Plains All American Pipeline, L.P.

Hello, and thank you for standing by. Welcome to the PAA and PADP third quarter earning 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'll hear an automatic message advising you that your hand is raised. Please be advised that today's conference is being recorded. I'd like to hand the conference over to your speaker, Ray Lamarrow, Vice President, Investor Relations, Communication, and Government Relations.

Thank you, Therese. Good afternoon, and welcome to Plains All-Americans Third Quarter 2022 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. An overview of today's call is provided on slide three. A condensed consulting and 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 Al Swanson, Executive Vice President and Chief Financial Officer. Other members of our team will be available for Q&A, including Harry Pafanis, our President, Chris Chandler, 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 will now turn the call over to Willie.

Thank you, Roy, and thank you everyone for joining us this afternoon. Today, we announced strong third quarter results above our expectations, reflecting continued execution of our long-term goals and initiatives. and our strong performance in both of our crude oil and NGL segments. In summary, third quarter adjusted EBITDA attributable to PAA was $623 million. We increased our full year 2022 adjusted EBITDA guidance by $75 million to $2.45 billion, which is $250 million above our initial February guidance. The year-to-year increase is driven by outperformance in both crude oil and NGL segments due to the capture of additional volumes, higher commodity prices, and favorable margin-based opportunities. Additionally, today we announced and closed an 85 million acquisition of an additional 5% in the Cactus II pipeline, bringing our total ownership to 70%. Importantly, we ended the quarter with a leverage of 3.7x and expect to end the year at 3.8x, both below the midpoint of our targeted leverage range. This supports increasing returns of capital to our equity holders. As such, within today's earnings release, we laid out a multi-year capital allocation and financial framework, which I will discuss shortly. Before that, I wanted to reiterate our views on why we remain constructive on long-term industry fundamentals. Notwithstanding global economic uncertainty and continued volatility in the commodity markets, we continue to expect global energy supply and demand to remain tight. As shown on slide four, for the past number of years and for a number of reasons, there's been a lower level of investment in the upstream sector, reducing resource development. At the same time, energy demand continues to grow, while historical supply buffers in the form of OPEC plus spare capacity and global inventories are greatly reduced and have been further impacted by recent geopolitical events. Year-to-date, we have seen U.S. Strategic Petroleum Reserve draws of approximately 190 million barrels, and commercial inventories remain or at below historic levels over the same timeframe. Global markets remain tight, and the world needs short-cycle North American production growth. As summarized on slide five, we've made meaningful progress on our long-term goals and initiatives, and as such, 2022 is a positive inflection point for planes. For the last several years, we have focused on deleveraging by maximizing free cash flow and reducing absolute debt. The success of this effort when combined with solid operating, commercial, and financial performance enabled us to achieve our leverage objectives well ahead of our initial expectations and to accelerate returns to equity holders while providing greater clarity on our multi-year capital allocation framework. As described in our press release this afternoon, we provided updates to our capital allocation and financial framework as follows. We currently intend to recommend to the board a 20 cent per unit annualized increase of our quarterly distribution payable in February 2023. Beyond 23, as part of our annual budget review process with the board, we anticipate targeting annualized distribution increases of approximately 15 cents per unit each year until reaching a targeted common unit distribution coverage ratio of approximately 160%. We anticipate leverage migrating below the low end of our targeted range of 3.75 to 4.25 times in 2023, and consistent with our objective in achieving and maintaining our mid triple B and equivalent credit ratings. Additionally, opportunistic unit repurchases will remain a component of our capital allocation framework, which will be a dynamic assessment of business outlook market environment, and capital allocation options. As we look forward, we remain focused on driving shareholder value and improving the resilience of our earnings by leveraging our existing crude oil and NGL infrastructure. This includes capital-efficient brownfield expansions and debottlenecking opportunities underpinned by contractual commitments, potential bolt-on acquisitions such as the Advantage JV and the acquisition of additional interest in Cactus II, and the optimization and alignment of existing assets with emerging energy opportunities. In Canada, we recently completed a win-win non-cash transaction to gain full ownership of our existing Empress facilities in exchange for a long-term processing capacity lease at the facility, allowing us to further optimize and operate the assets more efficiently over time. Additionally, we continue to evaluate capital efficient de-bottlenecking and expansion projects around our four Saskatchewan facilities and hope to be able to share additional details over the next coming quarters. With that, I will turn the call over to Al.