Plains All American Pipeline, L.P.

Good morning and thank you for standing by. Welcome to the PAA and PAGP second quarter 2023 earnings 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, Michelle. Good morning and welcome to Plains All-American second quarter 23 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. Highlights from the quarter are provided on slide three. 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 Al Swanson, Executive Vice President and CFO, as well as other members of our management team. With that, I will now turn the call over to Willie.

Thank you, Blake. Good morning, everyone, and thanks for joining us. In our release earlier this morning, we announced strong second quarter results, along with the closing of a Permian Gathering bolt-on acquisition on July 28th, and we provided an update on our NGL segment optimization efforts at Fort Saskatchewan. These announcements reflect meaningful progress towards executing on our full year 23 targets and goals. As a result of our year-to-date performance and the bolt-on acquisition, we now expect to be at the high end of our 2.45 to 2.55 billion adjusted EBITDA range for 2023. Our revised outlook also contemplates slightly lower than expected Permian production, driven by lower commodity prices and some weather-related impacts that occurred in June and July. A high-level overview of our updated 23 guidance is located on slide four, and Al will share additional detail in his portion of the call. As summarized on slide five, our Permian JV acquired the remaining 43% non-operated interest in the OMOG JV from Diamondback Energy via a negotiated transaction for $225 million or approximately $145 million net to Plains' interest, which was funded with excess free cash flow. This further aligns us with Diamondback in the core of the Midland Basin and is consistent with our objective of capital discipline and efficient growth, complementing our existing footprint. With regard to updates on our NGL business optimization, a summary of today's announcements are provided on slide six. In summary, we sanctioned a 30,000-barrel-a-day Fort Sask train one to bottleneck and expansion. We also added connectivity projects to both our co-ed wide-grade gathering pipeline and our fourth SASC fractionation complex, which further integrates and expands our NGL system. We entered into commercial commitments, substantially increasing the weighted average contract tenured to 10 years across our fourth SASC fractionation capacity in our co-ed pipeline. Overall, we expect the NGL projects to generate unlevered returns in excess of our hurdle rate on approximately $200 million of investment capital. This multi-year investment fits within our previously communicated expectations for total average annual capital spend of $300 to $400 million a year net to PAA over the coming years. Lastly, we have a third-party supply agreement that expires at the end of 2024 which reduces our overall frack spread exposed volumes by approximately 15,000 barrels a day. The combinations of these announcements is expected to be EBITDA neutral in 2025 and beyond in a 55 to 60 cent per gallon frack spread environment, with the contributions from the Fort SAS expansion associated connectivity projects and code pipeline agreements offsetting the expiry of the NGL supply agreement. Importantly, the end result is a more predictable and durable level of fee-based earnings in our NGL segment, underpinned by long-term contracts. Additionally, we're no longer exploring a joint venture and a higher-cost expansion of Train 2 at the Fort Sasks facility, as it did not meet our required return thresholds. Before turning the call back over to Al, I want to leave you with three messages. First, we've exceeded our EBITDA targets through mid-year, and we expect to be at the high end of our full-year guidance range. Second, we closed an attractive Permian-Bulcan acquisition that further improves our premier Permian footprint in an efficient, disciplined manner. And third, we announced several strategic actions in our NGL segment, which will help improve the long-term durability and the quality of our cash flow stream over time. All of these actions align with our goals of remaining capital disciplined generating multi-year free cash flow, reducing leverage, and increasing returns of capital to our unit holders. With that, I'll turn the call over to Al.