Enterprise Products Partners L.P.

Good day, and thank you for stopping by. Welcome to the Enterprise Products Partners LP second quarter 2021 earnings conference call. At this time, all participants are in listening mode. At 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 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Randy Burkhalter, Vice President of Investor Relations. Please go ahead.

Thank you, Shannon. Good morning and welcome, everyone, to the Enterprise Products Partners Conference call to discuss second quarter 2021 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprises General Partner Jim Teague and Randy Fowler. Other members of our senior management team are also in attendance for the call today. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on the beliefs of the company as well as assumptions made by an information currently available to enterprises management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the four looking statements made during this call. And with that, I'll turn it over to Jim. Thank you, Randy.

Our business has continued to perform extremely well during the second quarter. We reported over $2 billion of EBITDA for the second quarter. our distributable cash flow was 1.6 times coverage. Cash flow from operations for the second quarter was $2 billion, which more than fully funded both our CapEx and our distributions. So as we sit halfway through the year, our distributable cash flow totaled $3.3 billion, providing $1.35 billion in retained cash. Second quarter results reflect the ongoing recovery in demand for hydrocarbons, as the global economy continues to reopen from COVID lockdowns. Our liquids pipelines transported 6.4 million barrels a day in the second quarter. Our natural gas pipelines transported 4.2 billion BTUs a day for the second quarter. That equaled 2019 volumes. Summing it all up, in crude oil equivalent, we transported 10.2 million barrels a day. Our fractionation volumes remain strong, added near record at 1.2 million barrels a day. Our propylene production for the second quarter of 2021 was a record 113,000 barrels a day. And liquid volumes handled by our marine terminals for the second quarter were 1.6 million barrels a day, which continues to lag pre-pandemic first quarter 20 performance 2 million barrels a day, primarily due to the weakness in crude oil exports. Really, this would be expected as strong prices, backward-dated markets, and lower inventories are pushing, are signaling that volume needs to stay at home, at least for now. In short, it shows that markets work. This time last year, we were slipping deeper into the COVID pandemic. It looked and felt like a black hole to some, but By this time last year, we had already returned to our headquarters office in what was virtually an empty downtown Houston. We set protocols. We started wearing masks before they were mandated. We put plexiglass around our cubicles. We insisted on keeping our distance. And we had hand sanitizers all over the building. But I really think it was a competitive advantage being back because we worked as a team. We moved products for our customers and our producers. We were buying and selling. We were arming the system and collecting on steep contango in about every product we touch. We were determined in the middle of the pandemic to make money, not make excuses. You fast forward to today, and the environment and sentiment are completely different. In the second quarter, crude averaged $28 a barrel, and as we all know, traded severely negative on April 20, 2020. Almost overnight, rig counts dropped from 800 to less than 250. Producers shut in significant amounts of production, and the Texas Railroad Commission held an online hearing on mandatory proration. that was attended by 35,000 people worldwide. I gave testimony to this hearing, and I was very straightforward and probably wouldn't have been as much so had I known we had 35,000 people listening. Today, WTI sits at $72. Natural gas has more than doubled from $1.75 to around $4. Rig counts have returned to 500 and growing. Producers are self-financing their capital, paying down debt and returning funds to their shareholders. Just to give you an idea for a couple of key products, we won't go through all of them. This time last year, ethane was selling at 18 cents a gallon. Today, it's 33. Propane moved from 35 cents. Today, it's, what, $1.09 print? Even with natural gas prices up, though, our gross processing spreads... and the Permian in particular have gone from around 22 cents to 50 cents a gallon. Responding to significantly increasing demand, wholesale gasoline has moved from 75 cents to $2. It was as low as 50 cents in March of last year. And refining utilization has moved from an anemic 70% at the low to over 90%. Crude and product inventories have gone from a hard-to-imagine 3.6 billion barrels at least 600 million barrels overstocked to below normal levels of 2.8 billion and continuing to fall. Economies are recovering and demand for virtually everything is increasing worldwide, pressuring supply chains. While our cash flows are markedly different, largely because of the movement of all commodities from steep contango into backwardation, Our businesses and our employees prove time and time again that they will perform regardless of the environment or today in what feels like something like hyper-growth. While the press release has a lot of details, I'll boil it this way. During last year's collapse, we leaned hard on our marketing teams, and we said at the time our storage was worth its weight in gold as we took advantage of steep contango, arming the system, coupled with a significant cost cutting by our operations. This year, with prices and volumes up considerably, our assets are who's leading the way, with significant increases in volume for gathering and processing, pipeline transportation, and exports in what I'll generally describe as fairly steady. Moving to an update on capital, we expect our growth capital for 2021 to be 1.7. We haven't changed, I don't think, Randy. For the rest of 21, we continue to be on schedule to complete our Acadian gas system to Gillis, the expansion of our ethylene and propylene pipeline systems, and the construction of our natural gasoline hydrate treater. Our growth capex in 22 and 23 projects currently sanctioned is $800 million and $400 million respectively. But we expect these to increase as some of the projects under developer development are sanctioned. The long-dated capital is largely around our PDH2. We couldn't be more pleased with the market fundamentals and momentum that we see in our petrochemicals business. The reopening of global economies has caused a surge in demand for propylene due to high demand from durables, which has caused the refinery grade to polymer grade spread to widen from 15 cents a pound historically to 40 cents a pound. Our petrochemicals and refined products segment contributed five out of the total six financial and operational records. The strong performance of our petrochemicals business was led by our propylene segment, which offset lower results from our octane enhancement due to a planned turnaround. Our Mount Bellevue propylene splitters achieved record throughput of 98% of nameplates. with strong margins, and our PDH plan operated at an average of 112% of nameplate following the planned maintenance in the first quarter. Finally, we recently closed on a transaction acquiring the ethylene storage business from NOVA. This transaction, although didn't take a lot of cash, is meaningful in that it is yet another milestone in the development of our petrochemical hubs, which is a key in furthering our petrochemical growth strategy. We feel very good about our strong position and our momentum in the midstream petrochemical space. We're pleased with how our assets and our people performed again last quarter. We have been outspoken about why we have been bullish on prices for well over a year and have been preparing accordingly. The global inventory excesses that came with the global pandemic have for the most part been exhausted. And it's nice to see both supply and demand participating in what we believe will be a very strong extended recovery cycle. We expect continued upside in demand, both in the U.S. and globally, and appropriate production increases from a healthy U.S. ENB industry. With that, Randy.

Thank you, Jim. And good morning, everyone. First, I'll hit some of the income segment items. Net income attributable to common unit holders for the second quarter of 2021 was $1.1 billion or 50 cents per common unit on a fully diluted basis. This compares to $1 billion or 47 cents per common unit for the second quarter of 2020. Net income was reduced by non-cash impairment charges of one penny per fully diluted unit, both for the second quarter of 2020 and the second quarter of 2021. Moving on to cash flows, cash flows from operations increased to $2 billion for the second quarter compared to $1.2 billion for the second quarter of 2020. The swing in cash provided by or used for working capital accounts between the two quarters explains $731 million or 90% of the increase. So again, changes in working capital accounts. Free cash flow for the 12 months ended June 30, 2021. And again, we define that as cash flow from operations, less investing activities, less distributions paid out to non-controlling interest in our joint venture projects was $4.2 billion. compared to $2.7 billion for the comparable 12 months ended June 30, 2020. We declared a distribution of 45 cents per common unit with respect to the second quarter of 2021. That will be paid on August 12th. This distribution represents a 1.1 percent increase compared to the second quarter of 2020. EPD's distribution reinvestment plan and employee unit purchase plan purchased a combined $38 million or approximately 1.6 million EPD common units in the open market during the second quarter. Our payout ratio, which we defined as the sum of our cash distributions and buybacks as a percent of cash flow from operations over the trailing 12 months, was 60% as of June 30, 2021. Compared to the latest available data, which is 12 months ending March 31, 2021, for our non-peer midstream C-Corps and MLPs, enterprise had one of the highest payout percentages. In the near term, while we wait for better visibility on federal regulatory and tax policies as it pertains to the energy industry, and as we assess the potential opportunities and related capital requirements for energy evolution projects, we are continuing to make financial flexibility our priority at the margin. However, we do plan to opportunistically buy back common units in the second half of this year. The amount of the buyback would probably be comparable to the $200 million we purchased in 2020. Turning to capitalization, Our total debt principal outstanding was approximately $28.8 billion as of June 30. Assuming the first call date or the final maturity date for our hybrids, the average life of our debt portfolio is 16.5 years and 20.8 years, respectively. Our effective average cost of debt is 4.5%. Adjusted EBITDA for the second quarter of 2021 was $2 billion and $8.4 billion for the 12 months ended. Our consolidated leverage was 3.24 times after adjusting debt for the partial equity content attributed to the hybrid debt securities and further reduced by any unrestricted cash. Our consolidated liquidity was approximately $5.4 billion at June 30, including availability under our existing credit facilities and approximately $400 million of unrestricted cash on hand. Finally, we expect to publish our annual sustainability report update, which is intended to supplement our 2019-2020 sustainability report next Monday on August 2nd. The report will be available on our website. We hope you have an opportunity to read it, and we look forward to publishing our next complete report in the summer of 2022. With that, Randy, I think we're ready for questions.

Okay, thank you, Randy. Shannon, we're ready to take questions from our participants.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. We ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Jeremy Tonette with J.P. Morgan. Your line is open.

Hi, good morning. Good morning. Just wanted to follow up on the energy evolution initiative there as it relates to carbon capture, and just wondering if you might be able to provide a little bit more detail, I guess, on what you see as possible there. Is this something kind of... In the ship channel itself, a hub concept, do you see that as something that is possible at some point in the future? And if so, where do you think the carbon could be stored? Do you think it's more of an onshore or offshore solution?

I guess it could be both. We're looking at what we think are some low-hanging fruit, and then we're looking along with a major chemical company, a major oil company, as to what we could do beyond that. And, you know, you can make a case to sequester it offshore, but you've got depleted reservoirs in the Permian, Tony. And so, I mean, we're still in infancy stage, but we're beginning to see that there might be some low-hanging fruit that we could take advantage of.

Got it. That makes sense. I was just curious if, you know, poor issues onshore kind of influence the decision onshore versus offshore then. But just Also curious, I guess, what type of timeline do you think that this could be, you know, really materialized over? It seems like we're really in the infancy here. If the Texas Railroad Commission gets kind of primacy on the classics wells, that could really, you know, change things a bit here. And if we get more federal legislation lifting the 45Q to 85, that could really change things here. But curious as far as what you think the timeline is for things coming together here.

Well, it's not immediate for sure.

Tony, you got any ideas? You know... Given the amount of regulation that's in front of us, anything short of three years would surprise me. Angie, you feel any different?

Yeah, I think that's about right in timing.

Got it. I'll leave it there. Thank you.

Thank you. Our next question comes from Jean Ann Salisbury with Bernstein. Your line is open.

Hi, good morning. A couple of questions about the quarter. Your NGL pipeline gross margin was down kind of 8% to 10% from its usual run rate. The news release referenced lower rates and volumes on Dixie and Mapple and also some downtime, but it wasn't clear to me how much was one-off and how much is kind of ongoing due to lower rates. Can you expand on that?

Chris, do you know or Doug?

Dixie was impacted. We had a hydro test, so I'll call that a one-off.

Okay. Because for the quarter, I guess that segment was kind of 555, and it's been a while since we've been in that low a couple years. So I'm just trying to figure out if that should be my new norm. Plus some for the hydro test.

Yeah, and this is Randy. I think there were also some, you know, we've got an integrated system, so to the extent we have NGL fracks down as well, I think we may have had some downtime over on Norco that that could also impact the volumes moving across South Louisiana system too. So there may be some ripple effects.

Yeah, I think Lutex probably was down.

Okay, that's helpful. Thank you. And then my other question is that the NGL prices year-to-date have obviously been very strong, but it hasn't seemed to really hit your processing gross margin. Can you kind of talk about why that is, if it's because gas price has also been strong or you've hedged or something else?

I don't know the question. In terms of NGLs, Jeanne Ann, this is Brent. You know, we have some keypole exposure, but it's probably not as much as some of our peers. So last year, I don't think, you know, in terms of when prices were very low, it wasn't probably nearly as impactful to us as it was to others. And in the same vein, when prices have been higher, we probably don't benefit as much as others. We do benefit, obviously. And I think the benefit that we have is more of a delayed effect in terms of what we see on volumes. And then ultimately kind of what drives our business is it's not just we see benefits in other parts of our business.

Gene, and one other impact that may be out there as well is if at the processing plant we elect to extract ethane, and we may be working on variable economics as far as extracting that ethane, which would not be, the benefit would not be reflected at the processing plants. If anything, it would be a cost associated with that at the processing plants and you'd get benefit on your downstream assets.

Oh, that actually makes a ton of sense. Cool. That's all for me. Thanks a lot.

Thank you. Our next question comes from Schneer Gershuni with UBS. Your line is open.

Hi. Good morning, everyone. I appreciated the commentary and the prepared remarks today about returning capital to unit holders, including the $200 million of buybacks for this year. You know, Randy, you spent a bit of time on my talk today kind of highlighting the 60% payout ratio, you know, kind of on a trailing 12-month basis for CFFO, which does include buybacks. I'm kind of wondering if, as you feel more comfortable with policy outlook and so forth, whether we could be thinking about 60% as kind of a signpost of where you'd ideally like the payout to kind of shake out with buybacks being a portion of it for CFFO. you know, not just 21, but for like 22 and beyond? Just kind of curious how you're thinking about that.

Yeah. You know, Shanira, I have to go back in. I know we've got a slide in the deck, in our investor deck, that shows over time what our percent payout has been as a percentage of cash flow from operations. And, you know, some of that's impacted by, you know, changes of cash used or provided by working capital accounts. So it will move around depending on how much money we have tied up in working capital. But typically, I mean, if you go back and look over time, I want to say that I'm going off memory, that has probably ranged from 55% to 65%. So I think that's a range. I don't think we're going to come in and get precise dialed in to the percentage, that would almost be like the tail wagging the dog. I think some of it is more of what's going on in the business, what kind of cash flows are we seeing being thrown off. So I don't think we're going to get as precise as 60% or 61% or 62%, but it would be more in a range.

Okay, that makes sense. Perfect. Appreciate that. And sort of a follow-up to how you're thinking about CapEx for 2022, I understand that you have 800 million of sanctioned projects. In addition to SPOT, are there any larger scale projects that you're evaluating, whether it's on energy evolution or kind of on the base business as it stands today? But are there any projects that you're evaluating or even in the permitting process that you could move the number by more than $500 million for next year. I'm just kind of curious where you are in terms of what you're evaluating right now.

Yeah, you know, I'll kick off with this, Schneer, and then see if Jim wants to add. You know, we had mentioned really going back to, I think, our January call that we were working on a few projects that, you know, we just for commercial sensitivity, we weren't going to provide a lot of and that's still where we are today, that we can't provide a lot of detail. But those, you know, we'll see. Could it come in and add to 2022? Yes, it could. You know, it could be in the $500 million incremental area. But I go back to what Jim said in the call back in – where he said, you know, if you think longer term, you know, something in the billion five to two billion run rate could be, you know, in the near term, what you could see are growth capex. I don't know if we'd get to that number for next year, but I think that's a good go by.

Just to re-clarify, so one and a half to two is kind of the range, but hard to kind of hit the top of the range next year.

I hate to underestimate our guys, but, yeah, that's how we feel. We'd have to hurry.

Okay, now that makes perfect sense. Really appreciate the color, and have a great day, guys. Thank you.

Thank you. Our next question comes from Tristan Richardson with Truist Securities. Your line is open.

Hey, good morning, guys. Just... Remarking on the pet chem business, strong results there, particularly on the propylene and PDH side. Clearly, past few quarters have had some turnarounds and downtime. But, you know, just looking at this quarter, based on what you're seeing from a spread perspective, is this a good general run rate for gross margin when the spread is available to you and facilities are online and highly utilized? Yeah.

You know what, in the near term, I think we're going to be hanging in here with this kind of results, Chris.

Yeah, Jim, I agree. We should be in the same run rate with everything running and refinery utilization hanging in there.

Well, I've talked to a couple of CEOs from petrochemical companies, and what they both said to me is they're running full out and they can't catch up. So we kind of like that business and brother says, do more things in it.

That's great. And then, you know, I think you talked, historically, you guys have talked about, you know, in any given year, there might be 500 to 800 million of spread opportunities. And I think as of the most recent quarter, kind of talked about potentially 2021 being, you know, north of 600. Curious about if that's still north of 600 as a comfortable figure or how we should think about how that's changed over the past quarter.

North of 600 will be conservative.

I appreciate it. Thanks, Jim.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your touchtone telephone. Our next question comes from Keith Stanley with Wolf Research. Your line is open.

Hi. Good morning. I first just wanted to clarify the demand response items. So the total benefit, it looks like, for Q2 was the $66 million in the release, and that's across the fractionation and that seaway. And then also, I just want to confirm, that's incremental to the $250 million URI gain you talked about last quarter, right?

Yeah, Keith. So yeah, I think what we're probably in total, we're looking at about $300 million in total. And then in the second quarter, yeah, the benefit was probably around 70. And some of the reason why you didn't see that hit until the second quarter is, frankly, we were waiting on clarity from the state of Texas as far as what the definitive settlement was going to be around ERCOT and around the LARS program.

Got it. Okay. One follow-up question on capital allocation. So just looking back, you raised the distribution slightly in Q4 last year. Should we expect similar timing for distribution growth announcements and I guess, how are you thinking about distribution growth generally into next year versus buybacks as part of the capital return story?

Yeah, Keith, I think, you know, the board comes in and, I mean, we take a look at the distribution every quarter. But, you know, here the last two or three years we've done it where we've come in and really announced the increase. in January for the next year. I think we would probably stick to that. I don't think that's cast in stone. As far as the whole thing on distributions versus buybacks, we're an MLP, the most tax-efficient way to return capital and cash to your partners is through distributions. And, you know, that's what we've done. I think we've got, this is the 23rd year in a row that we've increased our cash distribution. And there's not another midstream company out there that I know of that can say that. So, you know, distributions are really our first go-to. As far as on the buyback side, you know, I think, you know, options professor talked one time, it depends. It depends on what your level of CapEx is and I think we need to see not only level of CapEx, we just need to get some better visibility on government policy because right now there's just a lot of question marks. I thought we would have known something by now, but it looks like that's dragging out. But I think a lot of things go into the calculus of coming in and doing buybacks. But I think we've demonstrated our willingness to come in and do buybacks. We're just going to be deliberate in the way that we leg into it. Thank you.

Thank you. Our next question comes from Christine Cho with Barclays. Your line is open.

Thank you. So maybe if I could start with the LPG market. There's been market reports that you guys have been buying back cargoes in recent weeks. Is this just your marketing subsidiary preparing for what could potentially be a short propane market in the coming months? It seems like the amount that you've been buying back is more than what your PDH facility could take, but any kind of color on what you guys are thinking there would be helpful.

Hey, Chris Zane, I'll start and give it to Brent. We bought back because the fees were too cheap. We could make more money doing something else with the propane, Brent.

That's it. I mean, at the end of the day, we look at every molecule and what the value of it is to enterprise versus what we get across the dock. And what we achieve across the dock isn't worth what we have keeping it in the system.

Now, is some of this potentially going into storage for later? I mean, the curve is backward dated, so it just didn't seem like you would be able to hedge things out.

Yeah, I wouldn't look at it as a storage play.

Okay. And then could you give an update around spot, just where the regulatory process is, what the next milestones are, especially if it's to hit 22 capex? And just given expectations for overall U.S. production growth isn't what it used to be, can you just go over your thoughts on why spot is necessary? And would you still need your crude export facilities along the Gulf, or would you look to potentially repurpose those assets for something else?

Yeah, I think one of the things, we still believe spot is something that is needed. It's kind of a magnet to pull things through your pipeline system. But we've got a strong anchor, and I think we've got some interest from others. We expect the final EIS to come out. I think it's ready by the Coast Guard. And the last thing we heard from Marriott is to expect the permit in the fourth quarter. But, yes, we feel like it's a project. Now, we can build this project in phases, and that's what we intend to do.

And would you still keep your existing crew facilities along the Gulf?

Oh, I'm sorry, Christine, you did ask that. I think we need to, we're looking at a need to expand our LPG capability out of the ship channel. So that's what, is Bob Sanders in here? Let me talk to him, and he's come to this. We're looking at, we've got some expansion projects on our LPG facility on the ship channel.

You know, we have a lot of long-term contracts, you know, that are on enterprise assets. And so, you know, if we have joint venture partners on the VLCC terminal, you know, there's still a need for what we have existing, and then it would be more of an optimization as it relates up to the joint venture partners. But between Petchem and the NGLs, there's ways to use those docs besides crude oil.

Got it. Thank you.

Thank you. Our next question comes from Michael Lapiz with Goldman Sachs. Your line is open.

Hey, guys. Thanks for taking my question. A little bit of a theoretical one. When you think about capital allocation versus CapEx and whether that capital allocation is deleveraging, buybacks, or even just normal course distribution growth or special distribution payouts, how do you think about what your cost of capital is? And what is the return a new project has to hit to make it kind of a more valuable use of cash relative to some of the other alternatives?

Michael, I'm glad you asked that because I was actually incomplete with my answer earlier because that's one of the things that factors in there is when we come in and look at our CapEx and if you come in and you look at the buyback, You know, when you, you know, we look at what our return on capital is on the project, but we also look at what the downstream benefits are from a project that, again, you know, we run a value chain system. So if we add a project, it has the ability to come in and add incremental volumes and incremental margin to other part of our system and So that adds on to the project economics. And we look at that holistic return. And also it adds on to it increases EBITDA as well. Compared to a buyback, I mean, you know, I think, you know, as I looked this morning, I think we were yielding, I don't know, 7%, 7.5%. Our coverage is about 1.5 times. So I think that rough math is probably between 11% and 12%. cash yield, if you think about it from, if I go back to distributable cash flow, because, again, that's subtracting out maintenance capex. So, you know, that's the bogey that we look at on the buyback side. And those are the two of the returns that we look at just from a return threshold. Does that cover it all for you?

Yeah, that helps a ton. And just trying to think about it. Special distributions, are there any reasons why special distributions would ever be off the table?

You know, Michael, we've not really contemplated them in the past. I mean, a little bit. I'd turn that question on you. It seems like, you know, a lot of what I read in sell-side reports really dismisses the effectiveness of special distributions. If you're, you know, and I understand not being able to come in, the inability for the equity markets to capitalize a special distribution into the unit price, but frankly, you know, our guys ran some correlation analysis the other day, and it's crazy to me that when you come back in and you pick the period, three years, five years, ten years, we actually have our unit price has an inverse correlation to cash flow per unit. It has an inverse correlation to EBITDA. And really the only correlation, the highest correlation that it has is to the price of the XLE, the S&P Energy sectors. So I scratch my head anyway that the cash that we generate, our unit price isn't correlated to the cash that we generate anyway. So we're in a little bit of a quandary. So I don't know if a special distribution would be good or bad because I don't know what our unit price correlates to anymore. But I go back to what I said earlier, the most efficient, tax-efficient way to get cash and return capital to limited partners is is through distributions.

Understood. Cool. Thank you, guys. Much appreciated.

Thank you. Our next question comes from Gabe Marine with Mizuho. Your line is open.

Hey, good morning, everyone. Recently, there was, I guess, one of your peers announced a JV transaction with a private equity-backed gathering system. I'm just wondering if something like that is of interest, potentially, maybe circumvent some of, I think, the... antitrust issues you've raised in the past. Just curious for your thoughts on that.

Our thoughts on that transaction?

Yeah, specifically if it might make sense in either the Permian or in overpiped areas like the Eagleford, for example, and a way to consolidate the sector when private equity owns quite a bit of assets out there.

I guess we never say never. And, Randy, we're kicking tires all the time. As to that, I don't know that we would be interested in a joint venture with a private equity. I tell you, we're spending a lot of time right now looking at our pipeline system and trying to determine what are the opportunities to repurpose. But, you know, I mean, we look at everything, but I can't see us doing a joint venture with a private equity. Can you, Brent, you?

I mean, to your comment, never say never, but... You know, there's a lot of opportunities that we look at, and we'll see what comes of it.

Got it. And then maybe if I can just follow up and ask specifically as it pertains to Randy's comments about kind of waiting for definitive stuff out of D.C. on policy, you know, what should we be looking for? Is it really just tax rates? Are you looking kind of for the, I guess, the federal permitting, the infrastructure build, all of the above? I'm just specifically wondering kind of what – of those things, what's most prominent, I guess, in your mind?

Yeah, Gabe, I think it's all the above. And, you know, Gabe, I mean, some of it even, you could come in and say it's even, you know, where I think the energy industry is in a little bit of a conundrum.

Hey, Randy, talk about the focus on supply and not on demand. Yeah, because... And you'd do good on that.

Yeah, because if you come in by last count... there are like 194 countries in the EU that have signed on to the Paris account. And part of that is coming in and trying to get to net zero emissions by 2050. But none of those countries have enacted any policies addressed to... oil and gas demand. And it seems like the policies that are being driven are more on supply and more, really, I think in the U.S., what we've seen thus far this year is really on domestic supply, but not anything on demand. And, you know, you come back in, I think that, you know, what we've heard out of, you pick it, IEA, EIA, is the expectation is we're going to be back to 100 million barrels a day of crude demand by the end of the year. And, you know, looking for that demand to grow, I think, again, no matter what PIA or IEA that you look at, looking for crude oil demand to grow for the rest of the decade at least. But really the only policies out there domestically are on supply constraints. And so where that leads us is, and I think you've seen it to a degree, going to end up with higher crude oil prices, higher motor gasoline prices across the board, which will be inflationary. But we're at a little bit of a conundrum on energy policy in the country as well. The other thing that... Well, you know, because, I mean, the most recent example is, I guess, you know, some of this has been going on since January. You know, domestically, we've come in and we're putting a freeze on permits on federal lands, but we're asking OPEC Plus to come in and produce more oil so oil prices won't go up. And so, you know, again, just a head scratcher. But I think when you come in and you look, the world, OPEC plus countries, they have the capacity to produce more oil and they have the capacity to come in and respond to demand. Again, I think it's going to be at a higher price. And you've seen recently, whether it's the Saudi oil minister or the the Prime Minister of Norway, and I believe Norway is part of the Paris Climate Agreement, they've both said that they're going to drill and withdraw every last barrel of oil that they have in the ground. So, Gabe, I think there are just a lot of unknowns out there. We're early on in this energy evolution. We think we've got a role to play. In fact, when we look at midstream companies, on this whole energy evolution and handling carbon sequestration and hydrogen, we may be one of the early on that we can respond quicker than a lot of companies that are trying to do this from the get-go because we already have pipes everywhere and we know geology. So, you know, again, we just need some more clarity, you know, whether it's tax policy, regulatory policy, energy policy. And then, frankly, I think the other thing that will be out there is just what we're seeing. There's so much changes going on at the FTC as well. But, I mean, that's more of a broad comment. It doesn't matter if you're in energy or in tech as far as what's coming out of the government on that regard, too. So I didn't mean to get on my soapbox to you, but just, again, waiting on a little bit more clarity. Thank you. But we will come in and act on opportunities as we see them come forward.

Got it. Well, thanks, Randy. Appreciate all those thoughts. Thank you.

Thank you. And I'm currently showing no further questions at this time.

Okay. Thank you, Shannon. With that, we will conclude the call today. And if you wouldn't mind, Shannon, would you please give our participants the replay information? And thank you all for joining us today.

Thank you. This concludes today's call. A replay will be available from 1 o'clock p.m. Eastern Time, July 28, 2021, to 1259 p.m. Eastern Time, August 4, 2021. Please use the dial-in number 855-859-2056 or 404-537-3406 for international participants. Enter access code 986-9482. Thank you and have a wonderful day.