Gabriel Moreen: Great, thanks.
Operator: [Operator Instructions] The next question comes from Michael Blum with Wells Fargo. Your line is open.
Michael Blum: Thank you. Good morning, everyone . So I just wanted to stay on this tuck-in acquisition here and just get your thoughts on whether this is kind of a one-off opportunity, or do you think there’s going to be other potential kind of tuck-in deals here that we should expect to see over the next couple of years?
Willie Chiang: So Michael, this is Willie. I mean, the way we look at this is we’ve got a great France rise across North America, particularly around the Permian. And if there’s anyone that can extract synergies in these opportunities, it should be us. But we’re going to remain very, very disciplined as we approach this. And so when you think about what we might do, it’s things like these Bolt-on Acquisitions, bite size Bolt-on Acquisitions that make a lot of sense to us. So I would expect that we are going to continue to look at opportunities there and if there are strong return projects that are strategic and meet the hurdle rates of our returns, we are going to consider them. But we’ve got to stay disciplined and we look at a lot of things, and we end up with a few. Jeremy, anything to add on this?
Jeremy Goebel: No, Michael, I would just say that it’s consistent with the advantage transaction, the West interest in Cactus II last year in this one. So this is a trend, but it’s something like Willie said, it’s got to fit for us. It’s got to work for them. We’re going to be very disciplined. As we said, we look at a lot, but it’s got to compete for capital with the rest of our potential uses.
Michael Blum: Okay great, that helps. And then just in light of today’s announcement on the Canada investment that you’re going to be making. Just wanted to confirm that your long-term kind of annual capital spend rates are unchanged.
Willie Chiang: I’ll take that one. Absolutely. We expect to stay between the $300 million to $400 million range as we go forward. We’ve said average because there could be some lumpiness in some of the timing around the projects, but you can expect us to stay within that range for a number of years.
Michael Blum: Thank you.
Willie Chiang: Thank you.
Operator: [Operator Instructions] The next question comes from Keith Stanley with Wolfe Research. Your line is open.
Keith Stanley: Hi, good morning. I wanted to stay on the frac expansion project. And so just want to clarify, the project is EBITDA neutral in 2025 and beyond because of the existing contract rolling off. I assume that existing contract you have is in the money or favorable in some way. Could you just give more color on the dynamics there on why the EBITDA from the project itself would be offset?
Jeremy Goebel: Sure, Keith. This is Jeremy. So that contract was entered into about 25 years ago, and so we’re changing the relationship that we have with that counterparty unit. So I view this is — depends on how your view of commodity exposure is. We gave you a sense for where it is at $0.50, it would be in the money at $0.70, it wouldn’t be. But you have to look at the $200 million as a series of projects. It’s gathering projects, it’s connectivity between facilities. The frac expansion is just a small portion. That’s the uniqueness of the brownfield expansion. So this is a series of projects with diverse customer bases for very long term. So we’re excited about the durability of the cash flow and predictability. So it’s basically taking one-third of our frac spread exposure and converting it to a durable cash flow but we are changing the contractual nature that we have servicing this customer as part of this process.
Willie Chiang: And Keith, maybe to add one thing. This just reinforces the integrated system we have, but when you really look at it, we talk about our saddle and the seasonality of it. It goes back to trying to increase a portion of our cash flow to the fee-based side and it should flatten that saddle as we go forward. So we think that predictable more durable earnings long term should help as far as we think about valuation for our units.
Keith Stanley: Got it. Thanks. And sorry, I’m going to stick with NGLs for my second question. Just — obviously frac spreads came down a lot in Q2, although propane is kind of coming back with oil now. Can you comment at all on where you stand on 2024 exposure and how open you are to pricing? And then relatedly, just looking at NGLs in 2024, these turnarounds seem like they have a pretty big impact this year, $50 million in Q2. So should we assume that turnaround impact would reverse and be a benefit in 2024 looking forward? Or how should we think about that?
Jeremy Goebel: Sure. There’s two questions there. On the turnaround, I don’t think we have any material turnarounds projected for next year. And I don’t think the impact was quite that big for this year. So I would view it from a capital standpoint, yes, there’s substantial maintenance capital that goes into them. But — so from a cash flow standpoint, you won’t have the maintenance capital and you’ll have some additional production. But I don’t think the impact is in the neighborhood of $50 million. Your other question, can you repeat that?
Willie Chiang: Really, frac spread exposure, and I’ll take this. Keith, we don’t disclose what we’re going to do on frac spec exposure. You’re right, frac spread exposure were high. They’ve come off significantly. They’re coming back. And what I would tell you is we look at – we try to time and be very thoughtful about how we do hedge forward. And as we go forward into 2024, we’ll probably share – we’ll definitely share more at the end of the year, but the market is improving as far as the frac spread environment for 2024.
Keith Stanley: Thank you.
Willie Chiang: Thank you.
Operator: Please standby for the next question. The next question comes from Neal Dingmann with Truist Securities. Your line is open.
Neal Dingmann: Thanks guys. Can you just talk about twofold, one on the ’24 CapEx, expand a little more detail. And then secondly, just on capital allocation around that 3.5 target? Thank you.
