Enterprise Prods Partners Q3 2026 Earnings Call Transcript

Enterprise Prods Partners (NYSE:EPD) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Enterprise Prods Partners reported strong financial performance for Q3 2026, with a 16% increase in adjusted EBITDA to $2.8 billion and a 27% rise in distributable cash flow to $2.3 billion year over year.

Strategic initiatives included the expansion of key infrastructure such as the LPG export expansion at the Houston Ship Channel and the new natural gas processing plant in the Midland Basin, reflecting a focus on organic growth rather than acquisitions.

Future outlook remains positive, with continued growth expected in the Permian Basin and robust demand for U.S. hydrocarbons internationally. The company sanctioned $6.3 billion in organic growth projects, aiming for consistent returns.

Operational highlights featured record pipeline volumes and increased natural gas processing capacities, particularly in the Permian Basin, with plant inlet volumes up 12% year over year.

Management emphasized a disciplined capital allocation strategy, a strong balance sheet, and a continued focus on teamwork and customer service as key drivers of the company’s success.

Full Transcript

OPERATOR

Thank you for standing by and welcome to Enterprise Prods Partners third quarter 2026 earnings conference call. Currently all participants are in a listen-only mode. After the speaker’s presentation there will be a question-and-answer session. To ask a question during the session you will need to press 11 on your telephone to remove yourself from the queue. You may press 11 again. I would now like to hand the call over to Joe Thuriak, VP of Finance and Investor Relations.

Please go ahead.

Joe Thuriak (Vice President, Finance and Investor Relations)

Thanks, Latif. Good morning and welcome to the Enterprise Prods Partners conference call to discuss third quarter 2026 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprise’s 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 Exchange Act of 1934 based on the beliefs of the company as well as assumptions made by and information currently available to Enterprise’s management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable and 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 forward-looking statements made during this call.

And with that I’ll turn it over to Jim.

jim teague (Chief Executive Officer)

Thank you, Joe. As some of you may or may not know, this marks my final quarterly earnings call as co-CEO of Enterprise. Looking out across this room and reflecting on nearly three decades, it’s impossible not to feel a profound sense of gratitude for the journey we have shared. When I joined Enterprise in 1999, the company had an enterprise value of less than $2 billion. Today it approaches 120 billion. The true measure of Enterprise has never been just the number on a balance sheet.

It has always been defined by philosophy that was handed down by Dan: do the best you can every day. Those simple yet profound words became the foundation of the Enterprise culture. They define both our personal and collective mission. Achieve extraordinary results through hard work, perseverance, and teamwork. Before joining Enterprise, I spent more than two decades at Dow Chemical. I was an Enterprise customer. My time on the other side of the negotiating table gave me a unique perspective of the midstream industry. It taught me to view our assets from the customer’s point of view. That customer-first mindset is woven directly into our culture, driving our team to ask the hard questions. How do we solve our customers’ problems? How do we eliminate downtime?

And how do we keep products moving? That mindset, combined with an extraordinary team willing to ask why? And why not allowed us to move quickly. When the shale revolution transformed our industry, we spent the last 20 years connecting supply basins from the Permian, Eagle Ford, Haynesville, and Marcellus to our customers along the Gulf Coast. And when domestic production exceeded U.S. demand, we built and expanded our collection of export terminals to deliver product all over the world.

When I look at our network of pipelines, plants, and docks, I don’t just see physical assets. I see the people who run them. Our assets thrive because the people operating them care about one another. Enterprise success has never been driven by individual heroes. It’s driven by teamwork. We operate as one. One team and one book. The Enterprise book. Every decision is made based on the overall benefit for the company. For a long time, we measured things in Dandelion.

Today we measure them in Randalls. Our strength comes from checking our egos at the door and staying laser focused on the details. To all the men and women across our entire system, thank you. You are the true engine of Enterprise. You’ve braved freezing rain, brutal heat, hurricanes, and a pandemic. When times get tough, you work around the clock to keep production flowing. Serving alongside you has been the greatest privilege of my professional life.

Duranda, thank you for your unwavering support and thank you for your dedication for preserving our company’s values. To my partner, Randy, we have shared an incredible working partnership for nearly 30 years. Your financial discipline, sound business judgment, and dedication to our core values represent everything the Enterprise culture stands for. As Randy assumes the sole CEO role in January, I step aside, knowing with certainty this company is absolutely in the best hands.

Finally, to our investors and the analyst community, thank you for the engagement, the sharp questions, and the trust you’ve placed in our company over the years. And with that, you got the ball, buddy boy.

Manny Latif

Jim, as always, you’re a hard act to follow. Thank you for your leadership and mentorship over the past 28 years. You have been a pacesetter and driver of value creation for our customers and our partnerships. Whether it was developing NGL markets both domestically and internationally to absorb all the prolific amount of NGLs produced from the shale plays, or developing transparent and liquid pricing hubs for ethylene and polymer grade propylene that benefited our petrochemical customers, or leading the efforts to improve the Houston Ship Channel through assuring two-way traffic and securing the Project 11 deepening and widening expansion project, you have been one of the leading change agents in our industry.

We congratulate you on an extraordinary career and wish you the absolute best in the next chapters of your remarkable life. Now with that, let’s turn to the quarter. Enterprise reported another strong performance for the third quarter. These results were primarily driven by increased natural gas and NGL production growth in the Permian that was reflected across our entire natural gas and NGL value chain businesses, also from continuing strong demand for U.S. energy and petrochemical products, including the motor gasoline additives we produce, also higher natural gas pipeline volumes in the Haynesville Basin, as well as earnings and cash flow from new assets placed in service over the past 12 months.

For the quarter, we generated $2.8 billion of adjusted EBITDA, a 16% increase over the third quarter last year. Distributable cash flow from operations increased 27% year over year to $2.3 billion, providing 1.9 times coverage and generating $1.1 billion of retained cash flow that we reinvested back in the partnership. Our integrated pipeline system moved a record 14.8 million barrels per day equivalent. Our marine terminals exported 2.5 million barrels per day of liquid hydrocarbons.

In our natural gas processing business, total inlet volumes reached a record 8.5 Bcf a day. In the Permian Basin, plant inlet volumes increased by 12% compared to the third quarter of last year, hitting a record 4.6 Bcf per day. Our three-year CAGR on Permian plant inlet volumes is 19%. That production growth feeds our integrated NGL value chain supporting higher pipeline, fractionation, storage, and export. Our system provides our producer customers flow reliability and access to multiple markets while providing our consumer customers supply diversification. Assets that began operations during the past 12 months include our 11th natural gas processing plant in the Delaware Basin, the Bahia NGL Pipeline, Frac 14 in Mont Belvieu, and the second phase of our Neches River NGL export terminal.

Global energy supply disruptions and volatility continue to support strong international demand for U.S. hydrocarbons, particularly NGLs, petrochemicals, and refined products. In this environment, our reliability, flexibility, and most of all price transparency remain increasingly valuable for our international customers. Looking ahead, our next major projects scheduled for completion in the fourth quarter are a 300,000 barrels a day LPG export expansion at our Houston Ship Channel export marine terminal and a new 300 million cubic feet per day natural gas processing plant in the Midland Basin. The LPG marine terminal expansion will increase our total LPG loading capacity at the Ship Channel to approximately 1.1 million barrels per day. Athena, our 20th natural gas processing plant in the Permian Basin, will increase our total processing capacity in the basin to nearly 5 Bcf per day.

We have recently updated our Permian production growth forecast through 2030. While our 2025–2030 forecast of crude oil production changed modestly—only 100,000 barrels per day by 2030—our forecast of wet natural gas and NGL production during this time period increases to 34% due to higher gas-to-oil ratios in the Permian. This compares to 23% growth for this time period that we forecasted last April. I’d refer you to page 9 of our third quarter earnings supplemental slide deck for this updated forecast, and Corey can address this further during our Q&A. We have a confident outlook. Continued production growth in the Permian Basin and robust domestic and international demand are providing attractive organic growth opportunities for the partnership. We are remaining disciplined in our capital allocation. Rather than pursuing acquisitions at top-of-the-cycle M&A multiples, we have been opting for targeted organic growth that historically provided us higher and more consistent returns on capital with fewer surprises.

We have $6.3 billion of organic growth projects that have been sanctioned and are under construction. We believe with these opportunities and solid execution, our team can continue to deliver cash flow per unit growth that will increase the value of our partnership over time. During the quarter, we declared a distribution of $0.56 per common unit for the third quarter, which is a 2.8% increase over the distribution that we declared for the third quarter 2025. The distribution will be paid on November 30th to common unitholders of record as of the close of business on October 30. The partnership purchased $112 million of its common units during the third quarter. Total year-to-date repurchases for 2026 are $387 million, bringing the cumulative utilization of our $5 billion buyback program to 36%.

In addition to buybacks, purchases under our Distribution Reinvestment Plan and Employee Unit Purchase Plan totaled approximately 1 million common units for the twelve months ended September 30, 2026. Enterprise paid out approximately $4.8 billion in distributions to limited partners, combined with $437 million of buybacks over the same period. Enterprise’s total capital return was $5.3 billion, resulting in a payout ratio of adjusted cash flow from operations of 54%.

Total capital investments were $1.1 billion in the third quarter of 2026, which included $900 million for growth capital projects and $185 million of sustaining capex. Our expected range of growth capital expenditures for 2026 will net to between $2.9 and $3.4 billion after applying approximately $600 million of proceeds from asset sales already received. While we currently expect our growth capital expenditures in 2027 to still be in the $3 billion area, given expected natural gas and NGL volume growth in the Permian, we will provide an update next quarter after we complete our annual budget cycle and review.

Sustaining capex for 2026 is expected to be approximately $650 million. Our total debt principal outstanding was approximately $33.7 billion as of September 30th. Assuming the final maturity date for our hybrids, the weighted average life of our debt portfolio is approximately 17 years. Our weighted average cost of debt is 4.7%, and approximately 96% of our debt was fixed rate. At September 30, our consolidated liquidity was approximately $4.8 billion, including availability under our credit facilities and unrestricted cash on hand.

As of September 30, our consolidated leverage ratio was 2.9 times on a net basis. After adjusting debt for the partial equity treatment of our hybrid debt and reduced by the partnership’s unrestricted cash on hand, our leverage target remains three times plus or minus a quarter—so that is 2.7 times to 3.25 times. With that, Joe, we can open it up for questions.

Joe Thuriak (Vice President, Finance and Investor Relations)

Thanks, Manny. We are ready to open up the call for questions.

OPERATOR

Thank you. As a reminder, to ask a question, you will need to press Star 11 on your telephone to remove yourself from the queue. You may press Star 11 again. Please limit yourself to one question and one follow-up, or two questions, to allow everyone the opportunity to participate. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeanne Salisbury of B of A. Your line is open.

Jeanne Salisbury (Analyst)

Jim, best of luck to you in retirement. We are definitely going to miss hearing your quotable quotes on these calls. There will be a void during earnings season, and thank you for all of the help.

jim teague (Chief Executive Officer)

Thank you.

Jeanne Salisbury (Analyst)

Jim and Corey, I just wanted to ask what drove the increase in your gas-to-oil ratio forecast? Was it decline curves in wells that have already been online, or was this more of an expectation of a coming producer shift to more Delaware or something like that?

Corey

Yeah, Jeanne, it’s a great question and I think you nailed it. It really is both of those factors kind of combined. So when we think about the decline curves, we have been seeing the curves shallow on natural gas. So when we look at our PDP, you get that compounding effect of more natural gas coming online relative to crude oil. So that was one of the key drivers for increased GORs in the basin. The other one, obviously, as you pointed out, is people moving to different locations—whether it be moving just into a location in the Delaware Basin where we’re seeing a little bit more activity from a growth perspective.

Typically the Delaware Basin is drier, but they’re also hitting new benches that are producing really high GOR. Some of these benches typically will reach as high as 8 to 9 GOR on IP. And these are the Woodford or Barnett relative to what we would see on a Wolfcamp that’s more like a 2 GOR on IP. So some of these areas definitely have rock that is more gas. When we build out our forecast, Jeanne, there’s a couple of things that we like to look at.

One of them obviously is location, as I just mentioned. Another one is technology. And we keep looking at what the producers are doing in the basin—using different proppants, new surfactants, new drilling mechanisms. The frac equipment is better. When I think about total recoveries that come out of the rock, as we’ve been talking about an increase in total recovery in the basin, those last few percent are typically going to be a lighter molecule.

So these are all factors driving the higher GORs.

Jeanne Salisbury (Analyst)

Thank you. I look forward to delving into it even further with you in the next few weeks, so thanks a lot for that. As my follow-up, ethane and propane prices have been very strong the past month or so. I think some are attributing it to a ramp in exports, some are saying that fractionation is extremely tight and that’s the main driver. I’m just wondering what your view is and whether these elevated price levels of ethane and propane you expect to persist.

Tyler Cott

Hey, Jeanne. This is Tyler Cott. Yeah, we’ve seen a little bit of an increase. It’s been mostly in the front of the curve, and I think it’s for the reasons that you said—just timing around demand and supply. We’ve had a new ethane cracker in the U.S. Gulf Coast reportedly starting up and a little bit of new export capacity, so I think that’s part of it, along with fractionation waiting to come online. I think it’s important to note, though, that the U.S. is still extremely competitive, somewhat due to the high freight costs.

So U.S. consumers of those NGLs are still very much advantaged to the rest of the world.

Tug Hanley (EVP, Chief Commercial Officer)

Jeanne, this is Tug. I’ll just add that ethane production is continuing to grow. We still continue to expect ethane to be long here in the U.S.

Jeanne Salisbury (Analyst)

That makes sense. Great. I’ll leave it there. Thank you.

OPERATOR

Thank you. Our next question comes from the line of Teresa Chen of Barclays. Your line is open.

Teresa Chen (Analyst)

Congratulations again to Jim. Thank you for your leadership, and we wish you the best as well. Going back to the macro forecast, given the magnitude of the gas revision in just six months, and with the revisions consistently moving higher over the past few iterations, how much conservatism and general subjectivity is embedded in your assumptions? And do you see the potential for GORs to surprise even further to that side?

Corey

This is Corey.

Teresa Chen (Analyst)

And turning to the Northeast, with continued upstream consolidation there, how are you thinking about the implications for ATEX recontracting at this point, taking into account the existing plans at AR and RRC, and now the EQT-Range combination? Does the changing producer landscape alter the commercial dynamics around ATEX as those contracts come up for renewal soon?

Randy Fowler (Co-Chief Executive Officer)

Yeah. And Teresa, before I turn it over to Kerry to answer, just keep in context: this is less than 3% of our EBITDA. Kerry, go ahead.

Kerry Weaver

Hi, this is Kerry Weaver. We don’t view the recent announcements as materially changing how we look at ATEX. We recognize that there certainly could be some optimization as customers look at their portfolios, and we would expect the next generation of contracts to reflect today’s market rather than the economics that existed when ATEX was originally contracted. But the conversations are still dynamic, and we’re having those with current and potential new shippers as we continue to evaluate, on a high level, what the best, most economic use is of the pipe.

But we continue to view ATEX as a very strategic asset, and that’s especially with the significant amount of demand coming online in the Gulf Coast that will need the ethane.

Teresa Chen (Analyst)

Thank you.

OPERATOR

Thank you. Our next question comes from the line of Spiro Dounis of Citi. Your line is open, Spiro.

Spiro Dounis (Analyst)

Thanks, operator. Congrats once again, Jim. Randy, very much looking forward to your first monologue going to the ’27 outlook. First, I know the original 10% increase in ’27 is maybe less relevant now given the ’26 outperformance, but from what I can tell you’ve largely sort of held firm on that ultimate EBITDA endpoint for ’27 and been maybe hesitant to say that ’26 tailwinds are durable through next year. So curious now, maybe, to get an update on that outlook, especially in light of you raising your Permian volume outlook.

Randy Fowler (Co-Chief Executive Officer)

Yes, Spiro, don’t get used to the monologue. We’re going to be having some additional speakers on the next call. Fair question. The one thing to keep in context: if you just look at our EBITDA through the first three quarters of this year, we’re up 15% year to date. So I think to a degree we got things backwards when we said we were looking at modest growth in ’26 and then we could see up to 10% growth in ’27. I think the way it’s turning out—again, 15% up year to date—so 2027, hard to know what the world will bring in ’27 as far as geopolitical conflicts and what have you, but ’27 may be more modest compared to what we’re going to wind up reporting for 2026.

Spiro Dounis (Analyst)

Got it. And when you say modest percentage basis, just want to make sure I understand—

Randy Fowler (Co-Chief Executive Officer)

What that means, Spiro, it depends on what your crystal ball is for geopolitical conflicts. That’s where we picked up some nice spreads across the system. So without that I think it’s probably more modest. Not really looking to put a percent on it.

Spiro Dounis (Analyst)

Yes, fair enough. No, I can appreciate the lack of clarity these days. Second question, maybe just turning to leverage—below 3x now and from the point I could tell trending perhaps even below your sort of lower end of the range next year if all goes well. Good problem to have, certainly. But I guess at what point do you consider yourselves underlevered? Is that a meaningful consideration in your mind and what are the options to address it? I know buybacks are there, but you’ve taken a growing but kind of measured approach on that, and so curious: do you see large growth opportunities manifesting themselves now for later in the decade, or does M&A suddenly come back into focus?

Randy Fowler (Co-Chief Executive Officer)

Spiro, we’re just looking at 2.9x on debt to EBITDA. We just ticked to that this quarter, and think of that—some of that is the tailwind of 15% EBITDA growth this year. So we’re benefiting from that. Certainly the balance sheet flexibility gives us a lot of room on the M&A side. But again, as we said in the prepared remarks, we’ve really been deliberate on the M&A front, and it seems like organic growth gives us more consistent returns of capital and, like I said, I’ll reiterate—with a lot fewer surprises than what we see on the M&A side.

So I don’t see the need for our debt to go much lower than where it is today. But we’ve got, you know, as we said in the prepared remarks, we’ve got a lot of good growth opportunities coming in, especially when you come in and look at just the gas and NGL-rich content in the Permian. We’ve got a lot of room to run.

Spiro Dounis (Analyst)

Great. Sounds promising. I’ll leave you there. Thank you, everyone.

OPERATOR

Thank you. Our next question comes from the line of Manav Gupta of UBS. Please go ahead, Manav.

Manav Gupta (Analyst)

Good morning. I actually just wanted to follow up quickly on the Bahia expansion. Your partner is obviously setting an envelope of developments within the Permian with 4.0 stackable technologies and their volumes are growing at a faster pace than anybody would have expected. So if you could give us an update on the Bahia expansion, probably coming on for one year from now.

Kerry Rossi

Hi, yes, this is Kerry Rossi. As we look at Bahia, the extension into the Delaware will be in service in the fourth quarter of 2027. The expansion of 400,000 barrels a day, stepping us up to 1 million barrels a day, will start in 4Q27 as well and continue through mid-2028. And that’s as we get permanent power and pump stations, with power really being the critical path.

Manav Gupta (Analyst)

Perfect. And my quick follow-up is, I think you mentioned in the opening comments that you don’t want to pay a higher multiple at the peak of the cycle. But just thinking about a very strong balance sheet, any potential bolt-on opportunities—where are the areas where Enterprise Prods Partners could be potentially looking to buy some stuff if it’s available at the right price?

Randy Fowler (Co-Chief Executive Officer)

Really, I think as far as bolt-on opportunities—really across the entire value chain, across the entire system.

Manav Gupta (Analyst)

Thank you.

OPERATOR

Thank you. Our next question comes from the line of John Mackay of Goldman Sachs. Please go ahead, John.

John Mackay (Analyst)

Hey team, thank you for the time. Let me go back to the macro outlook a little bit, and this has been touched on but maybe asked in a different way. With the higher Permian gas growth outlook, how do you see that changing your project plans over the next few years? If you’re going to, let’s say, hold relative G&P market share, it probably implies more plants and therefore more downstream in the plan than you would have been considering before. So maybe just kind of walk us through how you’re thinking about that. Thank you.

Justin Kleiderer (Senior Vice President, Pipelines & Terminals)

John, this is Justin Kleiderer. You know, I think in the past we’ve said a range of one to two a year on plants. Certainly with the higher growth curve, we feel more confident that we’re going to be closer to the two per year. You know, if you look historically, processing capacity growth versus production growth versus 2019 have basically matched each other one-to-one. If you just take that out further, the steeper that gas production curve goes, the more infrastructure is going to be needed to support it.

So to the extent we continue to revise that curve, the more we’ll need. So I still think two a year is good for the runway, and then we’ll look to see how some of these newer developments in that basin continue to unfold and pivot around that data.

John Mackay (Analyst)

Appreciate that. Second one from me: we have seen LNG contracting off the Gulf Coast pick up on the back of a couple things, but one of them has been—let’s call it—an energy security bid. Anything you guys can share on the LPG contracting side in terms of tone of conversations, how that’s picked up over the last couple months, and what we could expect from here?

Tyler Cott

Yeah. Hey, John, this is Tyler Cott. I think like we’ve said before, on the LPG side we’re pretty highly contracted—about 90% through the end of the decade. I think in terms of what we’re hearing from our customers, yes, energy security is a big part of it. I think a couple other things are just the confidence in the U.S. producer and the production story that we’re talking about—our customers definitely see that. And then I think, finally, at least for us and our assets, we offer a little bit of a differentiated service.

We have a lot of scale, a lot of flexibility, three different terminals. So I think that’s also contributed to a lot of the strong interest that we’ve seen.

John Mackay (Analyst)

Understood. Thank you.

OPERATOR

Thank you. Our next question comes from the line of Julian Domalin Smith of Jefferies. Your line is open, Julian.

Patrick

Hi. You’ve actually got Patrick, but from Julian and myself, another congratulations on your retirement—so thank you for everything. And I think a question will just be evolving a bit from some of the other ones there in terms of that growth going towards the end of the decade. And I know you don’t want to do capex updates till Q4, but does that extend to changing your forecast for the number of frac plants as well? And if you could talk a little bit about the lead times that you need for that kind of changing capex allocation—I mean, if you’re looking at adding stuff in ’28, ’29, does it basically have to be announced in Q4 or you can’t do it in that timeframe, or is there a chance that that could keep evolving as you change your forecasts each year?

Zach Straight

Julian, it’s Zach Straight. As far as outlook on fracs, you know, I’m not going to say we’re not going to build. I actually think we probably will build more, but we feel pretty good where we’re at. We just announced Frac 15. It’s not coming on until ’28. Lead times have been a bit more extended, probably six more months. But we’ve got a lot of flexibility in our downstream value chain—storage, fracs across South Texas, Louisiana. So we feel pretty good where we’re at with 15, and we’ll see what contract we can do for the next one.

Patrick

Thank you. And another question, evolving on that Permian growth story—I think I’m just wondering if you’re planning on expanding your market share materially. I think there was a comment in your last answer about growing one-to-one with production growth and processing capacity. Is there any intention to get more competitive and take more market share? I think you’ve been growing that quite a bit over the last few years, right?

Justin Kleiderer (Senior Vice President, Pipelines & Terminals)

Yeah. Patrick, it’s Justin Kleiderer. Yeah, I think as Randy said in his comments, we’ve grown at a 19% CAGR, which is well in excess of what the basin’s done. So I would expect we’ll continue to see that trend play out going forward.

Patrick

Okay, thanks.

OPERATOR

Thank you. Our next question comes from the line of Keith Stanley of Wolfe Research. Please go ahead, Keith.

Keith Stanley (Analyst at Wolfe Research)

Hi, good morning, Randy. How are you thinking about buybacks for next year and beyond? Is the 50% to 60% of free cash flow framework that you laid out for this year something you think you would continue to do?

Randy Fowler (Co-Chief Executive Officer)

Oh, as far as total capital return—yeah. I think what we had said is really in the 55% to 60% range. I think that’s still a good range to think about. Okay, so 55% to 60% of return of cash flow? Yes, specifically 55% to 60% of adjusted cash flow from operations for distributions and buybacks. And just when you’ve seen what we’ve done over the last 12 months, that’s still heavily skewed towards distributions.

Keith Stanley (Analyst at Wolfe Research)

Got it, thanks. The next question on the LPG export expansion. So you’re nearing completion—it’s rather large at 300,000 barrels a day. How can we think about a ramp-up of volumes and how quickly you think you could fill that level of expanded capacity on exports?

Tyler Cott

Hey, Keith. This is Tyler Cott. It’s full.

OPERATOR

Thank you. Our next question comes from the line of Brandon Bingham of Scotiabank. Please go ahead. Brandon.

Brandon Bingham (Analyst)

Hey, good morning. Thanks for taking my questions here. Just wanted to maybe go back to the Permian forecasts, but more on the crude side. You know, the growth was more or less unchanged. Just modest uptick there. Could you just walk through some of the dynamics that you’re seeing on the crude side and do you think there’s any upside potential to that particular stream?

Jay Bayney

Yeah. Hey, Brandon, this is Jay Bayney. I think what we’ve seen on the crude side over, call it, the second and third quarter is we’ve seen a little bit of production move up within our dedicated acreage that’s predominantly around the Midland Basin. And then in the Permian Basin, we’ve seen our trunk line connects with third-party gatherers. We’ve seen volumes increase on that, call it up to 50,000 barrels a day. So we’re seeing growth in both basins.

Brandon Bingham (Analyst)

Okay, maybe just the broader basin forecast that you guys updated today. Any thoughts around that holistic piece?

Cory Johnson

Yeah, this is Cory Johnson. So when we look at our forecast update, it really wasn’t a change in the cadence of completions or drilling. It was a change in what we’re seeing coming out of the rock. And so that’s why we didn’t see a whole lot of change in the crude oil. We saw more of a change in the gas because, again, we’re getting more gas and about the same crude as we had expected before.

Brandon Bingham (Analyst)

Okay, great, that’s helpful. And then maybe just a quick one: petchem segment looked really good. Just kind of curious how much of that, looking at the bridge, quarter over quarter, can be carried forward and maybe how much of that do you think is maybe more along the lines of market dynamics at present?

Kristana

Hey, Brandon, this is Kristana. Yeah, there were some puts and takes. So, you know, propylene was down lower and so was our ethylene exports, but MTBE kind of picked up the slack and then some. So we’re seeing MTBE a little bit weaker right now. Typical seasonal weakness. But ethylene and propylene have both picked back up.

Brandon Bingham (Analyst)

Great. So I guess, yeah. Summary?

Kristana

Yeah, it’s sustainable.

OPERATOR

Thank you. Our next question comes from the line of Jason Gableman of TD Cowen. Your line is open, Jason.

Jason Gableman (Analyst at TD Cowen)

Yeah, hey, thanks. Two questions on the Permian gas. One maybe related to the near or to the 3Q print. You know you had a step up in inlet volumes, didn’t have any new process plants coming online. So I was wondering if you could talk through what drove the step up. How much of that is just ramp up of volumes on your acreage? Is there any consideration for others offloading volumes onto your plants which maybe is not sustainable? Any color there would be helpful.

Justin Kleiderer (Senior Vice President, Pipelines & Terminals)

Jason. Justin Kleiderer again. Yeah, I mean I think quarter over quarter we’re up 13% in the Delaware and just over 10 in the Midland. I’d say in the second quarter we saw probably about 200 a day of economic shut-ins due to all the volatility in Waha pricing. And so I think you can say that’s a combination—the growth you’re seeing quarter over quarter is a combination of that production coming back as well as some just organic additional acreage being completed and brought in line behind the system.

So it’s a combination of the two.

Jason Gableman (Analyst at TD Cowen)

And I wanted to hit on the long-term forecast again. Sorry, but, you know, the dry gas out of the Permian forecast is only 7 1/2 B’s a day. I think at this point we’re up to 20 B’s a day of new dry gas egress coming out of the Permian between ’25 and 2030. So, Corey, wondering if that kind of pipeline build-out fed into your modeling at all and how you explain the delta between your dry gas production growth and the amount of pipeline capacity that’s been contracted.

Cory Johnson

When we run our analysis it’s really a bottom-up analysis looking at the rock and talking to all of Justin’s customers to see how they are reacting and then also what they’re seeing in the basin. When it comes to the overall forecast, it does factor in when we think about what the runway looks like for producers. I think this is probably the clearest runway we’ve had in years for producers to look out and see that there is plenty of takeaway capacity for them to grow into.

And so it will be a factor when we sit down and recalibrate for our 2027 forecast that we should release somewhere in that March, April time frame.

Jason Gableman (Analyst at TD Cowen)

Great. Thanks for the answers.

OPERATOR

Thank you. I would now like to turn the conference back to Joe Thuriak for closing remarks. Sir.

Joe Thuriak (Vice President, Finance and Investor Relations)

Thanks, Latif. Thank you to our participants for joining us today. That concludes our remarks. Have a good day.

OPERATOR

This concludes today’s conference call. Thank you for participating. You may now disconnect.

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