Enterprise Products Partners L.P. (NYSE: NYSE:EPD) reported a solid start to 2024, with Co-CEOs Jim Teague and Randy Fowler announcing a 7% increase in total gross operating margin to $2.5 billion for the first quarter, compared to the previous year. The growth was attributed to new assets and higher net marine terminal volumes. The company also outlined its expansion in the Permian natural gas processing sector and discussed financial strategies, including distribution and capital investment plans.
Key Takeaways
- Total gross operating margin increased by 7% to $2.5 billion in Q1.
- Growth driven by new assets and increased net marine terminal volumes.
- Expansion of Permian natural gas processing infrastructure is underway.
- Company aims for 100 million barrels a month in exports, excluding the SPOT project.
- Financial updates include net income, adjusted cash flow, distributions, and capital investments.
- Discussions on commercializing a project are ongoing, pending necessary contracts.
- Texas Western Products project is setting volume records, with margins on target.
- New dedications and gathering expansions in Delaware and Midland areas.
- Over 91% of plant capacity is utilized.
- Domestic propane prices may widen until new export capacity is available.
- Strong global demand for LPGs is expected to continue.
- Upcoming downtime at the Wink to Webster asset in June.
- Steady activity levels in the Permian, unaffected by weak natural gas prices.
- Positive contributions from octane enhancement and PDH expected to continue.
- Future capital allocation aimed at 55-60% of adjusted cash flow for distributions and buybacks.
- Potential for increased buybacks in the event of market dislocation.
Company Outlook
- Plans to allocate 55-60% of adjusted cash flow from operations to distributions and buybacks.
- Sees opportunities for organic growth in the Permian and downstream benefits.
- Aims for $2-2.5 billion in organic growth CapEx by 2026.
Bearish Highlights
- Uncertain impact on customers from the upcoming downtime at the Wink to Webster asset.
- Propane prices may widen domestically until new export capacity is introduced.
Bullish Highlights
- Strong global demand for LPGs expected to persist.
- Positive contributions from octane enhancement and PDH to continue throughout the year.
- Wide RGP and PGP spreads in the first quarter bolstered overall margins.
Misses
- No specific misses were discussed during the earnings call.
Q&A Highlights
- Neal Dingmann from Truist Securities inquired about future capital allocation.
- Brent Secrest emphasized a balanced approach to distributions and buybacks, with an eye on organic growth opportunities.
- Randy Fowler indicated increased flexibility for buybacks as earnings and cash flow grow, and the potential for more in the event of market dislocation.
- A growth CapEx range of $3.25-3.75 billion is projected for 2024-2025, with a normalization to $2-2.5 billion in 2026-2027.
InvestingPro Insights
Enterprise Products Partners L.P. (NYSE: EPD) has demonstrated resilience and growth potential, as reflected in its recent earnings report. To further understand the company's financial health and investment potential, let's consider some key metrics and insights from InvestingPro.
InvestingPro Data:
- Market Cap (Adjusted): $61.0B USD
- P/E Ratio (Adjusted) for the last twelve months as of Q4 2023: 11.3
- Dividend Yield as of the latest data: 7.34%
InvestingPro Tips:
- EPD has a longstanding history of rewarding its shareholders, having raised its dividend for 27 consecutive years, showcasing a commitment to consistent returns.
- Analysts have shown confidence in EPD’s performance, with 3 analysts revising their earnings upwards for the upcoming period, indicating potential for continued financial growth.
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Full transcript - Enterprise Products Partners LP (EPD) Q1 2024:
Operator: Thank you for standing by. Welcome to the Enterprise Products Partners First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today’s program is being recorded. And now, I’d like to introduce your host for today’s program, Libby Strait, Senior Director of Investor Relations. Please go ahead.
Libby Strait: Good morning. Welcome to the Enterprise Product Partners conference call to discuss first quarter 2024 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, 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 forward-looking statements made during this call. With that, I will turn it over to Jim.
Jim Teague: Thank you, Libby. We have a war in Europe. We have a war in the Middle East. We have student mobs occupying elite university campuses and a former President being trialed for crimes in courts up and down the East Coast, chaos reigns. In many ways what’s going on today reminds me of the 1960s. We had a war in Asia called the Vietnam War let student anti-war demonstrators occupying campuses throughout the country and while no President was on trial one was chased from running for a second term. And on top of all that now, like in 1968, we find that the DNC will hold its convention in Chicago. For those of you too young to know what that means, I suggest you Google (NASDAQ:GOOGL) 1968 Chicago Convention. But with all this chaos, there is a constant today that should bring calm to Investors concerns in this volatile world. Enterprise continues to deliver month-after-month, quarter-after-quarter and year-after-year and first quarter was no exception. Our total gross operating margin for the quarter – first quarter was $2.5 billion, a 7% increase compared to the first quarter of last year. Our earnings growth for the first quarter was primarily driven by contributions from new assets placed into service during the second half of last year, along with the 17% increase in net marine terminal volumes attributable to continued strength in global demand for U.S. energy and higher sales volumes and margins in our octane enhancement business Our system transported 12.3 million barrels a day of crude oil equivalent that being NGLs, crude oils – crude oil, petrochemicals refined products and natural gas. We generated 1.9 billion in DCF during the quarter, providing a 1.7x coverage was supported a 5% increase in cash distributions to partners compared to the same quarter last year. We retained $786 million in DCF. Randy, you are going to get into more color on all this right. During the quarter, we expanded our Permian natural gas processing infrastructure with the start of our Leonidas plant in the Midland Basin and our Mentone 3 plant in the Delaware Basin. Each of these plants has supply capacity to process more than 300 million cubic feet a day on natural gas and extract over 40,000 barrels a day of NGLs. We currently have three additional 300 million a day plants under construction due in the Delaware and one in the Midland basin, along with our Bahia NGL pipeline and Frac #14, which is really our 13th fractionator, but we are not going to call it 13 we call it 14. Our plants and the systems that support them are essentially full on the first day of service. With the completion of the three processing plants under construction, we will have a total of 19 Permian processing plants capable of producing 675,000 barrels a day of NGLs beating our NGL systems, including one of the world’s largest NGL export capacities. We also begin service on Phase 1 of our Texas Western products pipeline system in March, successfully connecting Gulf Coast refined products to end markets in the Permian Basin, with additional Phase 2 destinations in the Albuquerque and Grand Junction markets expected in the second and early third quarters. At the beginning of the month, we received the deepwater port license for our Spot Project. This is one of the most significant milestones to-date of the development of Spot. We put out a press release on April 9 discussing the project and highlighting the accomplishment of the Enterprise team that worked tirelessly for over 5 years, tirelessly for over 5 years to obtain the license. I think Spot is going to be a valuable and highly strategic addition to our asset base as we continue with commercialization. As with the EIA reported that the U.S. exported a record 12.1 million barrels a day of liquids that being crude oil, refined products and natural gas liquids, the world is hungry for our reliable and plentiful resources, that’s priced by pre-market. To put that in perspective, the number was 3.6 million in 2014 and less than 10.2 million in 2010. Demand for growing U.S. liquids has been and will continue to be primarily in emerging markets. Enterprise will continue to play a key role. We export around 70 million barrels a month of liquids and have an initiative to reach 100 million barrels a month, which does not include Spot. We are a significant player in the export market and we expect our growth is going to continue to grow. Randy?
Randy Fowler: Thank you, Jim. Good morning, everyone. Starting with first quarter income statement items, net income attributable to common unitholders for the first quarter of 2024 increased 5% to $1.5 billion or $0.66 per common unit on a fully diluted basis compared to $1.4 billion or $0.63 per common unit for the first quarter of 2023. Turning to cash flow, adjusted cash flow from operations, which is cash flow from operating activities before changes in working capital increase 6% to $2.1 billion for the first quarter of 2024 compared to $2 billion for the first quarter of last year. We declared a distribution of $0.515 per common unit for the first quarter of 2024. As Jim mentioned, this is a 5.1% increase over the distribution declared with regard to the first quarter of 2023. The distribution will be paid May 14 to common unitholders of record as of the close of business today. In the first quarter, the Partnership purchased approximately 1.4 million common units off the open market for $40 million. Total purchases for the 12 months ending March 31 were $211 million or approximately 8 million Enterprise common units bringing total purchases under our buyback program to approximately $960 million. In addition to buybacks, our distribution reinvestment plan and employee unit purchase plan purchased a combined 6.5 million common units on the open market for $172 million during the last 12 months, including 1.6 million common units on the open market for $43 million during the first quarter of 2024. For the 12 months ended March 31, 2024, Enterprise paid out approximately $4.4 billion in distributions to limited partners combined with the $211 million of common unit repurchases across the same time period. Enterprise’s payout ratio of adjusted cash flow from operations was 56% for that 12-month period. Total capital investments in the first quarter were $1.1 billion, which included $875 million for growth capital projects and $180 million for sustaining CapEx. We expect growth capital expenditures for 2024 and 2025 to be in the range of $3.25 billion to $3.75 billion. We continue to estimate 2024 sustaining capital expenditures to be approximately $550 million, which includes planned turnarounds at both of our PDH plants, our iBDH facility and high-purity isobutylene facility. As previously mentioned, these scheduled turnarounds typically occur every 3 to 4 years. At this time, we expect the PDH turnaround to be completed in May 2024. We plan to begin addressing the issues on the fourth reactor within PDH 2 in June. Our total debt principal outstanding was approximately $29.7 billion as of March 31, 2024. Assuming the final maturity date for our hybrids, the weighted average life of our debt portfolio is approximately 19 years. Our weighted average cost of debt is 4.7%. At March 31, approximately 98% of our debt was fixed rate. Our consolidated liquidity was approximately $4.5 billion at the end of the first quarter, including availability under our credit facilities and unrestricted cash on hand. Our adjusted EBITDA for the first quarter was $2.5 billion and $9.5 billion for the trailing 12 months. As of March 31, 2024, our consolidated leverage ratio was 3.0x on a net basis after adjusting debt for the partial equity treatment of our hybrid debt and reducing the debt outstanding by the Partnership’s unrestricted cash on hand. As a reminder, our leverage target remains 3.0x plus or minus 0.25x. And with that, Libby, I think we can open it up for questions.
Libby Strait: Thank you. Operator, we are ready to open the call for questions from our participants, if you could please remind them of instructions to ask the question.
Operator: [Operator Instructions] Our first question comes from the line of Theresa Chen from Barclays (LON:BARC). Your question, please.
Theresa Chen: Good morning. Thank you for taking my questions. First, congratulations on obtaining the deepwater port license for Spot. Sure, that was a labor of love over the past 5 years. Can you provide us an update on the commercialization progress since you’ve received the license earlier this month? And also, can you help us think about, how much CapEx would the project require? And over what period that would be spent?
Randy Fowler: Yes, I will talk to the CapEx. First of all, it’s not what was in the Reuters article, my long shot. And we typically don’t share with people what our CapEx is. I’ll turn it over to Brent to answer the other question.
Brent Secrest: I mean, the commercialization, Theresa is still ongoing. I’d say for the most part, it’s positive. We’re spending a lot of time on the road. We expect to have two contracts by the end of call it next month. And then we’re in ongoing discussions with other counterparties to commercialize that. But, yes, the mindset is, we’re not going to move forward on that project until we have the contracts to support that project.
Theresa Chen: Thank you. And then turning to your onshore activities can you provide an update on the status of the Texas Western Products project so far and after the initial phase in began service. And what are the key gating factors from here until Phase 2 are brought online and what should we look for?
Tug Hanley: Yes. This is Tug Hanley speaking. I’ll turn it over to Justin on the future activities. But as current status goes, we have two terminals online in West Texas. We just loaded over 50 trucks. Yesterday, it seems like every single day, we’re saying new record on volumes loaded. And as far as the margins were getting those have met our expectations or they’re currently exceeding them. And do you want to talk about Justin, Albuquerque, when alone.
Justin Kleiderer: Yes, I’d say, Theresa, just inquire just think about Phase 2 being Albuquerque and Grand Junction as Jim had sent his comments. We feel good. We’re on the verge of commissioning Albuquerque as we speak so in the second quarter rolling into early third quarter to get that Phase 2 seems to be pretty good timing.
Theresa Chen: Thank you.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Tristan Richardson from Scotiabank (TSX:BNS). Your question please.
Tristan Richardson: Hi, good morning, guys. Could you talk about a little bit about just the projects you added in the quarter on the midstream side? New dedications are these with existing customers or these new customers just primarily in the Delaware versus the Midland? And then should this support plants that are already currently under construction or is this gathering projects that could support future new plant sanctions?
Natalie Gayden: Hey, this is Natalie Gayden. The new dedications that the gathering expansions in the Delaware and in Midland are supported by new acreage dedication, some existing customers, some new customers. Big gathering expansions feed the new plants that we’ve built, and this morning, I was looking, we’re over 91% of our plant capacity full. So a combo of everything.
Tristan Richardson: That’s helpful. Thanks, Natalie. And just, thinking about the on the crude side, you saw Seminole move back into NGL service. Just thinking about the crude volumes in the quarter, we’re just seeing increased utilization on the existing infrastructure there. Can you talk about maybe the use of DRA to sort of squeeze better utilization out of your existing plants with Seminole lines with Seminole moving in into NGLs?
Unidentified Company Representative: Yes, Tristan, this is [indiscernible]. Yes, I mean, we do a combination and optimization really both for DRA and power with two going out of service. You saw a modest increase in variable cost, but it was near negligible just in the optimization.
Tristan Richardson:
J:
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Spiro Dounis from Citi. Your question please.
Spiro Dounis: Thanks, operator. Good morning, team. Maybe if we could just go back to exports, Jim, once you talked about getting to that 100 million barrels a month without SPOT. I guess I’m just curious if you just maybe dive into that a little bit more and provide a little more color and how you think you can do that. And now with SPOT potentially moving forward. Curious where that goal goes from here, especially when you consider the ability to free up some of that LPG capacity as well.
Jim Teague: Hi, Spiro, I had a dream one night that we got to 100 million barrels. So I made it an initiative. If you’re going to get to 100 million barrels, you’re going to get it because you got a great supply position. So some of the things, Natalie’s talking about is building your supply position. And we know what it takes to get to that number. And what we need to do from a supply perspective. And I don’t think, Zach, I don’t think we have to spend a heck of a lot of money on our ship channel or any of our docks in order to handle that, Bob?
Unidentified Company Representative: Not over what we’ve already committed to.
Jim Teague: So it’s all about supply, Spiro.
Spiro Dounis: Got it. Appreciate that. Second question, maybe just going to some of the prices we’re seeing on Waha. Obviously, a lot of volatility there recently and into the second quarter looks like maybe you got some benefit from those negative prices in the first quarter. But I imagine at this rate second quarter impact could be even bigger. Maybe to remind us again some of the exposure you’ve got there and open capacity to benefit from that.
Tug Hanley: Hey, this is Tug Hanley. So it’s puts and takes. So, from the negative gas price perspective we are seeing lower prices obviously for equity volumes. However, on the positives of the lower gas price, we’re seeing wider margins on C2 to the gas. So that’s higher key pool margins for us. They’re over $0.22 a gallon. And I need a couple of things for us, specifically, higher acting recoveries across the system. So we’re seeing record pipeline volumes. And then on the gas transport position, we have around 375 million a day that we can participate in bringing Waha down to the Gulf Coast, which is the premium market versus the Waha negative price.
Spiro Dounis: Great. I’ll leave it there. As always, thanks Jim.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Keith Stanley from Wolfe Research. Your question please.
Keith Stanley: Hi, good morning. Just a follow-up on Spot, so you said you hope to have two contracts soon working on others. What’s the soonest do you think you can get to an FID kind of a bulk case and a base case on that project, just a sense of how long it could take?
Brent Secrest: Hey, Keith, it’s Brent. I think we’d like to target before the end of this year to go forward on that project.
Keith Stanley: Okay. Okay, thank you. Second, second question, the stocks lagged a bit recently. Your yield plus growth sort of proposition is very high. How are you thinking about the return on stock buybacks versus the returns you get on growth investments? Is that spread narrowing a lot in your eyes or growth projects still a lot more creative than what you can do with buybacks?
Brent Secrest: Keith, over the last 3 or 4 years, I mean, the stock prices ebbed and flowed just with the overall volatility in the energy sector in the space. So I mean it, it comes and goes. I think we try to keep all the above approach and when we see it attractive to do buybacks, we do that, but it’s been measured, call it $200, $250 million a year. And I expect it to stay in that area, our growth CapEx, our projects that were coming in at attractive returns on capital. That actually grows our business and serve our customers. So yes, I mean, we take a look at it, but you don’t make allocation of capital issue – allocation of capital decisions day by day, depending on where the stock prices. So, we’ve got a longer term view than that.
Keith Stanley: Thank you.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Zack van Everen from TPH and Company. Your question please.
Zack van Everen: Hey, thanks for taking my question. Sorry on liquid marketing, really propane specifically we’ve seen domestic storage and production based on the weekly EI data come in pretty high. I was just curious on your expectations for domestic prices on the propane side and do you see this widening the spreads to the international markets? And then on that, can you just remind us of the sensitivity and exposure you guys have to that spread?
Tug Hanley: Hey, this is Tug Hanley speaking, I’ll just comment on the international market. So, it’s the barrel here in the U.S has the price, the clear across the water. So, we are seeing lower freight prices, which are leading to higher spot export opportunities for us. We are seeing some of those opportunities in the low-single digit numbers materialize, so that’s been a benefit to us on that aspect.
Brent Secrest: And I think overall – and Zack, it’s Brent. Propane is going to be constrained here domestically until new export capacity comes online. And so call that next year, you could probably see storage value start widening out, because that’s the only place can go at this point. I think it’s probably good for some of our other assets or our customers around PDH. But once you get out till next year and the years beyond, we think the appetite for LPGs is there across the world. We think freight is going to be there. So, at some point in time it’s going to come back to the U.S. producer and for them to catch up to line with the export capacity of the freight and the overall global demand.
Zack van Everen: Got it. That makes sense, appreciate that. And then moving to Wink to Webster, I saw a note out that you guys might have some down time at the beginning of Q2. I was curious, one, if you can comment on that. And two, if you can move those volumes to another asset like Midwinter to ECHO one and just the overall impact there?
Unidentified Company Representative: Yes. Hey Zack, this is Jay. Yes. So, we have went out this past week to notify our shippers of downtime in June, starting the first, it’s estimated around 10 days and look until we get actual nominations come in, call it mid-May. It’s kind of hard to figure out how that’s going to impact our customer base.
Zack van Everen: Okay. Perfect. That’s all I have. Thanks.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of John McKay from Goldman Sachs (NYSE:GS), your question please.
John McKay: Hey, good morning. Thanks for the time. I wanted to maybe just stay in the Permian. I would be curious to get an update from you guys on how activity levels are trending so far this year versus your base and fully understand that the producers are not making decisions based on the gas price, but would just be curious. We are seeing this, weak Waha and kind of gas take away issues in the near-term affect the overall activity level? Thanks.
Anthony Chovanec: This is Tony. Yes, essentially, you have seen no effect from the weak natural gas prices. If you and we show this slide often so that people understand it. If you look at what drives the economics of the producers in the Permian, it’s not natural gas. And you are – what we have seen in natural gas process is not going to cause people to shut in or even throttle back oil related natural gas at this point. We haven’t seen it. I guess proof is a little bit in the pudding. If you go and look at everybody has different rig counts, but if you go and look at rig counts in the Permian since the first of the year, they are steady as they can be, actually same can be said for the Eagle Ford (NYSE:F) producing rig counts down, in the Haynesville and you see them down somewhat in Appalachia, but not in your oily basins.
John McKay: Yes. That’s fair. Maybe just from petchemss, octane was pretty strong. Maybe just give us a quick read on how you would expect that to kind of roll out the rest of the year and maybe on the other side where we could expect kind of the PDH contributions to ten-fold as well? Thanks.
Chris D’Anna: Yes. John, this is Chris D’Anna, on the octane enhancement side, we benefited probably 80% of the improved performance was due to volumes and higher volumes and higher fees. And then we also had a favorable hedge performance. And I guess looking forward, if you look at the forward curve for normal RBOB, it shows pretty steady. So, we have at least for the second quarter $1.80 spread. And just a reminder for the biggest contributor for octane enhancement is our MTBE which is made-up of normal RBOB. And what we call uplift, which is just the market price, and really the difference between the normal RBOB spread and the market price. For your second question on PDH, we are expecting when PDH 1 and then with the return of PDH 2 after our outage in June that both of those assets are contributing back to their full amounts.
John McKay: I appreciate that. Thank you.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Neel Mitra from Bank of America (NYSE:BAC), your question please.
Neel Mitra: Hi, good morning. Thanks for taking my questions. I wanted to ask about the activity within the first quarter. I think it was kind of universally accepted in the Permian that the first quarter would have a little bit of a lag versus the fourth quarter of ‘23. Just wanted to hear your insights of what you saw in terms of weather activity coming back and if you could kind of delineate that you are seeing some hot spots in production within the Permian and where you are seeing some lagging versus your initial expectations?
Brent Secrest: This is Brent. Relative to our first quarter, there was definitely an impact because of weather in the Midland Basin processing side. Our Delaware processing plants held up very well. On the Midland side, we had some downtime and it probably extended Graham for 10 days at some point. But that’s the reason there is probably an effect on volumes. But to Natalie’s point in terms of what we see as we go forward and we have a morning supply meeting that you guys are well aware of, it’s routine for every day that Natalie comes in to report our processing volumes that that’s up every single day.
Neel Mitra: So, is it fair to say that there has been a lot of flush production in kind of around the April timeframe after the first quarter?
Brent Secrest: Natalie, I mean we saw the increase our big jump on our side once our new plants came up.
Natalie Gayden: Yes. Once our new plants came up, we had some producers that, as you know, don’t have that acreage dedications, rather they just fling from we won market share. So, we – for example, when [indiscernible] came up, we were immediately full. So, I don’t know if I call it, first production from being down after the winter storm rather than just continue on pace, coming back up after the cold weather event.
Neel Mitra: Got it. And if I could sneak one more in there, it seem like the PGP RGP spreads were especially strong in the first quarter. Just wondering how that contributed to the first quarter results and if you see that as an ongoing trend for the rest of the year?
Chris D’Anna: Yes. This is Christian again. The RGP PGP spreads were wide for the first quarter. And you probably saw in the write up we had some operational issues on both our PDH and our splitter. So, there were there were some puts and takes there. And again, I think looking-forward, we see the contribution from our PDH plants running that’s going to going to help with our overall margin.
Neel Mitra: Okay. Great. Thank you.
Natalie Gayden: Operator, we have time for one more question.
Operator: Certainly, one moment, then for our final question. And our final question for today comes from the line of Neal Dingmann from Truist Securities, your question please.
Neal Dingmann: Good morning. Thanks for the time. My guys, just my question is on future cap allocation. I am just wondering you all boosted the – it looks like 2025 CapEx a bit based on opportunities out there. I am just wondering do you all have – when you look at future years, let’s just consider 2025 sort of the bogey or level for both shareholder return and projects. Just wonder how we should think about the balance between the two, as you start looking at ‘25 and ‘26.
Brent Secrest: Yes. Hey, Neal, good morning.
Neal Dingmann: Good morning.
Brent Secrest: What we had talked about at Analyst Day here a few weeks ago was really from a combination of distributions and buybacks, sort of operating in that 55% to 60% of adjusted cash flow from operations. We have sort of been in that zone since 2021. And that’s sort of what we foresee here for the next few years as well. As far as organic growth CapEx, again, seeing a lot of opportunities in the Permian and also with that the downstream benefits that come with that increased supply as it goes through our value chain. And now, with getting the license for a SPOT, we will be hustling to come in and get it contracted. So, I think we still come back with a bogey of what we put out in 2026 and that’s early is $2 billion and $2.5 billion of which only $800 million of that is currently approved projects. So, we have got some room to fill that up including coming in and with SPOT. We are successful in getting that underwritten SPOT is really a 3-year construction cycle on that. And so anyway, I think that would help come in and address that $2 billion, $2.5 billion organic growth CapEx.
Neal Dingmann: No, that makes sense, right? And just quick follow-up, I won’t keep it just on the buybacks, just Randy, your thoughts on is that sort of as overall just earnings and cash flow keep ramping up just thoughts on would you do anything different with the buybacks or how that sort of factors in?
Randy Fowler: Yes. Neal, I think we will have more flexibility on buybacks. And again we look to be opportunistic with it. So, I mean you have seen us do $200 million or $300 million here over the last few years. I mean if there was a market dislocation, we have got the flexibility to do more. And then certainly, here in 2024 and 2025, we are looking at growth CapEx $3.25 billion to $3.75 billion range. I think once you get back out to 2026 2027, and if we are in a more of what I would say normalized CapEx range $2 billion, $2.5 billion, then we will have a lot more flexibility to do buyback then as well.
Neal Dingmann: Perfect. Thanks for the time Randy.
Operator: Thank you. This does conclude the question-and-answer session of today’s program. I would like to hand the program back to Libby Strait for any further remarks.
Libby Strait: Thank you everyone for joining us today. That concludes our remarks. Have a good day.
Operator: Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
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