as it's presumed in your preliminary guide? |
We don't intend to provide a volume to go with the EBITDA until February so look forward, we'll provide that detail then. |
We'll go next to Keith Stanley with Wolfe Research. |
Hi, good evening. Just wanted to clarify on the transportation segment guide. It implies a pretty strong acceleration in Q4. Quite a bit more than what you've seen in the past few quarters so it's up 40 million and then you're losing BridgeTex so it looks like it's up really more like 65 million versus the third quarte... |
Clearly, Sunrise is a piece of it, but as we stated in the prepared comments, there clearly is an expectation for production volumes to increase. We saw a slight lull incompletion in pushing barrels back. We expect a lot of that to come in the fourth quarter so that's definitely a component of the growth piece. |
Okay. And then, it looks like about a 500 million reduction in short-term debt. I'm assuming that's just hedge collateral coming back to you? and is that a sustainable level to model going forward? |
What I would say is, a little bit of the flips between long-term and short-term had to do with the BridgeTex cash closing at the end of the quarter. So short-term was understated relative to probably what we could've borrowed under the same metric, i.e. hedged inventory and margin. But we have seen our margin numbers c... |
Clearly, we had done a lot more hedging for the first eight to nine months of the year versus the fourth quarter as we mentioned. What I would tell you is that's probably below what you would expect if you look out six months or nine months from now due to the BridgeTex timing and the cash that came in from that. |
And that cash was received in early October though, right? Or was it in Q3? |
No, it was in September, in Q3. |
We'll go next to Patrick Wang with Baird. |
Hi, good afternoon, thanks for taking my question. As you look toward resuming distribution growth in 2019, how does or doesn't preferred equity fit into the picture of those source of funding? |
Today, clearly our view is that when you look at next year, the equity portion of what our capex requirements will be would be funded principally with retained cash flow. We have room left on the "basket" as far as the rating agencies for hybrid or preferred type of securities. But our thought in 2019 would be that we ... |
Got it, that's helpful. And then, bigger picture in the Permian. It looks like crude takeaway relief will come before new gas takeaway. So then when you think about clearing levels between now and 2020, how do you think about the risk of a gas-induced activity constraint on the oil side? |
That is a risk. There's also fractionation risk on the NGL side. We feel like gas is probably a little bit ahead of fractionation risk but we're monitoring all of the above. I think our view and I think as Harry pointed out of volumes is predicated on a presumption that producers are not going to -- they're going to co... |
So we feel a ramp toward the second half of next year in completions as there's a line of sight into oil, gas, and NGL takeaway. But there are interim solutions just like there are with oil with some of the others, flaring being one, there are other ways to move NGLs. So we're paying attention to all of them but I thin... |
We'll go next to Sunil Sibal with Seaport Global Securities. |
Yes, hi, good afternoon, guys. And thanks for all of the clarity. I just wanted to go back to the credit metrics that you laid out on slide 14. So when I look at the target numbers on the extreme right, the leverage metrics that you lay out there, that's consistent with the triple B rating that you're looking for, a mi... |
You mean our targets? Yeah, they are but rating agencies have adjusted kind of how they look at things over the recent past. But our intent is to overtime make sure we get our leverage and our performance to where we will be mid-triple B again. But it won't be instantaneous we view. But they are consistent. But clearly... |
And then, within that EBITDA calculation, how do you think about the S&L contribution? Is that pretty much laid out or is it like a minimal level kind of number? |
In how we think of leverage metrics? |
Yeah, no. We'll include S&L in the metrics because clearly some of the debt that is in the numerator side of the calculation is there to generate S&L profitability. So you really can't eliminate the EBITDA without taking the debt out, right? That wouldn't make any sense. But the reality of it is that -- and part of wha... |
Yeah, it does. Thanks for that. One follow-up from the previous question. When we think about closely to 4 million barrels of tariff volumes in Permian and then you look at your MBCs or the next cycle to three years, could you give us the sense of cascading or impact of these MBCs rolling off over the next two to four ... |
Clearly a substantial amount of our long haul is supported by MBCs, clearly, on the gathering side, you've got more acreage dedications probably supporting that. We do not have any material roll-offs on large contracts on our MBCs over the next few years. |
We'll go next to Ross Paine with Wells Fargo. |
Mr. Paine, we are unable to hear you. You might try checking your mute button or picking up your handset. |
We'll go next to Elvira Scotto with RBC Capital Markets. |
Hey, good afternoon. A couple of quick clarification questions for me on the Exxon JV project. Just wanted to clarify, are you looking for additional third-party shippers or additional JV partners? And what would Plains' ownership interest ultimately be? |
We haven't disclosed the ownership but ultimately -- and you can imagine that upstream companies and downstream companies both shippers on pipelines all in often cases, whichever pipelines you commit to, take equity. So in many cases, it's both. So we're really looking for long-term partners in the project and we're ju... |
You should think about our position as meaningfully less than 50%. We've made that comment before. |
Great, thanks. And then just a bigger picture question around Cushing. Can you maybe provide a little more color on your view of Cushing and it's relevance longer term? Especially in the context of pipelines moving more Permian crude to the Gulf Coast and Canadian barrels potentially bypassing Cushing, especially with ... |
Over 2 million barrels a day that moves through Cushing, I don't see that materially changing. When you look at it, even if you have fewer Permian volumes coming in, you're gonna have more local production in the Mid-Continent. You're gonna have more of the Rockies production coming into Cushing so Cushing's gonna cont... |
Hey, as it's at the top of the hour, I think we're gonna go ahead and cut off questions at this point. Those of you remaining in the queue, Brett and I can circle back with you individually and address those questions. But thank you everybody for your time today and we appreciate you being on the call. |
That does conclude today's conference. We thank you for your participation. You may now disconnect. |
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Plains All American Pipeline wasn't one of them! That's right -- they think these 10 stocks are even better buys. |
Students Mesquite High School in Texas participated in Black History Month: An Educational Experience for All Career Fair. Businesses from the communities set up tables and booths to promote their line of work. In this particular picture, our MHS Senior students were talking to one of the massage therapists at The Spa ... |
Baghdad doctors say the health care system never recovered from the embargo years. |
In 1990, UN Security Council resolution 661 imposed economic sanctions and an embargo on Iraq as a punitive measure for its invasion of neighbouring Kuwait. |
The sanctions were designed to strip Iraq of its import and export capabilities and persuade it to withdraw from Kuwait to internationally-recognised borders. |
In February 1991, US-led military action ousted the Iraqi army from Kuwait but the sanctions were to continue until the government of Saddam Hussein was removed in 2003. |
However, by 1996, the UN sanctions were beginning to erode Iraq's once-thriving middle class and debilitate the country's health care system. |
The UN estimated that up to 1.7 million Iraqis may have died as a result of the sanctions; 500,000 of them were children, by 2003. |
Many of them perished as a result of simple medical conditions, such as dehydration, infection, and diarrhoea that could have been easily treated by most over-the-counter medicines found anywhere else in the world. |
Iraqi doctors were forced to make do without basic necessities such as antibiotics and rubber gloves. These items and others including crutches, heart medicine, pencils, and water treatment supplies were banned for more than a decade. |
The UN sanctions regimen dictated that these items could have been potentially used by Saddam in pursuit of weapons of mass destruction. They labelled them as items of "dual use," and banned their entry into Iraq for the entirety of the embargo. |
As early as 1995, the Food and Agricultural Organisation (FAO) warned that Iraqi children faced massive starvation. |
Three years later, Dennis Halliday resigned from his post as the UN humanitarian coordinator in Iraq, because he "refused to continue to take Security Council orders ... that had imposed and sustained genocidal sanctions on the innocent of Iraq". |
Dr Muna al-Bayati, an Iraqi doctor in Baghdad, 35, remembers studying and practicing medicine at a small, rundown clinic operated by the Iraqi ministry of health during the embargo years. |
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