MPLX LP (NYSE:MPLX) Q1 2023 Earnings Call Transcript

MPLX LP (NYSE:MPLX) Q1 2023 Earnings Call Transcript May 2, 2023

Operator: Welcome to the MPLX First Quarter 2023 Earnings Call. My name is Sheila, and I will be your operator for today’s call. . I will now turn the call over to Kristina Kazarian. Kristina, you may begin.

Kristina Kazarian: Good morning, and welcome to the MPLX First Quarter 2023 Earnings Conference Call. The slides that accompany this call can be found on our website at mplx.com under the Investor tab. Joining me on the call today are Mike Hennigan, Chairman and CEO; John Quaid, CFO; and other members of the executive team. We invite you to read the safe harbor statements and non-GAAP disclaimer on Slide 2. It’s a reminder that we’ll be making forward-looking statements during the call and during the question-and-answer session that follows. Actual results may differ materially from what we expect today. Factors that could cause actual results to differ are included there as well as in our filings with the SEC. And with that, I’ll turn the call over to Mike.

Michael Hennigan: Thanks, Kristina. Good morning, and thank you for joining our call. Earlier today, we reported our first quarter results. Our business continues to grow and delivered adjusted EBITDA of $1.5 billion, an increase of 9% year-over-year and a new quarterly record for the partnership. Distributable cash flow of nearly $1.3 billion was up 5% year-over-year. Turning to the macro environment. While natural gas prices have come down recently, our long-term production outlook in our key regions remains largely unchanged. In our largest basin, the Marcellus, the cost to deliver for our key producer customers is still below the current prices. In the Permian and Bakken, our production outlook is unchanged as crude prices are strong and prices for associated gas do not significantly impact producer activity in these basins.

This quarter, we advanced our growth projects, which are anchored in the Marcellus, Permian and Bakken basins. We expect these disciplined investments in high-return projects, along with our focus on cost and portfolio optimization continue to drive cash flow growth. While our capital outlook is focused on our current O&S and G&P asset base, we are participating in 3 publicly announced alliances focused on CCUS and hydrogen technologies. We will continue to evaluate low-carbon opportunities where we can leverage technologies that are complementary with our asset footprint and expertise. And we remain — we remain optimistic — sorry about that, about our opportunities in 2023, and are focused on executing the strategic priorities of strict capital discipline, fostering a low-cost culture, optimizing our asset portfolio, all of which are foundational to the growth of MPLX’s cash flows.

Now let me turn the call over to John to discuss our growth as well as our operational and financial results for the quarter.

John Quaid: Thanks, Mike. Looking back over the last several years, our successful execution of the foundational strategic priorities, Mike just referenced, has resulted in a 6.8% compound annual growth rate for our DCF. As you can see on this slide, our growth is not linear and tends to come in stair steps as we develop and bring projects online. Last quarter, we announced a 2023 capital outlook of $950 million, including $800 million of growth capital and $150 million of maintenance capital. Across both segments, we are focused on projects targeted at expansion or debottlenecking of existing assets to meet customer demand. In the L&S segment, our joint venture projects in the Permian are progressing. We see strong demand for the Whistler natural gas pipeline and its expansion to 2.5 billion cubic feet per day which remains on schedule for completion this September.

We also expect volumes on the Wink to Webster crude pipeline to ramp over this year and the next 2 years as the pipeline continues to play segments into service. And as a reminder, these projects are largely financed at the joint venture level and the related capital is not reflected in our capital spending or capital outlook. In the G&P segment, Torñado II, our fifth 200 million cubic feet per day gas processing plant in the Permian came online in the fourth quarter of last year and is already operating near capacity, ahead of our midyear goal. We are also progressing Preakness II, our sixth plant in the Permian and the plant in the Marcellus, Harmon Creek II, both of these gas processing plants are expected to be online in the first half of 2024.

Slide 6 outlines the first quarter operational and financial performance highlights for our Logistics and Storage segment. The L&S segment reported record results with its first $1 billion adjusted EBITDA quarter. L&S segment adjusted EBITDA increased $122 million when compared to first quarter 2022. The increased results were primarily driven by growth in throughputs and higher rates across our L&S business lines. Total pipeline volumes were up 6% year-over-year, primarily due to growth in crude oil throughputs associated with expansion and debottlenecking activities and impacts associated with Marathon’s refinery turnarounds. Terminal volumes were similarly up 5%. Moving to our Gathering and Processing segment on Slide 7. G&P segment adjusted EBITDA increased $4 million, compared to first quarter 2022 as higher throughput fees and volumes were offset by lower natural gas liquids prices.

While our G&P segment is largely a fee-based business, we do have some direct sensitivity to natural gas liquids prices. As a rough rule of thumb, our annual results are impacted by about $20 million for every $0.05 per gallon change in NGL prices. NGL prices averaged $0.77 per gallon for the quarter, as compared to $1.15 in the first quarter of 2022, resulting in roughly a $40 million unfavorable effect versus the prior year period. For the quarter, total gathered volumes were up 21% year-over-year due to increased production in the Utica and the Permian. Processing volumes were up 4% year-over-year, primarily from higher volumes in the Permian driven by increased customer demand and our investments and processing capacity. Focusing in on the Marcellus, our largest basin of G&P operations, we saw year-over-year increases for gathering and fractionation volumes driven by increased customer demand and our investments in fractionation capacity.

Moving to our first quarter financial highlights on Slide 8. Total adjusted EBITDA of $1.5 billion was up 9% from the prior year, while distributable cash flow of $1.3 billion increased 5%. The lower year-over-year DCF growth was partly due to timing of maintenance capital expenditures, which were $30 million higher than the prior year. While we expect annual project-related expenses to be flat with the prior year, these projects are not performed ratably over the year. As discussed last quarter, the first quarter is typically our lowest quarter for project-related expenses. As we look to the second quarter, we anticipate these expenses will increase sequentially as they have done in prior years. MPLX declared a first quarter distribution of $0.775 per unit, resulting in a distribution coverage ratio of 1.6x for the quarter.

During the quarter, we issued $1.6 billion in senior notes, and we redeemed the $600 million of outstanding Series B preferred notes and $1 billion of senior notes scheduled to mature in July. MPLX ended the quarter with total debt of around $21 billion and a debt-to-EBITDA ratio of 3.5x. Our leverage ratio has decreased over the last few years as our earnings have grown while our absolute debt level has remained relatively constant, providing the partnership with financial flexibility. Now let me hand it back to Mike for some final thoughts.

Michael Hennigan: Thanks, John. In closing, MPLX’s growth strategy supports our commitment to return capital to the unitholders. MPLX remains a strategic part of MPC’s portfolio, supported by the over $2 billion MPC receives annually from MPLX distribution. And as MPLX pursues its growth opportunities, we expect the value of this strategic relationship will continue to be enhanced. Our business continues to grow and generate strong cash flows. By advancing our high-return growth projects anchored in the Marcellus, Permian and Bakken basins along with our focus on cost and portfolio optimization, we expect to continue to grow our cash flows, allowing us to reinvest in the business and return capital to unitholders. And for 2023, we expect the distribution to be our primary tool to return capital to unitholders. Now let me turn the call back over to Kristina.

Kristina Kazarian: Thanks, Mike. . With that, we’ll now open the call to questions, Sheila.

Q&A Session

Operator: . Our first question will come from Jeremy Tonet with JPMorgan.

Jeremy Tonet: Just want to pick up with some of your later comments there as it relates to capital allocation. I was just wondering if you could kind of update us, I guess, on how your thoughts on capital allocation have evolved over time and where you see it today? And what factors kind of have driven that change or evolution of views over time?

John Quaid: Jeremy, it’s John. Great question. I’ll take that and then let Mike comment as well. Certainly, as we look at where we are now, right, we’re — as we said last quarter, we’re focused on the distribution. We certainly, over the last few years, have had opportunities on the repurchase side, and we’ll continue to look at that. We’re perhaps more opportunistic than we have been in the past as we commented last quarter. And even if you think back, we even tried to supplemental at one point, I think we’ve tried that and maybe got some reaction on that one that maybe is not still a tool for us, but not our primary focus. So as we look at where we are now, again, looking back at last year’s numbers, $6 billion of EBITDA, $5 billion of DCF, $4 billion of free cash flow, paying out $3 billion in distribution, $1 billion left over, we’re sitting in a strong position.

Balance sheet is strong, gives us that financial flexibility to think about capital allocation across the business. As you see, we continue to focus on strict capital discipline. We haven’t changed our outlook of $800 million of growth spending for the year. And really, I think as we’ve kind of pivoted here recently, we see the distribution as our best opportunity to drive value for all unitholders while still supplementing that with opportunistic unit repurchases.

Jeremy Tonet: Got it. Just curious, I guess, on the driver there and the shift towards more distribution growth over unit repurchases, if you could provide a little bit more color on kind of what were the drivers in that thought process?

John Quaid: Yes. I mean I think as I was saying, Jeremy, when we looked at kind of the space, our opportunity, you think even through COVID and maybe if you want to call it the COVID recession, we continue to grow the cash flow of the partnership and have kind of built up coverage as we pulled back — we pulled back on our distribution, others may have cut. And now that we look at where we are, we certainly see that tool as the one that best — gives us the best opportunity to solidify that value for all unitholders. That certainly has progressed over time. I mean it’s one thing. If you think about the over $1 billion of repurchases we did, we did at an average unit price of $29 a unit, right? We’re sitting at about $35 today. So we always continue to look at where those levers are, but again, I think over time, as the options have evolved, right now, we see the best opportunity to drive value in the distribution.

Michael Hennigan: Jeremy, it’s Mike. I’m going to add that in the quarter, there was less volatility than normal in the unit price. We still have buybacks on the tool belt. But as John said and we said in our prepared remarks, we want investors to know we’re committed to growing cash flows, and as a result, we’re committed to growing our base distribution. We still have everything on the tool belt, but we’re going to lean harder in general towards distributions to show investors we’re continuing to grow the cash flows.

Jeremy Tonet: Got it. That’s helpful. And just one last one, if I could. Mike, I know that MPLX isn’t a forward guidance company. But last quarter, you provided a bit more color as far as kind of mid-single-digit growth potential, and I was just wondering, a strong result this quarter. Is that repeatable? Is that part of kind of that mid-single-digit growth that you were talking about? It seems like Street expectations in future years still aren’t at that level. So just wondering how we should think about that or what people might be missing?

Michael Hennigan: Yes. Thanks, Jeremy. It’s a good question. And a lot of people have written it in a certain fashion. What I meant was a general outlook of the business, but it will be stair-step, particularly on the natural gas side of our business. So let me just give you the facts, and then I’ll come back to the comment. The fact is our distributable cash flow grew 6% in 2020 despite COVID. It grew 11% in 2021. It grew 4% in 2022. So if you look at that 3-year CAGR, it was 6.8%. And you can see a little bit of the stair-step, up 6%, up 11%, up 4%. So it’s bouncing around a little bit. So I’ve gotten a lot of questions about how we view our growth. So I was just trying to give what I consider just a general outlook of the business.

And if you look at the last 3 years, I think that supports the statement. I’m hoping that helps. And thanks for commenting that we’re not generally a guidance company, but just trying to give you a little bit better feel for how we think about the business and the growth of the cash flows.

Operator: Our next question will come from Brian Reynolds with UBS.

Brian Reynolds: Maybe just to follow up quickly on capital allocation priorities and the growth CapEx. You’ve discussed the low multiple type build projects already in the backlog. But kind of curious if you can just give us maybe a ’24, ’25 outlook towards CapEx? Are there attractive growth projects that MPLX is looking at that could potentially impact share buyback or unit buybacks in support of that DPU growth over the long term?

John Quaid: Brian, it’s John. So I don’t know that we’re ready to provide ’24 to ’25 guidance at this point, right? You have seen us the last few years, talk about kind of a zone for where we’re looking, what that piece of our capital allocation looks like. I don’t know that we’re anticipating a major change there, but probably a little bit early to talk about ’24, ’25 at this point.

Brian Reynolds: I guess just as a quick follow-up. Is it fair to say that the projects would be pretty similar to the current slate of projects? Or is there anything else that MPLX is looking at?

John Quaid: Yes. I mean if you think about some of the big ones I talked about, we’ll still be spending some money on in ’24 to get them up and running. But it’s kind of been our playbook, right? We continue to look at opportunities and the best ones we see are across our footprint in the basins and areas where we’ve got strength, on the G&P side or strong tie-ins with MPC as well. So I think we’re going to continue to look at those opportunities. And that’s what we kind of got in the pipeline right now, but it could always change, but that’s where we are right now.

Michael Hennigan: Brian, it’s Mike. I’m just going to add. Our asset base is big enough. We’re roughly $6 billion of EBITDA at this point. Our asset base is large enough that we get these organic growth opportunities that are not headliners, but they provide meaningful returns. And like I just answered to Jeremy’s question, when you look at growing DCF 6%, 11%, 4% over the last 3 years or about a 7% CAGR, it kind of shows — hopefully, it shows the market that we have opportunities. We’re continuing to grow the cash flows, albeit not these big headliner type projects, just a lot of smaller higher return projects, which we think are easily executed and just drive right to the bottom line quickly. So to your question, yes, there’s a backlog of things that we’re looking at that are similar.

We’ll continue to grow the asset base and kind of bolt on to all the places that we see where growth can be. And it’s primarily in those basins that we’ve talked about as the larger ones, but we still have smaller projects occurring in those other basins as well. So if we spend the capital that we’re thinking about over time, we think we’re going to continue to grow those cash flows just the way we’ve described.

Brian Reynolds: Great. And just as my one follow-up, we have seen some CapEx inflation on some Permian-related long-haul projects. Could you just give us an update on your current kind of budget versus actual so far on just Permian nat gas projects? And are they expected to come online on time and on budget?

Michael Hennigan: Yes, I’ll let Shawn take a stab at that one. .

Shawn Lyon: Thanks for the question. This is Shawn. One of the — we really — on Whistler, we continue to see strong demand for that contracted capacity there and are pleased with that. The expansion that we’ve announced previously that should come online in September of this year really is on plan and on budget. So we’re pleased with that. And again, the dynamics or fundamentals for the Permian gas takeaway are still strong. So thanks for the question.

Operator: Our next question will come from Keith Stanley with Wolfe Research.

Keith Stanley: There was a reference to portfolio optimization as a focus, I think, a few times on the prepared remarks and in the release. Any updates there? I assume you’re alluding to some of the less core assets and regions? Are you more optimistic on finding opportunities for portfolio optimization?

John Quaid: Keith, it’s John. Thanks for the question. I think there, again, maybe kind of similar to Mike’s comments on the capital side, it’s probably more little singles and doubles. We had some maybe even at a lower level than our noncore basins. We’ve had some asset sales here and there if you look back at our results over the last year or so finding maybe terminals that maybe fit better in somebody’s portfolio than ours or, for example, on the G&P side, we might have some natural gas supply lines for utilities that the utilities might be interested. So it’s probably been smaller things like that, that we’ve been doing that we probably don’t raise to a level where we talk about those specific items in our materials, but again, those continue to drive the cash flow performance of the portfolio. I’d say on the basins, we continue to look there, but really don’t have any pressing or immediate updates on that right now.

Keith Stanley: Great. And separate question. Just you highlighted there’s still $1 billion of excess free cash flow basically after distributions and clearly pointing to more distribution growth as a focus. Aside from distributions, do you look at other potential options? And I guess I’m asking specifically our acquisitions more likely in the mix just as you have a lot of this financial cushion and capacity?

John Quaid: Yes. Thanks for that. I’ll start, and then I’ll let Mike comment as well. I mean, certainly, we have the company financially in a position where if the right opportunity with the right type of high-quality assets that fits into our strategy and our footprint and has the right risk-adjusted return, right? If we had all those criteria and some others, we’ve got the partnership in a position where we can take advantage of those. But as I think you’ve heard us say over a number of quarterly calls, we’re pretty strict in how we look at that. It just tends to be more challenging to get the returns on those type of projects versus maybe the opportunities we have organically within our own system in the places where we operate.

Michael Hennigan: Yes, Keith, I’m going to add to what John just said at the end, because that’s really the key. In order for us to look at something else, it’s got a hurdle what we can do on our own, and we just had such a good track record of finding higher return projects that we haven’t reached out to some of these others. We continue to look at a lot of things. I think people are wondering if we’re looking at different opportunities, we are. We have a whole group that does that. And at the end of the day, we compare it to what we have as our plan that we have total control over. As you know, in the M&A market, we don’t have control of that. So we compare it to what we have internally. And if there’s an opportunity, we’re not opposed to pursuing it, but we do have the words we use is strict capital discipline and believe in getting really strong returns with the capital that we invest.

Operator: Our next question comes from Theresa Chen with Barclays.

Theresa Chen: I’d love to just sense of how volumes are trending across your G&P footprint just in light of lower natural gas prices and going back to your comment earlier, Mike, about production economics still being intact, what are you hearing on the ground from your customers?

Michael Hennigan: Yes. Thanks, Theresa. I’m going to let Greg start, and then I’ll come in after that.

Gregory Floerke: Theresa, this is Greg. As Mike mentioned earlier, the — our largest area, which is Appalachia, particularly Marcellus, is one of the lowest cost production basin. So if you look at the macro drivers for what determines activity, the production cost level versus gas price, the amount of firm transportation capacity commitments by various producers and then hedging activity. And I think particularly in the Marcellus, the boxes are check there for most of the producers. The — if there’s one thing we see, it’s probably a shift — the potential for a shift from lean gas, non-processable gas into rich gas basins. Definitely, if you rank the basins, the crude basins are obviously the most attractive with good crude pricing levels versus gas.

And that activity is going to continue regardless of the natural gas prices. Waha is a good example of that, negative prices at times, but good crude prices still spurring growth. The — in general, we see more — likely more shift to ethane recovery versus rejection, because those recovery spreads for fractioning ethane are positive. But we think that there should be continued potential shift over the rich gas areas from maybe more dry gas areas, which is very supportive of our large processing and both ethane — de-ethanization and C3+ fractionation base in the Northeast in particular.

Michael Hennigan: Theresa, it’s Mike. I’ll just add. I think Greg hit it on the head. As you see fluctuations in gas prices, and obviously, everybody has seen them over the last year or so. The rigs move around depending on wet versus dry, depending on the region and whether it has takeaway capacity, et cetera. Overall, we’ve been bullish natural gas, and we continue to be that into the future, particularly into a low carbon future. But there’s going to be some stair steps that play itself out. . Takeaway capacity from the U.S. will change with more LNG next year and beyond. That’s one thing that will happen as hopefully, permitting reform gets a little bit more advanced. You’ll see some projects advance on a more timely fashion. But in general, I think we’re still believing that the U.S. natural gas market is advantaged globally, and it will be an area of growth for us for some time.

Theresa Chen: And in terms of the seasonality in your project-related expenses and the anticipated increase quarter-over-quarter heading into second quarter, is there a magnitude you can point to on how we should frame that?

John Quaid: Theresa, it’s John. Thanks for the question. Yes, I mean, again, I think it’s something that flows similar to year-to-year. If you look at last year, 1Q to Q2, those costs were probably up about $30 million. We could maybe see something a little bit higher this year, but at least that gives you a little bit of a sense of the magnitude. And hopefully, that’s helpful.

Operator: Our next question will come from Michael Blum with Wells Fargo.

Michael Blum: Just had a question on the L&S segment. You had really strong volumes on the crude and terminal side. I’m just wondering, is this kind of a sustainable level? Or is there anything specific going on this quarter to point to?

John Quaid: Michael, it’s John. Thanks for the question. I think there’s a couple of things there. One, as we highlighted, there’s some of that effect that’s driven off of the MPC refinery turnarounds. And things to remember is our pipelines of crude into the refineries and product out, they aren’t the same level at every refinery. So depending on which refinery is up or down, you may or may not see the effect, for example, on the crude side if the crude coming into that refinery is on somebody else’s pipeline. So there’s a little bit of that effect in there. And again, too, I mean, one of the things that’s driving that growth is also our pipelines around the crude gathering business as we continue to grow that primarily in the Permian as well. So that’s kind of baked into those numbers. So it’s the mix of those 2 things that’s driving the relative increase.

Operator: . Our next question will come from Doug Irwin with Citi.

Douglas Irwin: Maybe to follow up on that last comment around some of the turnaround schedules. And if you look at kind of maintenance CapEx for 1Q, you’re already about 1/3 of the way through the annual guidance number here. So just curious if there’s kind of any heavy maintenance activity to call out in the quarter? And kind of how we should be thinking about the rest of the year given the MPC’s turnarounds tend to be kind of more back half weighted?

John Quaid: Yes. No, great question, Doug. So part of what’s happening on the MPLX side with our maintenance capital, we do have some timing things this quarter. Again, we haven’t changed our outlook of $150 million for the year, a little bit higher this quarter at $44 million, driven by a couple of major items. One, on the marine side of the business, when we replace assets, barges, vessels, but we maintain at the same level of total assets, we treat that and report that as maintenance capital, because we’re not really growing our EBITDA, we’re kind of maintaining it. So we did have some asset replacements on the marine side that are just specific to that quarter that we don’t have planned for the rest of the year. We also had some work around compressor station in Oklahoma, some repairs we were doing, and that work was completed in the quarter, and we don’t see a significant item like that over the balance of the year.

So again, — it’s more the maintenance on our assets, not necessarily tied to MPC’s turnaround schedule.

Michael Hennigan: Doug, it’s Mike. Just for clarity, MPC’s schedule is front half weighted in ’23, mainly in Q1 and Q2. And last year, it was back half weighted mainly Q3 and Q4. So just to give you that color on MPC as well.

Douglas Irwin: Okay. Great. That’s helpful. And then maybe just another follow-up on Brian’s earlier question about this Permian gas takeaway. We’ve seen some peers file additional permits here recently for Permian pipelines, which seems to kind of signal demand for more capacity kind of beyond what’s already been announced. I’m just kind of curious to get your broader thoughts on Permian gas takeaway and kind of how you see these dynamics playing out over the next few years?

Shawn Lyon: Doug, thanks for the question. This is Shawn. As I mentioned, we’re continuing to be — the gas takeaway, the demand continues to be strong. Our Whistler investment is paying out. And again, we look forward to the expansion of Whistler and Matterhorn. And we continue looking at future opportunities in that area. But we see that strong demand, as Greg and Mike have said, base to get to the crude. So we’re pleased with where we’re at and look forward to the future opportunities that we see.

Operator: Our next question comes from Neal Dingmann with Truist Securities.

Neal Dingmann: First question is just on the potential of the Marcellus expansion and bottleneck. I know you’ve spoken in the past. I believe I’m just kind of curious on, number one, the amount of space that you still have there on the existing processing plants and just sort of what the thoughts are on investing capital there in the near term given gas prices?

Gregory Floerke: Neal, this is Greg. In terms of the capacity, we process over 6 billion cubic feet a day of gas in Appalachia. Our utilization has continued to be in the high 80% to 90% range over the last few years. And so we see some producers not continuing to drill to maintain levels, some are growing. And so generally, though, it’s sort of flat to slight growth in the processed volume area, but also drives fractionation. As the — some of the rigs shift to dry gas, you typically see much higher volumes on IPs with dry gas than you do with rigs. So it opens up more takeaway capacity. As we also see more ethane recovery, it opens up takeaway capacity on the residue lines. So — in terms of individual producers, we’ll continue to see growth. Some of our recently announced Harmon Creek II project expansion is a sign of that. So on a producer-by-producer basis, there is growth in some areas, essentially with room made for that capacity by declines in others.

Neal Dingmann: Very good. And then you touched on this, I just want to make sure I understand just on what you most recently seen on the MPC refinery runs. I’m just wondering any change on expected activity or utilization for you all?

John Quaid: Neal, it’s John. That’s a great question. And I think sometimes the challenge for folks to understand what kind of sensitivity we have or frankly don’t have, the changes in MPC’s utilization. So — and it’s really driven off of the MVCs and in some cases, right, some of our assets are fee for capacity. So we’re getting paid to run and operate those assets regardless of utilization levels. So while we do have some sensitivity to MPC’s refinery utilization, I think, it’s maybe a little bit less than folks might think it is.

Operator: And our last question will come from Neel Mitra with Bank of America.

Indraneel Mitra: Firstly, I wanted to ask what inflation adders you have in place? And maybe how much they are, are they kind of FERC related? And where they reside or are they in L&S primarily or also in the G&P segment? And finally, when you would expect the timing of inflation adders to impact earnings?

Shawn Lyon: Neel, thanks for the question. This is Shawn. As you know, FERC is — they’re going through their process now. It’s very public, very transparent to determine what that index rate is for the entire industry. And then once we — we should hear in the next couple of weeks. Once we get that, we’ll go through our process based on their guidance system by system to make sure we can implement it and then we’ll post our tariff at the end of May with implementation in July. So I don’t want to get ahead of ourselves, but really, it’s — we’ll know more in a month where we’re at, but we’re just following their guidance as they move through their very public process. So hopefully, that helps Neel. So — but thanks for the question.

John Quaid: And Neel, it’s John. Let me just add generally, right? So Shawn is speaking to the pipeline portion of our business. We have other inflation escalators. Some are fixed, some are linked to CPI, some are linked to other indexes. Some of those are effective Jan 1, some were effective July 1. So Shawn is speaking specifically to the pipelines, but we do see — our contracts do have those escalators in across other portions of the L&S business, and we even see it a little bit on the G&P business as well. So again, just generally giving you — but it’s a mix. Some are fixed, some are indexed to certain items. And again, they have different effective dates as well. .

Indraneel Mitra: Got it. My follow-up question, your equity interest in the Whistler expansion and also Matterhorn Express. One of your peers talked about their expansion being delayed a couple of months. I was just wondering if you could comment on if there’s any potential delays or bottlenecks for your projects going forward right now or if you see any constraints?

Shawn Lyon: This is Shawn again. We are not seeing on our Whistler expansion. Again, we’re not seeing any delays, and we’re on plan and on budget.

Kristina Kazarian: All right. With that, thank you for joining us today, and thank you for your interest in MPLX. Should you have additional questions or would like clarification on any of the topics discussed this morning, members of the Investor Relations team are available to take your calls. Have a great day, everyone.

Operator: Thank you. That does conclude today’s conference. Thank you for participating. You may disconnect at this time.