Plains All American Pipeline, L.P.

Good day, and thank you for standing by. Welcome to the PAA and PAGP fourth quarter full year 2021 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 that session, you'll need to press star 1 on your telephone. And if you require any assistance during the call, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Roy Lamoureux. Mr. Lamoureux, the floor is yours.

Thank you, Chris. Good afternoon, and welcome to Plains All-American's fourth quarter and full year 2021 earnings call. Today's 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 two. A condensed consolidating balance sheet for PAGP and other reference materials are located in the appendix. Today's call will be hosted by Willie Chang, Chairman and CEO, and Alice Watson, Executive Vice President and CFO. Other members of our team will be available for the Q&A session, including Harry Pafanis, our President, Chris Chandler, our Executive Vice President and Chief Operating Officer, Jeremy Goebel, Executive Vice President and Chief Commercial Officer, and Chris Herbold, Senior Vice President of Finance and Chief Accounting Officer. With that, I'll now turn the call over to Willie. Thank you, Willie.

Thank you, Roy. Good afternoon, everyone, and I want to thank you for joining us today. It's really quite remarkable what a difference a year can make. Year over year, global crude oil demand is up over 5% and back to near pre-COVID levels, and global oil prices have increased over 50%, with WTI and Brent trading near $90 a barrel. The Permian Basin, which is key to our financial success, exceeded our 2021 expectations exiting the year at roughly 5 million barrels a day, with crude oil production growth of approximately 540,000 barrels a day over a year in 2020. We expect the basin to add approximately 600,000 barrels a day annually for the next several years, and our asset base, built over decades, is well positioned to capture future growth with meaningful operating leverage and modest capital requirements. We also have a significant NGL position in Canada, with asset optimization and emerging energy opportunities across our footprint. All of this puts us in a good position to continue improving our financial flexibility and reinforces our confidence in the long-term outlook for our business. This afternoon, we reported fourth quarter and full-year 2021 results, exceeding our expectations. Additionally, we furnished 2022 full-year guidance, incorporating plain share of the Permian Joint Venture and we have revised our reporting segments to create two business segments, one for each of our crude and NGL businesses, which more consistently aligns with how we view and how we operate our business. Our 2022 adjusted EBITDA guidance attributable to Plains is $2.2 billion, which represents approximately $200 million of growth when adjusting for unique items benefiting 2021. Al will discuss these and other details during his portion of the call. As shown on slide four, 2021 was a year of solid execution for us in a competitive environment. Overall, we executed well, and we achieved our goals set out in February to maximize free cash flow, complete our multi-year capital program, further optimize our portfolio, and advance our sustainability efforts. We generated approximately $1.65 billion of free cash flow after distributions, exceeding our February forecast by approximately 600 million, primarily driven by asset sales that exceeded our target by 125 million, continued capital discipline with reduced capital expenditures of approximately 230 million versus our initial guidance, and further operating and commercial optimization. We repaid a billion dollars of debt, built 450 million of cash on our balance sheet, and we repurchased 175 million of our common equity bringing our cumulative repurchases to $228 million since November of 2020. We also completed our multi-year capital program with both the cap line reversal and Wink to Webster projects now in service. We are also well on our way to integrating our premium assets with the OREC system, and we are confident that the JV will generate at least $50 million in consolidated run rate synergies in 2022. In addition, we also made meaningful progress in our sustainability efforts, including establishing a new Health, Safety, Environmental, and Sustainability Board Committee for providing additional oversight and perspectives. And in regards to our emissions profile, we have further increased disclosure around our Scope 1 and Scope 2 emissions, which reflect ongoing reductions over the past three years and absolute emissions at the lower end of our peer group. We expect to continue the improvement trajectory through the efforts of our newly established emerging energy team, which is focused on a number of capital efficient opportunities to further optimize our existing assets and lower our emissions. Operational excellence continues to be a primary focus in our sustainability efforts, and we strive to continue to raise the bar, and we've made tremendous progress in our key health, safety, and environmental metrics over the past five years. We've reduced federally reportable releases and total recordable injury rate by approximately 40 and 50% respectively. Although we missed our 20% reduction targets in 2021, the severity of incidents we had were down greater by 25% and lost time days were down more than 90%. And I'm confident in our ability to continue improving going forward. With regards to capital allocation, our goals and initiatives remain centered on maximizing free cash flow and allocating it through a balanced approach, continuing to focus on debt reduction in the near term while increasing cash return to our equity holders over time. Based on the progress we've made to date and our expectation of generating meaningful cash flow over the next number of years, we intend to recommend to our board an increase in our annualized distribution of 15 cents per common unit, which, based on our guidance, maintains the capacity for continued discretionary repurchase activity. Our expected 2022 coverage ratio, taking into account the distribution rate that we plan to recommend to our board, is approximately 250%. This leaves room for responsibly returning additional capital to equity holders over time. Al will share additional detail on our financial strategy and our capital allocation priorities later in the call. Now let me share some comments on industry fundamentals that are shown on slide five. As I briefly mentioned earlier, global crude oil demand is near pre-COVID levels, with the EIA and other third parties forecasting demand growth of approximately three to four million barrels a day in 2022, and continued growth for the foreseeable future. We expect this demand growth, combined with the multi-year backdrop backdrop of reduced upstream investment and a continuation of OPEC discipline will exacerbate many of the market concerns already being experienced today. This includes tight global markets and continued commodity price volatility. As a result, over the longer term, we expect that North American energy supply will continue to play a key role in meeting global demand growth and the Permian is positioned to drive a vast majority of U.S. production growth. It's against this macro backdrop that we expect to generate significant cash flow on a multi-year basis, supported by our integrated business model from producing regions to key market and export hubs. We have a very flexible asset footprint with operating leverage, particularly in the Permian, and modest capital investment needs for a number of years to come. With that, I'll turn the call over to Al.