Subhash Chandra: You’re correct. I was mistaken it with the VPP. Great. Thank you.
Michael Kennedy: Yes. No problem.
Operator: Our next question comes from the line of Umang Choudhary with Goldman Sachs. Please proceed your question.
Umang Choudhary: Hi. Good morning and thank you for taking my question’s. First, thanks for sharing your thoughts on the macro. I wanted to follow up on your thoughts around on the propane markets and butane markets. It sounds like you are expecting a pretty decent rebound in demand this year and also next year? With inventory levels high for propane, how are you thinking about when that actually translates into a price action? And then I have a follow-up on the natural gas as well.
David Cannelongo: Thanks, Umang. What we’ve seen so far is to go back to our last call you’ve got oil prices down about $10, but propane down about $0.02 a gallon from that time. So overall, propane prices are doing quite well in the environment, especially given in December, we were really at the top of the five-year range on historical inventories. As we move through the first quarter, you’ve seen very strong U.S. exports. We expect that to continue at a minimum through the balance of the quarter. So, we move back down to that five-year range, both on an absolute level on a days of supply level. When we model out the balance of the year, we see inventories as we enter the fall returning to five-year historical norms on an absolute level and obviously lower than that on a days of supply basis.
So that kind of, I guess, summarizes our fundamental view on why we believe propane pricing will improve relative to other commodities throughout the year. But again, if you look at what’s just exporting so far here in the first quarter, arbitrage is open, export volumes are high. The other thing that we called out is the increase in VLGC capacity, which has reduced freight levels about 35% from December to where we are here today, and we expect that to continue into the summer, which will even tighten the differential between U.S. prices and Mont Belvieu international markets.
Umang Choudhary: All right. That’s really helpful. I guess to follow up on the natural gas macro and more on the pricing side of the equation, how are you seeing some of the hub’s kind of trade with the lower activity, which you’re expecting in the Haynesville? Will you see a return in some premium pricing? I mean you took it down to like $0.10 to $0.20 recently. Would you see a premium emerge if that plays out?
Michael Kennedy: We could see that play out. Generally, we get NYMEX Henry Hub pricing and then have a Btu improvement because we leave a lot of the ethane in the gas stream. So that’s kind of the $0.10 to $0.20. It’s kind of generally around 10% premium to whatever the NYMEX price is. So, if it’s $2.50 to $3 NYMEX, you’d expect a $0.20 type of differential with that. So that’s why it’s come off from last year’s premium, but we saw last summer, a lot of premium pricing on the pipes that we actually sell because a lot of it’s more on the kind of the eastern side of the Gulf and that tended to get premium pricing compared to other areas. So, we’ll continue to see how it goes. But our transport does go to the really strong pricing hubs in the summer. So hopefully, that trend we saw in ’22 will also occur in ’23.
Umang Choudhary: Helpful. Thank you.
Operator: Our next question comes from the line of David Deckelbaum with Cowen & Company. Please proceed your question.
David Deckelbaum: Thanks, Mike, I appreciate the questions. Mike, I guess, from your prepared remarks, you’re not going to be entering the Haynesville anytime soon. But…
Michael Kennedy: That would probably be correct.
