Enterprise Merchandise Companions (EPD) Q3 2022 Earnings Name Transcript

November 2, 2022

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Enterprise Merchandise Companions (EPD -0.59%)
Q3 2022 Earnings Name
Nov 01, 2022, 10:00 a.m. ET

Contents:

  • Ready Remarks
  • Questions and Solutions
  • Name Individuals

Ready Remarks:

Operator

Howdy. Thanks for standing by, and welcome to the third quarter 2022 Enterprise Merchandise Companions LP earnings convention name. At the moment, all members are in a listen-only mode. After the audio system’ presentation, there shall be a question-and-answer session.

[Operator instructions] Please be suggested that immediately’s convention could also be recorded. I might now like at hand the convention over to your speaker immediately, Randy Burkhalter, vice chairman of investor relations. Please go forward.

Randy BurkhalterVice President, Investor Relations

Thanks, Josh, and good morning, everybody, and welcome to the Enterprise Merchandise Companions convention name to debate third quarter ’22 earnings. Our audio system immediately shall be co-chief government officers of Enterprise’s Basic Accomplice, Jim Teague and Randy Fowler. Different members of our senior administration group are additionally in attendance for the decision immediately. Throughout this name, we are going to make forward-looking statements inside the which means of Part 21E of the Securities and Alternate Act of 1934 primarily based on the beliefs of the corporate, in addition to assumptions made by and data at present obtainable to Enterprise’s administration group.

Though administration believes that the expectations mirrored in such forward-looking statements are affordable, it can provide no assurance that such expectations will show to be right. Please seek advice from our newest filings with the SEC for a listing of things that will trigger precise outcomes to vary materially from these within the forward-looking statements made throughout this name. And so, with that, I am going to flip it over to Jim.  

Jim TeagueDirector and Co-Chief Government Officer

Thanks, Randy. Right this moment, we reported distinctive outcomes for the most recent quarter. We reported adjusted EBITDA of $2.3 billion for the quarter. We additionally generated $1.9 billion distributable money circulate, offering 1.8 instances protection.

We retained $826 million in DCF, taking us to $2.6 billion for the primary 9 months. We achieved six working data, together with transporting a file 11.3 million barrels per day of oil equal within the type of NGLs, crude oil, pure gasoline, refined merchandise, and petrochemicals we transported a file of 17.5 trillion BTUs per day of pure gasoline. We additionally set quarterly volumetric data for NGL fractionation, ethane exports, butane isomerization, and fee-based pure gasoline liquids. The place am I? Only a minute.

I’ve misplaced my place, and I will not inform you why. Earnings from our Midland Basin pure gasoline gathering and processing enterprise and better gross working margins from our pure gasoline processing, octane enhancement, and pure gasoline pipeline companies have been notably distinctive for the quarter. Right this moment uncertainties within the international financial atmosphere are weighing on the petrochemical trade, the place sluggish demand is resulting in lowered runs and destocking. There are some severe considerations about recession, particularly in Europe, the place the query is not whether or not they go into recession, however concerning the depth and size of the downturn.

In the meantime, on the opposite facet of the globe, China’s GDP has taken a nosedive from double-digit progress over the previous variety of years to low single digits at greatest. Considering again on my profession, first with Dow and right here in Enterprise, I am unable to depend the variety of downturns I have been by way of. At Dow, the downturns have been at all times painful. However right here in Enterprise, they at all times deliver alternative.

Within the present atmosphere, whereas the uncertainties are actual, the knowledge that Enterprise will at all times ship is actual too. Transferring to capex. 12 months-to-date progress capex, excluding our Midland Basin acquisition that totaled $973 million, and our present expectation for progress capital for 2022 and 2023 stays within the $1.5 billion to $2 billion. We at present have $5.5 billion of natural progress tasks below development.

And we stay up for bringing our PDH 2 plant, our Frac 12, one plant every within the Midland and Delaware basins, and our TW product system on-line in 2023. We have been touring domestically since finish of 2020. And now, we’re again on the highway touring internationally, and we’re welcome in each nation we go to. Brent and a few of his of us simply spent three weeks touring throughout Asia, from Japan to Korea, to Singapore, to India, and I joined them for some conferences within the final week of their journey.

In the course of a protracted battle in Europe and the outright weaponization of vitality by prudent, a world vitality and meals disaster and inflation worldwide, our nation is healthier positioned than every other, because of our abundance of each vitality and agricultural merchandise. However that abundance, the critically low inventories of distillate within the Northeast United States have been self-inflicted and will have been fully prevented by briefly waiving the Jones Act. In our travels, executives in different international locations now not ask concerning the dimension of U.S. Vitality Assets.

They do not ask about the place we expect worth is headed or if we really feel U.S. provides shall be aggressive. As an alternative in most conferences, we’re requested if our legislators have a clue concerning the realities of the world’s fast and longer-term wants for U.S. vitality.

Sadly, with a rhetoric that comes from our authorities and inaction on badly wanted allowing reform for pipelines, transmission, infrastructure, and mining most likely solutions that query. Our authorities wants to know that rhetoric issues. The United Nations has acknowledged that there’s a direct correlation between vitality consumption per capita and high quality of life. A lot of India’s inhabitants lives in poverty.

One in every of India’s most senior executives jogged my memory in our assembly that they’ve entry to ample provides of coal and with out entry to U.S. assets, they will use any and all obtainable assets to lift the usual of residing for his or her individuals. World coal consumption is predicted to hit an all-time excessive in 2022, and that is a pattern that might proceed as Russian pure gasoline stays shut in. In the meantime, again in contact with actuality, Europe just lately declared each pure gasoline and nuclear vitality as clear vitality, assets that shall be wanted for years to come back.

And Asia continues to make no bones about their long-term urge for food earlier vitality. We at Enterprise had been emphatic and it is going to take the entire above in an effort to meet the world’s rising vitality wants. That is why along with conventional midstream providers, we’re additionally targeted on investments in decrease carbon tasks like carbon seize and sequestration and offering blue ammonia into export markets. U.S.

hydrocarbons stay badly wanted to assist international locations who dwell in poverty, vitality poverty, and to assist our closest buddies, our allies in Europe who’re in vitality disaster. We at present export about 60 million barrels of oil equal each month. It is clear that the world needs and desires way more of what we now have. We’re again on the highway touring domestically, internationally.

We’re rising present relationships and growing new ones for brand new alternatives. Sorry, I misplaced my place, Randy.

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

All proper. Thanks, Jim. Good morning, everybody. Beginning with the third quarter revenue assertion.

Web revenue attributable to widespread unitholders for the third quarter of 2022 was $1.4 billion or $0.62 per widespread unit on a completely diluted foundation. This compares to $1.2 billion or $0.52 per unit for the third quarter of 2021. Adjusted money circulate from operations is our money circulate from working actions earlier than modifications in working capital. For the third quarter of this yr, it was $2 billion.

This can be a 13% improve, in comparison with $1.7 billion generated for the third quarter of final yr. We declared a distribution of $0.475 per widespread unit for the third quarter of 2022, which is 5.6% increased than the distribution declared for the third quarter of final yr. This distribution shall be paid on November 14 to widespread unitholders of file as of the shut of enterprise on October 31. Through the third quarter, we repurchased roughly 3.9 million widespread items at a price of $95 million.

For the primary three quarters of this yr, we repurchased roughly 5.3 million widespread items for $130 million. We plan to renew our program to opportunistically purchase again as much as $350 million of items within the close to time period. For the 12 months ended September 30, we paid over $4.1 billion of distributions to restricted companions and acquired again $255 million of widespread items within the open market. For this era, Enterprise’s payout ratio of adjusted money circulate from operations was 56%, and our payout ratio of the adjusted free money circulate, if you happen to exclude the $3.2 billion Navitas midstream acquisition, was 70%.

As well as, throughout the third quarter and the primary 9 months of this yr, roughly 1.5 million widespread items and 4.7 million widespread items, respectively, have been bought on the open market by our distribution reinvestment and worker unit buy plans. Complete capital investments within the third quarter have been $474 million, which incorporates $397 million for natural progress capital tasks and $77 million for sustaining capital expenditures. Capital investments for the primary 9 months of 2022 have been $4.4 billion, which included the $3.2 billion acquisition of Navitas Midstream, $973 million invested for natural progress capital tasks, and $234 million for sustaining capital expenditures. Our complete progress tasks below development stays unchanged from final quarter at $5.5 billion.

We proceed to anticipate our complete 2022 progress capital expenditures to be roughly $1.6 billion and sustaining capex to be roughly $350 million. For 2023, we at present anticipate progress capital investments shall be roughly $2.0 billion. Our complete debt principal excellent was $29.5 billion as of September 30, 2022. Assuming the ultimate maturity date for our hybrid notes, the weighted common lifetime of our debt portfolio was roughly 20 years.

Our weighted common price of debt is 4.4%. At September 30, roughly 93% of our debt was fastened price. Earlier this yr, we retired $1.4 billion of senior notes and redeemed $350 million of variable price hybrid notes utilizing a mixture of money proceeds from a be aware issuance in September 2021 and industrial paper. Our consolidated liquidity was roughly $3.3 billion at September 30, together with availability below our credit score services and unrestricted money available.

With regard to near-term debt maturities, we now have $1.25 billion of senior notes maturing in March of 2023. We anticipate our free money circulate technology and liquidity place will present ample flexibility relating to the refinancing of those notes. Adjusted EBITDA was $9 billion for the 12 months ended September 30, 2022. Our consolidated leverage ratio was 3.26 instances on a gross foundation.

And if you happen to internet out the partial fairness remedy for the hybrid notes and scale back debt by unrestricted money available that quantity on a internet foundation was 3.1 instances. Given the coordinated efforts by international central banks to extend rates of interest to mood inflation and the probability of a world recession and simply basic volatility, we imagine that it’s prudent to stay on the decrease finish of our focused leverage vary of three and 1 / 4 and three and three-quarters instances EBITDA. Lastly, we revealed our 2022 sustainability report in September. We encourage you to go to our web site and assessment our dialogue on the very important function of U.S.

fossil fuels in supporting the pillars of recent civilization and offering a pathway for a greater life for two.5 billion who nonetheless dwell in vitality property. With that, Randy, I feel we are able to open it up for questions.

Jim TeagueDirector and Co-Chief Government Officer

OK. Thanks, Randy. Josh, we’re able to take questions from our listeners. I want to remind everybody to please prohibit your questions to at least one query and one follow-up, please.

Go forward, Josh.

Questions & Solutions:

Operator

Thanks. [Operator instructions] Our first query comes from Michael Blum with Wells Fargo. You could proceed.

Michael BlumWells Fargo Securities — Analyst

Thanks. Good morning, everybody. Wished to ask about Permian progress heading into 2023. You had some feedback final week from the majors.

Clearly, you have acquired tight gasoline takeaway. Do you see that every one impacting the tempo of progress into ’23 on the oil facet and the gasoline facet, I assume, for the Permian?

Tony ChovanecVice President, Fundamentals and Provide Appraisal

Yeah. Michael, that is Tony. You realize, once we went into this yr at our Analyst Assembly, we stated given the momentum we now have, we thought that year-end ’21 to year-end ’23, arduous to name which yr it will land in, we might be as much as, and I am simply going to grease, 1.5 million barrels of improve. Clearly, and also you referenced what the majors stated, I am going to use Chevron for instance, form of as a poster baby.

The availability chain points within the oilfield and labor points should not minor. And so, if you happen to have a look at what Chevron stated, they’re guiding to the low finish of their manufacturing goal, notably as we get to year-end 2022. That stated, we have got 60 rig improve within the Permian Basin yr so far. And if you consider what these rigs appear like in comparison with, name it, 2019 or 2020, there’s some effectivity of some 30% higher.

This isn’t a small quantity. So, if I have been to guess proper now, OK, as a result of it is arduous. Yesterday, the August numbers got here out from EIA for what it is value. And so they confirmed a 100,000 barrel-a-day improve between July and August.

So, I might inform you that I feel we’re most likely a rise — and that places us year-to-date improve of between 350,000, 400,000 barrels, relying on which numbers you have a look at. So, I am snug saying that we’re most likely going to extend 500,000 to 600,000 barrels in 2022 for the entire U.S. and in 2023, 600,000 to 800,000 barrels. So, whenever you add the 2 collectively, $1.2 million to $1.4 million, and we’ll deal with that on the analyst assembly once more subsequent yr, however we’re very snug in that vary.

Michael BlumWells Fargo Securities — Analyst

Nice. Thanks for that Tony. I assume a associated query, clearly, Waha worth has been actually weak these days. Curious if you happen to may simply communicate to how a lot open gasoline pipeline capability it’s a must to seize these spreads.

And principally, how a lot of that you have already hedged?

Brent SecrestGovernment Vice President and Chief Business Officer

Michael, that is Brent Secrest. Should you have a look at Enterprise’s capability because it pertains to Waha to Gulf Coast markets, we’re between 350 million and 400 million a day of open capability, or simply name it outright capability for Enterprise. And because it stands proper now, none of that is hedged for subsequent yr.

Operator

Thanks. One second for questions. Our subsequent query comes from Jeremy Tonet with JPMorgan. You could proceed.

Jeremy TonetJPMorgan Chase and Firm — Analyst

Hello. Good morning.

Jim TeagueDirector and Co-Chief Government Officer

Good morning.

Jeremy TonetJPMorgan Chase and Firm — Analyst

Simply wished to form of pivot to the Petchem enterprise if we may. And we have seen plenty of commentary of the Petchems speaking about decrease working charges. And it seems like we’re head for a little bit of a down cycle right here. And also you touched on the opening remarks, however simply wished to get a bit extra colour on what that might imply for EPD particularly right here.

I feel we have talked about prior to now, perhaps this seems like form of a 6- to 9-month destocking cycle. Is that also the way you see it? And in that case, I assume, how would that influence EPD? Do you see like a giant step down in Petchem providers subsequent yr? Or how ought to we body the vary of outcomes?

Jim TeagueDirector and Co-Chief Government Officer

Chris, I’ll take a shot after which give it to you. We do not have the spreads between RGP and PGP that we had final yr. Saying that, the spreads we now have immediately are extra like what we now have historically seen. Our octane enhancement enterprise has accomplished effectively.

We have got that hedged 75% subsequent yr at good numbers. After which do not forget, we’re bringing on PDH 2 subsequent yr. After which our ethylene and propylene distribution and export and storage services are going sturdy and rising. So, I personally suppose, sure, propylene goes to be softer, however I nonetheless suppose we will do fairly good.

Chris D’AnnaSenior Vice President, Petrochemicals

Yeah. Should you have a look at how we have constructed our splitter enterprise through the years, it is midstream providers, the place we now have 50% of our margin is fee-based, 25% of our margin is fee-based with the publicity to the unfold when it blows out. And positively, that is what you have seen during the last yr and a half. After which the final 25% is market uncovered.

And I feel over the following six to 9 months, we proceed to see weak point in destocking. We will see form of reversion to what our historic splitter earnings have been. Let’s herald — PDH 2 will add to that, although.

Jeremy TonetJPMorgan Chase and Firm — Analyst

Bought it. That is useful. Thanks. And simply wished to see, I assume, inside this context of how you consider capital allocation right here, it looks as if we now have a little bit of choppiness within the credit score markets, after which traders nonetheless in search of a higher return of capital on the fairness facet.

And simply questioning the way you suppose that every one shakes out inside this background.

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

Yeah. Jeremy, that is Randy. Good morning. Jeremy, I feel you will proceed to see us form of observe the entire above and attempt to do a mixture of distribution progress and buybacks the place it is sensible, once more, opportunistically.

After which I feel we’re in fine condition. We have managed our debt maturities very effectively. We actually got here in and issued longer-term debt. So, our maturity ladder, we do not have huge maturities in any of the years arising.

So, I feel we’re in fine condition going into 2023 to deal with that maturity when it comes due. 

Jeremy TonetJPMorgan Chase and Firm — Analyst

Bought it. And so far as the return of capital to traders buyback versus dividend distributions, any change in ideas?

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

No, no change on thought. You realize, 2022 marks our twenty fourth yr in a row for distribution progress, and we expect subsequent yr shall be 25 years in distribution progress. However nonetheless, you already know, we’ll are available in and do the entire above.

Chris D’AnnaSenior Vice President, Petrochemicals

Jeremy, that is Chris Nelly. The one factor I might add there’s that in speaking to plenty of traders, given the inflationary atmosphere they’re in, they actually respect the 5.6% distribution progress yr over yr. That is useful to plenty of our particular person unitholders.

Jeremy TonetJPMorgan Chase and Firm — Analyst

Bought it. Thanks very a lot.

Operator

Thanks. One second for questions. Our subsequent query comes from Jean Salisbury with Bernstein. You could proceed.

Jean SalisburyAllianceBernstein — Analyst

Hello. Good morning. Simply constructing on Jeremy’s query, once more, about Dow saying that they’ll minimize polyethylene manufacturing by 10% to fifteen% right here. Are you able to form of simply increased degree give us your ideas on what which means for U.S.

ethane manufacturing and NGL costs? And if it may form of contact another components of what you are promoting like LPG exports or discretionary ethane that perhaps individuals do not essentially anticipate to be so Petchem-related?

Jim TeagueDirector and Co-Chief Government Officer

I am going to begin after which throw it to Brent and Chris, Jean. I’ll go to LPG exports. We’re full aren’t we, Brent?

Brent SecrestGovernment Vice President and Chief Business Officer

We’re full.

Jim TeagueDirector and Co-Chief Government Officer

So, each month, on ethane exports, I’ve seen us go at least 5 million barrels a month, I am pondering, and as much as 7 million barrels a month. So, I feel the place ethylene and propylene are involved. To the extent they go decrease, I feel it opens up export alternatives extra for ethylene and propylene. So, I feel these export docks develop in worth as costs go down.

Brent SecrestGovernment Vice President and Chief Business Officer

Jean, on ethane, when it comes to recoveries, if home demand goes down, it is nonetheless fairly sturdy, Tony, it is round 1.9 million barrels a day. So, it is nonetheless hanging in there. However in the end, there’s going to be plenty of ethane restoration out of the Permian basin. That is going to assist our Permian Basin NGL strains.

On the discretionary ethane, so whenever you have a look at Rockies and another extra challenged basins when it comes to distance, that is the barrel that is going to be on margin most likely for subsequent yr. Should you have a look at enterprise on the ethane enterprise on the downstream facet, I might say there’s most likely about 90% of our enterprise that is it is take-or-pay sort contracts. So, consider the ethane doc and EGS and ATEX and people sort of companies, all that is pretty effectively, from a income standpoint, on strong floor. After which in the end, on LPGs, what we have at all times stated is LPGs are going to have to cost in to go clear throughout the water.

So, we’re closely contracted. We do most likely have some open spots once we look into subsequent yr that we’ll wait and see what occurs, however we’ll have some alternative throughout our services.

Jean SalisburyAllianceBernstein — Analyst

Nice. Thanks. After which simply following up on considered one of your feedback there. You form of stated earlier than that as gasoline worth widened in Waha, you would possibly begin to see extra ethane being recovered there, perhaps 100,000 barrels even I used to be simply questioning now that you simply’re seeing gasoline worth widen if that ethane is exhibiting up.

Brent SecrestGovernment Vice President and Chief Business Officer

Completely. Should you look throughout how Enterprise runs their system, what is going on on would not most likely have an effect on us as a lot because it does have an effect on third-party processors. However you are positively seeing the results of it this month. You noticed it towards the tip of final month, and we anticipate to see it most likely for the steadiness of 2023.

Jim TeagueDirector and Co-Chief Government Officer

Another factor. I am completely satisfied that a few of what we export is being burned, particularly in Asia. In reality, I do know one firm that’s. I imply, you possibly can land ethane cheaper than LNG.

Brent SecrestGovernment Vice President and Chief Business Officer

Completely.

Jean SalisburyAllianceBernstein — Analyst

Nice. Thanks for all the colour.

Operator

Thanks. One second for questions. Our subsequent query comes from Michael Lapides with Goldman Sachs. You could proceed.

Michael LapidesGoldman Sachs — Analyst

Hey, guys, thanks for taking my query. Simply curious, world’s modified a ton within the final six or 9 months. It is simply the cycle. The credit score market is beginning to get a bit uneven on the market, particularly for a few of the smaller entities, public or non-public.

Simply curious, are you — is the M&A panorama, has that but turn into extra enticing? I do know you simply did Navitas, however that was form of earlier than the credit score markets acquired uneven. Simply curious the way you’re excited about the chance to make use of plenty of the steadiness sheet to gobble up belongings.

Jim TeagueDirector and Co-Chief Government Officer

I am pondering that we’re constructing two extra crops within the Midland Basin and two extra crops within the Delaware Basin, and that is a extra environment friendly use of capital than going to pay some huge cash. We just like the Navitas deal, it is accomplished actual effectively. However it wasn’t solely an excellent deal, it was a strategic match. And what bothers a few of us, a minimum of me, is I have been by way of quite a lot of second requests, and I do not see something we may purchase that does not require a second request.

Michael LapidesGoldman Sachs — Analyst

Bought it. In different phrases, sellers have not gotten to some extent both as a consequence of leverage or anything the place pricing has come down lots available in the market.

Brent SecrestGovernment Vice President and Chief Business Officer

Yeah, Michael. I feel it is extra – you already know, once more, increasing what Jim was saying is admittedly we simply see plenty of natural progress alternative proper now. And once we got here in and main as much as the Navitas transaction, we did a fairly deep dive of, a minimum of within the G&P world, so far as what the alternatives have been. And by far, Navitas checked all of the bins for us.

And as Jim stated, the transition has gone effectively. The match has been nice. We did not have something within the Midland, and we have been very happy with it. We proceed to have a look at alternatives.

However proper now, we’re simply seeing higher returns on capital on natural progress.

Michael LapidesGoldman Sachs — Analyst

Bought it. Thanks, guys. Admire it.

Operator

Thanks. One second for questions. Our subsequent query comes from Brian Reynolds with UBS. You could proceed.

Brian ReynoldsUBS — Analyst

Hello. Good morning, everybody. Possibly simply begin on the transferring items in ’23 capex. It looks as if Sinok has gotten pushed to the primary half of 25% from ’24.

Sort of curious if you happen to can speak about simply the transferring items in capex, what’s probably nonetheless below improvement? And what in the end may present some upsides or downsides that ’23 capex variety of roughly $2 billion.

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

Yeah. Brian, that is Randy. I feel the place we’re with 2023 at $2 billion. Actually, it is arduous to see that transferring materially increased.

So far as on the one massive challenge that is on the market that we’re in search of extra readability is our offshore crude oil export facility, and we’re nonetheless ready on permits there. However even with that, as we sit right here immediately, it is arduous to see that quantity transfer materially.

Brian ReynoldsUBS — Analyst

Nice. And only a fast follow-up. Is there any basic change of view with the Sinok growth being pushed again a yr?

Justin KleidererSenior Vice President, Hydrocarbon Advertising

Yeah. that is Justin Kleiderer. I do not suppose it modifications our basic view. I feel we now have a bit bit extra time to drag the set off on growth.

We nonetheless have the scope growth able to go. We’re simply spending a bit bit extra time making an attempt to know what’s applicable for what the market wants and when it wants it.

Brian ReynoldsUBS — Analyst

Nice. That is tremendous useful. After which perhaps simply as a broader query whereas ’23 E&P budgets have not been formalized, I am curious if you happen to may simply speak about Permian producer prospects, what they’re taking a look at, and the way they’re excited about ’23 simply given the anticipated nat gasoline tightness, are publics and privates taking a look at ’23 a bit bit in a different way? Do you see flaring coming again materially into ’23? Or do you suppose that is form of a factor prior to now? After which we may simply see extra lumpy volumes whereas we navigate that nat gasoline tightness? Thanks.

Tony ChovanecVice President, Fundamentals and Provide Appraisal

Brian, I am going to begin out. That is Tony. I made the remark at the start of this name, if you happen to have a look at what’s occurred to Permian rig counts, it isn’t small. So, there’s a vital quantity of momentum within the Permian.

We hear it from publics and privates alike. And I quoted some numbers this morning there so what we expect and the way the numbers find yourself, may issues gradual it down, you already know flaring on gasoline, we may go to plenty of issues. However it’s arduous to kill this type of momentum. And Brent, I am going to allow you to — you spend plenty of time with producers, speak about privates and large privates and public and the way you see it.

Brent SecrestGovernment Vice President and Chief Business Officer

Sure. Brian, I feel, you already know, whenever you have a look at the larger privates, they nonetheless have a reasonably sturdy progress plan. I heard a few of the earnings calls final week from a few of the bigger gamers within the Permian, they usually have been a bit bit extra tempered than what we had heard, however the larger public firm is the extra progress that they have been speaking about. However if you happen to have a look at our system within the Midland Basin and acknowledge that we now have a few of it is timing of capital tasks.

However if you happen to have a look at our progress on the pure gasoline facet and processing facet, it is most likely about 23% progress from 22% to 23%. On the Delaware Basin facet, it is going to be most likely, name it, 7% to 10%, that is most likely a bit bit later timing on our Mentone crops. And whenever you have a look at what producers are taking a look at even the place gasoline costs are in 2023, I did not verify it earlier than I got here in right here, however we’re nonetheless round a $3 sort quantity the place producers can hedge. In the entire scheme of issues, if the crude goes to drive someplace between 85% and 87% of the economics with the present that producers got after they have been capable of obtain $4 or $5 sort gasoline costs, that is what it was.

It was a present. However I do not suppose it modifications the mentality when it comes to the place Waha is buying and selling at as a result of, once more, it is nonetheless at a fairly wholesome quantity for 2023.

Brian ReynoldsUBS — Analyst

Nice. Admire all that incremental colour. Get pleasure from the remainder of your morning, everybody.

Operator

Thanks. One second for questions. Our subsequent query comes from Theresa Chen with Barclays. You could proceed.

Theresa ChenBarclays — Analyst

Good morning. Tony, I need to ask you for an replace on how a lot ethane do you suppose remains to be at present being projected within the Permian from — I feel the final replace was 200,000, 250,000 barrels per day. And the way a lot can realistically come out?

Tony ChovanecVice President, Fundamentals and Provide Appraisal

That quantity modifications from everyday. I am going to move it to Tug or Brent. However after I say it modifications from everyday, I imply, it modifications from everyday. I might suppose that that rejection quantity is much less due to what’s occurred to gasoline, however gasoline strikes, it is actually unbelievable what occurs at money market.

Brent SecrestGovernment Vice President and Chief Business Officer

There’s most likely some older crops on the market that may’t get well as a lot as plenty of the newer sort crops. I might suppose every thing that may be recovered might be getting recovered. Tug, do you have got a volumetric quantity what we expect mustn’t being recovered as a result of it most likely cannot?

Tug HanleySenior Vice President, Pipelines and Terminals

Yeah. That is — if you happen to have a look at the, you already know, Waha unfold proper now, there is a very wholesome incentive, clearly, for each single plant that may get well to get well. However so far as the older crops and wagon it is most likely 50,000 to 75,000 barrels a day that can not be recovered as a consequence of older expertise.

Jim TeagueDirector and Co-Chief Government Officer

On the spreads they’ve, I am unable to think about anyone purposely rejecting it.

Theresa ChenBarclays — Analyst

Honest sufficient. And seeking to the Petchem facet of issues, I am curious to listen to your view in your prospects within the worldwide markets. Granted from a U.S. perspective, if capability utilization is down right here making the feedstocks cheaper, exports make plenty of sense.

However as we have a look at the worldwide markets, we are also listening to about Far East and European services curbing manufacturing, some extended their upkeep due to these poor margin outlooks. And as we take into consideration Europe probably fending elevated quantities of naphtha to that Singapore market, as a competing feedstock. What does that imply for U.S. Gulf Coast exports of Petchem feedstocks internationally?

Chris D’AnnaSenior Vice President, Petrochemicals

That is Chris D’Anna. I assume globally, the entire Petchem phase is weak proper now. And so, what that is meant to us during the last a number of months is that our ethylene export dock has been full. And a few months, that product goes to Europe, some months, it goes to Asia.

And I feel all of the petrochemical crops over there are attempting to steadiness out and discover the proper optimum degree to run. However I feel the quick reply for us is that it means our dock is full, a minimum of for ethylene. And for propylene, we have had imports at instances, we have had export at instances. So, it is actually creating some alternatives for us.

Theresa ChenBarclays — Analyst

Thanks.

Jim TeagueDirector and Co-Chief Government Officer

I stated earlier that ethane dock goes to remain full and that LPG dock goes to remain full, however the weak point. Like I stated in my script, we have been touring internationally. And we have been visiting, I am not going to inform you what nation or who. However we have been visiting with the businesses that need to construct petrochemical complexes.

And our objective is to export every thing to them.

Operator

Thanks. One second for questions. Our subsequent query comes from Chase Mulvehill with Financial institution of America. You could proceed.

Chase MulvehillFinancial institution of America Merrill Lynch — Analyst

Hey, good morning, all people. I assume I need to observe up on a few of the Permian progress expectations. I feel you talked about, Brent, I feel you stated 600,000 to 800,000 barrels a day of — I feel that was U.S. progress for subsequent yr.

So, I assume, what would that translate into Permian progress? After which what about residue gasoline progress if you are going to go — what is the equal form of residue gasoline progress on that 23% quantity?

Tony ChovanecVice President, Fundamentals and Provide Appraisal

Yeah. That is Tony, Chase. It is very, very weighted towards the Permian. Every other will increase once we have a look at oil are comparatively small.

So, I feel Permian, I haven’t got that break up out in entrance of me, however suppose Permian. Relative to NGL progress, only a strolling — relative to residue for each 1 million barrels, take into consideration 3 Bs of gasoline from a drive standpoint. That stated, the gasoline, each on the Midland facet and on the Delaware facet, I imply, the oil is getting a bit gassier. That does not imply there’s much less oil.

It simply means there’s extra gasoline, which is the explanation you see us constructing extra crops. That does put producers in a field for 2023 for takeaway at Waha.

Chase MulvehillFinancial institution of America Merrill Lynch — Analyst

Yeah. I assume that was my follow-up query, is how shortly do you suppose that 1.1 B fills what’s PHP and Whistler, these expansions come on-line form of late 3Q, early 4Q. And the follow-up to that will be, do you continue to have the 350 to 400 Ms a day open for the primary half of ’24 for the FT?

Brent SecrestGovernment Vice President and Chief Business Officer

I am going to reply the second query. That is Brent, nevertheless it’s nonetheless open in ’24. In the end, these pipelines cannot come on most likely quick sufficient. I feel within the day by day market in relation to Waha, I feel we noticed it final week and previous to that, when issues are this tight, and one thing goes down, it is going to be extremely difficult.

And I do not suppose that is the final that we have seen of unfavorable gasoline costs in Waha. Or one thing goes up being the wind blows arduous.

Chase MulvehillFinancial institution of America Merrill Lynch — Analyst

Yeah. Yeah, completely. All proper. I am going to flip it again over.

Thanks.

Operator

Thanks. One second for questions. One second for questions. Our subsequent query comes from Neal Dingmann with Truist.

You could proceed.

Neal DingmannTruist Securities — Analyst

Morning guys. My first query, simply in your upcoming tasks, particularly, when taking a look at all these tasks listed on Web page 6, I do know speaking to a few of your different midstream and upstream guys are seeing the everyday provide chain points and different numerous delays on the market. I am simply questioning, may you guys give simply basic feedback — you have got plenty of unbelievable tasks approaching right here beginning first half subsequent yr and I am simply questioning if you happen to may give a way of — you are feeling fairly good about these tasks? I imply, clearly, there’s a lot of approaching, perhaps simply total colour you can give on that.

Graham BaconGovernment Vice President and Chief Working Officer

That is Graham. Sure, backside line is we really feel actual good about these tasks. I imply, there are a couple of nonetheless remaining provide chain points, primarily round electrical gear. I feel we have mitigated all of virtually each a type of points on these tasks.

Going ahead, we really feel actually good concerning the execution of the tasks that we now have on the checklist.

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

Graham, do you need to give a bit colour on PDH 2?

Graham BaconGovernment Vice President and Chief Working Officer

Sure. Simply in mild of — Randy talked about PDH 2, nonetheless scheduled for mechanical completion within the second quarter of subsequent yr. I feel the execution goes very effectively, taking a look at coming in below our forecast on that exact challenge. We’re actually enthusiastic about that.

Our groups did an amazing job again in 2020, mitigating plenty of the provision chain points that arose throughout the pandemic. And even by way of all of that, we’re nonetheless on schedule and perhaps a bit bit forward of price range.

Operator

Thanks. One second for questions. Our subsequent query comes from Keith Stanley with Wolfe Analysis. You could proceed.

Keith StanleyWolfe Analysis — Analyst

Hello. Thanks. And that is excellent news on PDH 2. I simply wished to make clear on the buybacks.

Is the plan nonetheless to repurchase the as much as $350 million particularly within the second half of the yr? Or is it extra open-ended on the timeline for finishing that?

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

Hey, Keith, good morning. Sure, it may spill over into subsequent yr as a result of, once more, we’re seeking to are available in and do that opportunistically. And once more, we’ll see what the market offers us plenty of noise on the market with the Fed. However sure, I imply, we’ll see if we are able to get it accomplished by year-end.

If not, we’ll spill over into subsequent yr.

Keith StanleyWolfe Analysis — Analyst

Bought it. After which only a fast one on the EFS, the Eagle Ford crude contract. The influence within the third quarter, ought to we consider that as form of an ongoing influence to simply annualize that quantity going ahead?

Brent SecrestGovernment Vice President and Chief Business Officer

So, if you happen to have a look at that contract and that is the lifetime of lease contracts. So, what we misplaced on that’s deficiencies. So, we’re nonetheless going to get some charges related to how a lot manufacturing goes up. Should you have a look at the producer round that contract, they’ve fairly wholesome progress plans.

So, as extra quantity comes on in ’23 [Audio gap] in ’24, they usually’ve shared the expansion plans with us. You are going to see some offset. So, I might suppose that this quarter might be the worst quarter when it comes to influence. Should you have a look at towards the tip of the yr, we’ll most likely make up about 25% of what we misplaced, after which that quantity will go up as we go ahead.

Keith StanleyWolfe Analysis — Analyst

Bought it. Thanks.

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

Josh, that is Randy. We’ve got time for another query.

Operator

Thanks. And our final query — one second, please. And our final query comes from Colton Bean with TPH and Firm. You could proceed.

Colton BeanTudor, Pickering, Holt and Firm — Analyst

Morning. Only one on my finish. The pure gasoline phase had a fairly vital step-up in earnings this quarter, nevertheless it did not appear like that was marketing-weighted. Are you able to simply stroll us by way of the modifications within the rate of interest enterprise and whether or not that is a sustainable run price heading into 2023?

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

Are you asking particularly about our Texas rate of interest system?

Colton BeanTudor, Pickering, Holt and Firm — Analyst

The pure gasoline phase broadly, however primarily based on the discharge, it seems just like the rate of interest was answerable for many of the uplift, so sure simply any modifications there?

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

Sure. So, we have gotten elevated demand or elevated contracts from — so volumes from energy suppliers, nevertheless it’s [Audio gap] additionally upgraded a few of our transport contracts from Waha as effectively.

Brent SecrestGovernment Vice President and Chief Business Officer

I feel if you happen to seemed throughout our complete pure gasoline phase, and you can go from Haynesville or wherever across the Permian, you are going to see will increase most likely each month as we go ahead, Colton. It is a fairly wholesome enterprise proper now.

Colton BeanTudor, Pickering, Holt and Firm — Analyst

Nice. Thanks.

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

OK. Josh, that is Randy. That may finish our name immediately, and we might wish to thank everybody for becoming a member of us for our name. And have an excellent day.

Thanks very a lot. Goodbye.

Operator

[Operator signoff]

Length: 0 minutes

Name members:

Randy BurkhalterVice President, Investor Relations

Jim TeagueDirector and Co-Chief Government Officer

Randy FowlerDirector, Co-Chief Government Officer, and Chief Monetary Officer

Michael BlumWells Fargo Securities — Analyst

Tony ChovanecVice President, Fundamentals and Provide Appraisal

Brent SecrestGovernment Vice President and Chief Business Officer

Jeremy TonetJPMorgan Chase and Firm — Analyst

Chris D’AnnaSenior Vice President, Petrochemicals

Jean SalisburyAllianceBernstein — Analyst

Michael LapidesGoldman Sachs — Analyst

Brian ReynoldsUBS — Analyst

Justin KleidererSenior Vice President, Hydrocarbon Advertising

Theresa ChenBarclays — Analyst

Tug HanleySenior Vice President, Pipelines and Terminals

Chase MulvehillFinancial institution of America Merrill Lynch — Analyst

Neal DingmannTruist Securities — Analyst

Graham BaconGovernment Vice President and Chief Working Officer

Keith StanleyWolfe Analysis — Analyst

Colton BeanTudor, Pickering, Holt and Firm — Analyst

Extra EPD evaluation

All earnings name transcripts

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