Plains All American Pipeline, L.P.

movements alone, the crude contribution should probably be higher than what is currently shown. Could you just walk us through what's baked into the new guide and maybe the embedded outlook in there?

Sure. Brandon, this is Al. Yeah, our original guidance for the year assumed a $60 and $65 environment for 2026, so kind of a 62. We came into the year highly hedged, at roughly those levels. The $85 environment that we're talking about for the future is roughly the strip from June through December when we looked at it. So there would be some benefit based on crude prices on our PLA, but the fact that we had hedged quite a bit before entering the year That sensitivity we give is just a raw sensitivity. In order to make it more meaningful, we would have had to have disclosed to you the hedge position at the beginning of the year, which we haven't historically done. So, what I would say is that the first quarter performance and the nine months of our guide is very minimally impacted by actual PLA pricing.

Okay, thank you. Yes, very helpful. Thank you. And then maybe just wanted to ask about, you know, in light of some of the commentary in your prepared remarks about a more constructive longer term market and just the whole macro environment as it stands today, how are you guys thinking about the potential for the Epic expansion at this point?

Brandon, good morning. This is Jeremy. We're excited about the opportunities around our entire long haul portfolio. and are having constructive dialogue with existing customers and new customers looking for secure supply from the United States. So that results in some spot activity, but longer term, the expectation is to contract at higher rates than maybe before this would happen with potentially new counterparties. So that would apply to recontracting existing pipeline capacity and expansions as well. So we're looking at all the above and hope to have updates in the coming quarters on how that looks.

Okay, great. Thank you.

Thank you. Our next question comes from Gabriel Maureen with Mizuho. Your line is open.

Hey, good morning, everyone. Maybe I'll just ask the permanent macro question, Willie, in terms of sort of your best outlook. I think, you know, previous years you talked about 200,000-ish barrels a day, year-over-year growth. Best venture at this point, I realize there's a lot of things in play and things are changing quickly, but do you think that goes significantly higher from here, 400,000, 500,000, and 27? I'm just curious what your latest thoughts are there.

Yeah, Gabe, this is Willie. Jeremy may have some additional comments, but I'll give you my thoughts. The U.S. producers have remained very disciplined as far as capital allocation, and they're looking really at the back end of the curve to see where it goes. WTI is roughly $70, and our view is when you start getting into the $75 and above, increased activity happens. There's also some other things that, more on the short-term operating We've got some natural gas. The Permian has some natural gas takeaway constraints. There are new lines that are being built and being commissioned as early as later this year. So the thought being that alleviates itself. Our assumption for the Permian this year was flat. And if there is some upside, obviously we benefit from it. But our view going forward is we're not giving a formal guide, but we would expect growth going forward and probably some momentum of volumes behind that's going to increase production here, maybe with a little bit of a flush later this year or early next year. So I think it really depends on the back of the curve, but the systems are ready to go.

Thanks, Willie. And then maybe if I can ask kind of on the sustainability of some of the marketing opportunities you're currently seeing. Can you just talk about, I guess, some of the spreads that you're seeing and also on the value of dock space, the extent you're debating internally maybe terming some of those out at higher prices, and then also the steepness of the curve and backwardation, how that's playing with your storage. Is that helpful? Is that a hindrance? I'm just curious your thoughts on that.

Dave, without getting into specific strategies, which I would say time, location, quality spreads, that's volatility. We benefit from all of those because we have the assets, the supply position, and the trading function to capture those opportunities. It's hard to forecast those when they arrive, and that could be The time spreads, could you sell a barrel now and buy it back later by emptying a tank, that type of thing. Could you, difference in grades between Canada and the United States, difference in grades on Gulf Coast grades. All of those are strategies and things we can take advantage of with our integrated system. And so we're excited about those opportunities. What we've put in this, as Willie and Al both stated, we've substantially captured what's in this forecast. It's hard. This is a very volatile time period. We've only been in this 60 to 70 days. So it's hard to forecast that to continue. But if it continues, we would expect to capture more opportunities going forward. And just to add on to what Willie's saying, we do estimate there's close to 200,000 to 300,000 barrels a day of oil that's behind pipe in the Permian Basin. So that flush production he's talking about is substantial. And a lot of that's in the more constrained areas of the Delaware basin, which we have a broader footprint. So take New Mexico and other places. So as Willie said, we're not giving a formal guide, but if you look at the plot of, you talk about spread, the Waha spread, it's almost flat price in Waha has been largely negative since last September. That's what's accumulating all of this to go. And so as gas prices recover, productive capacity is already there to add And as you add more, that puts more pressure on potentially long-haul spreads and the ability to term up contracts at a greater rate. So we're seeing more demand from new customers. We're seeing potentially flush production. Those should all benefit to taking short-term opportunities and convert them to longer-term opportunities.

And, Gabe, this is Willie again. If you look at our numbers, you know, long-haul has increased and the margins on that has also improved. So I think we're moving as we go forward, which should be constructive for us.

Appreciate it. Thanks, guys.

Thank you. Our next question comes from Manav Gupta with UBS. Your line is open.

Good morning. I just wanted to focus a little bit on the weather impact. I think it is about 49 million quarter over quarter. I'm just trying to understand, you know, it says timing of minimum volume commitments. Is there a possibility some of this can be reversed in 2Q? Some of what you lost in the current quarter comes back into the second quarter. If you could talk a little bit about that.

Yes, Manav, those are two different things. But first, with regard to weather, weather is just production shut in for a period, you can't make that back, but the flush production does come back. With regard to the timing of MVCs, that's continuous in our process, and if you look at some of the earnings calls from others about their dock performance or other things in that first quarter, freight was really expensive and margins didn't have people moving, so long haul volumes were down across the industry, but that has completely reversed in timing, so you would absolutely expect that to be recovered. a question of when those MVCs accrued versus when they're paid, but all the pipelines are full again and the MVCs are being reversed.

Manav, this is Willie. If you're referring to slide five, I think the point of your question is on that negative 49, there's a bunch of one-time events in there that you're absolutely correct that will not occur again as we go forward.

Perfect. And if you could also talk about the very strong results from the NGL segment in the first quarter versus the last quarter, some of the drivers of what helped you deliver a much stronger earnings on that segment quarter over quarter. Thank you.

Sure, Manav. This is Jeremy again. Higher border flows than expected. You had very full storage in Canada and continued production, which required the volumes to be exported. And those were exported through our empress assets. So higher border flows leads to more straddle production. And that would all be unhedged and impact. So that was more border flow concept, but higher frack spreads as well in the first quarter towards the end of the first quarter. So I'd say those two. And that has continued into the second quarter, which is the increase in guide for the NTL business through closing.

Thank you.

Thank you. Our next question comes from Michael Bloom with Wells Fargo. Your line is open.

Thanks. Good morning, everyone. My question is really on the guidance, the crude segments. I think I'll just ask it all at once. So the increase, just wanted to make sure I understood. It sounds like most of this is optimization, which you've already locked in, and then maybe the rest is PLA. I just want to make sure I understood that. And then the second part is if prices stay elevated for the balance of the year, would there be upside to the guide in the crude segment, or is that already sort of faked into the numbers?

Thanks. Michael, this is Willie. Great question. Our assumptions are that the numbers that are in there really are what we've captured that roll off through the year that will actualize on optimization efforts, and you're correct. If we have a stronger macro environment, higher prices, there definitely is upside.

Great, thank you.

You bet.

Thank you. Our next question comes from Jeremy Tonek with JPMorgan Securities. Your line is open.

Hi, good morning. Hi, Jeremy. Just wanted to see what you guys are seeing locally, ear to the ground there, as far as producer activity going. and whether rigs being picked up by the independents or if larger drillers could as well, and what would be needed to be seen, I guess, across this trip to gain the comfort to do that. And so just wondering how you think production could uptick here, or what do you see?

Jeremy, good morning. This is Jeremy. So since this started, you've already seen 15 rigs added back. and we would expect some to continue. But as Willie mentioned, there's a bit of a throttle right now. You can't add more natural gas to the system, as if flaring is not allowed. So productive capacities there, rigs being added now would impact 2027. I think there's a bit of confusion by the market in that if you take the products market and the physical crude market, they're substantially more tighter than the financial markets would indicate, which means the back end of the curve has to come up. It's very difficult even if you open this trade of Hormuz tomorrow to get everything back in order the way it was. It's going to take a while for shipping to start. You have to empty tanks before you can start back up production. Products markets are just empty in some places. So I think there's real dislocation that will take time. I think some of the integrators have stated it's for every day it's down, it's three days to get back up. And so it's potential for months to get out of this even if they were resolved today. So I think that's the part that probably producers are waiting on is more assurity that the back end of the curve that they bring rigs on. Because at this point, the service companies have stacked equipment. It takes capital to get those back in. It takes commitment to make those back in. So I think producers to make those commitments need commitment from prices that they'll be there. And the longer this goes, the more likely that will occur. But I think it's just a dislocation in the back end of the curve right now that's may be causing some hesitancy, but that's going to prolong the problem.

Got it. That's helpful there. And then, you know, just wanted to see, I guess, how you think that impacts BASIS over time here and, you know, what it could mean for future egress expansion.

Thanks, Jeremy. It's constructive for BASIS. More production is and more demand on the water, so you're seeing a specific to the corpus market and and some of the on the water efficient docks you're seeing higher pricing and relative to even the screens and so that on a prolonged basis says there's new buyers coming to america there's vessels that used to be pointed at other locations that intend to come back and forth to the united states for a while so i think you're seeing that on the ngl side i think you'll see it on the lng side and i think you'll see it on the crude side More buyers and more demand is generally constructive for spreads, and so we would expect to match either our supplier or our customers with that and hopefully offer a service at a higher rate.

Jeremy, this is Willie. You're aware that on Cactus 3 we have expansion capacity there, and as we've always said, we're going to pace that with market demand and commercial contracts. The other highlight on that is, as we've gotten to know the project and have assessed it, We have the ability to do that in a phased approach and also it's really fairly flexible for us to get additional volumes and it's not a long-term, it's not a binary big expansion. There's ways to do it in phases which should match customer demand. And generally speaking, in a higher price environment, there are more opportunities because there's basically a pull on the whole system And so typically in that kind of a market, the market opportunities and optimization opportunities become a little more prevalent versus a lower price where less is moving and there's less opportunities. I hope that helps.

That is helpful. Thank you.

Thank you. Our next question comes from Jackie Colitas with Goldman Sachs. Your line is open.

Hi, good morning. Thank you so much for the time. First, I was wondering if you could just comment on the progress of your cost reduction initiatives. Are these on track with expectations at this point, and is there any potential for upside capture here? When should we expect for planes to realize more significant efficiencies through the year?

Yeah, good morning, Jackie. It's Chris Chandler. I'm happy to take that. We are on track to capture the efficiencies, $50 million by the end of 2026 and an additional $50 million in 2027. We've actually already made a number of changes, some unrelated to the NGL transaction, some in anticipation of the NGL transaction. So, we feel confident in the number. There's always upside. We're always looking for additional opportunities and we will certainly pursue any that we find. We're not prepared at this time to change the $100 million target we have through the end of 2027, but on track there and things are going well.

Great to hear. Thank you. just shifting to capital allocation, you know, with debt reduction as a near-term focus, particularly following, you know, the pending NGL sale, when can we expect a shift or what would kind of allow a shift from debt pay down to a larger focus on, you know, potential buybacks or preferred pay downs?

This is Al. I'll take a shot at it. Yeah, so clearly with the proceeds from NGL, we anticipate taking that and paying down roughly a little over $3 billion of debt, which would be the term loan, the outstanding CP we have, and a $750 million note that matures later this year. Post that, we expect to be right at the midpoint of our leverage. We expect up 3.5. We expect that to migrate down, which will then come back to where we've been for the last number of years prior to the EPIC acquisition. leverage towards the low end of our range. Our view would be capital allocation first and foremost focused on maintaining distribution growth, funding investments, whether they're organic or M&A related, as well as looking at taking out perhaps should leverage remain at or below the bottom end of the range, and opportunistic share repurchases. So a long-winded way of saying that once we get through the NGL sale and deployment of the proceeds back to where we've been operating for the last several years.

Great. Thank you.

Thank you. I'm sure no further questions at this time. I'd like to turn the call back over to Willie Chang, President, CEO, and Chairman, for closing remarks.

Michelle, thanks. We appreciate everyone's support and attention, and we look forward to seeing you on the road. Stay safe. Thank you very much.

Thank you for your participation. You may now disconnect. Everyone, have a great day.