John Mackay: Hey all. Thanks for the time. I’m going to start on a pretty simplistic one. You might have a straightforward answer. But just in terms of the 2024 guidance increase going from $8.0 billion to $8.16 billion, is that all on STX? Is there any other change in there that you can frame up? And maybe just how do we think about that increase versus kind of what you were guiding for the EBITDA on those assets this year?
Kim Dang: The $8.0 billion when we published, that was slightly below $8.0 billion, but it rounded up to $8.0 billion and so — and then the $8.16 billion, the only difference between those two numbers is the EBITDA on NextEra. And the EBITDA on NextEra for 2024 is consistent with what we were expecting.
John Mackay: That’s — that is clear, and thanks for that. And then maybe just shifting gears, talk about RNG contributions in the quarter a little bit, kind of where that ended up trending for the year, how much of the kind of ’23 softness versus budget was driven by that and how much could it bounce back in ’24?
Kim Dang: Yeah. I mean, I would say the contribution from the RNG plants in the fourth quarter was relatively small. And we do have three plants in service now. They are not running as consistently as we would like them to run. And so, I think that’s what we’re focused on now. We recently took over operations from Waste Management and we think that once we really get our arms around this, we will be able to run these — get these to run very consistently. That may take a couple of months into 2024, but we think we’ll get them running consistently.
John Mackay: All right. Appreciate that. Thank you. See you next week.
Operator: Next, we will hear from Tristan Richardson with Scotiabank. You may proceed.
Tristan Richardson: Hey, good evening, guys. Just maybe a question on the STX. Could you just talk a little bit about what’s driving the growth in ’24 versus ’23? And then, with respect to integration of those assets, are there obvious sort of near-term low-hanging fruit type of projects as part of the integration that could drive further or even sort of similar type of growth in ’25 and beyond?
Kim Dang: Sure. So, between ’23 and ’24, there is an expansion project, contracted expansion project that came online, it came online late last — late — very late last year. And so, that incremental EBITDA between ’23 and ’24 is locked-in with customer contracts. With respect to ’24 and ’25, we don’t see anything as significant as that driving the growth. We talked about longer-term multiple being between 7 times and 7.5 times, coming down from the 8.6 times that we bought it. And that was driven a lot by — a small amount by cost-savings, but really by some commercial synergies and some incremental business that we think we can bring to those pipes, but that really occur three to four years out.
Tristan Richardson: Appreciate the color, Kim. And then maybe just following on a previous question around leverage. I mean, can you talk a little bit about where you sort of see the high end of where you’re comfortable should something sizable, whether it be M&A or organic, come across? Where you see yourself sort of the high-end in terms of comfortable on leverage?
Kim Dang: Yeah. So, our leverage targets are 4.5 times and there’s no change in that. And so, I think we feel like that’s appropriate given the size, scope of our assets, the stability of our contracts that are underpinned by take or pay contracts with good customer credit quality. We run, as I said earlier, around 4 times at the end of the last three years. And we see value in having some cushion for opportunities and/or risk if they should arise. And so that gives us plenty of capacity to execute on some opportunity if we found it attractive. Now this isn’t burning a hole in our pocket. We don’t have to go out and spend this money today. I mean, you’ve seen us, as I talked earlier, acquire those NextEra assets. Not much impact to our debt to EBITDA multiple.
We purchased 500 million in shares, not much impact. And so we’ve been able to do a lot of these things without huge impacts, but we’ve got a lot of capacity there if we find something that is a good strategic set, and that has attractive economics for our shareholders.
Tristan Richardson: That’s helpful. Appreciate it, Kim. Thank you.
Operator: Our next question will come from Neal Dingmann with Truist. Your line is open.
Unidentified Analyst: Hi, guys. Thanks for the time here. This is [JP Vachon] (ph) for Neal. I had one clarification question just kind of, what we were talking about earlier. The Permian nat gas egress that you guys were referring to, the 2026, I guess late ‘26, ‘27, what you’ve been hearing from customers, has that changed at all, I guess, maybe from last quarter or two quarters ago? Has the tone changed from customers there or has that kind of been the expectation for some time there?
David Michels: Yeah. I don’t think it’s changed much. I think it’s been the expectation. I think as the market — both the market side is coming together from the LNG standpoint and the producing side, I think it’s probably a perfect match in terms of timing. But I do sense that there is more of a need to ensure that there’s a solution in place, probably a little more urgent than maybe we had on the last couple of calls.
