Plains All American Pipeline, L.P. (NASDAQ:PAA) Q2 2023 Earnings Call Transcript

Willie Chiang: Sunil, this is Willie. I’ll give you my thoughts on capital allocation, and then Al can certainly add to it. As we think about capital allocation, there’s two primary things. One, we need to drive free cash flow. You don’t – you can’t do anything if you’re not driving free cash flow. And the second one is really around disciplined around everything we do, but particularly on CapEx. So as we think of the order and what we – how we allocate going forward. One, we want to protect our commitment to return capital to the unitholders. We laid out this capital allocation framework. So that’s going to be high on the list. And then we go to strategic high-return Bolt-on projects that we will consider that makes sense to help us efficiently grow the business, opportunistic buybacks and the press are probably further down the list.

Because we want to maintain financial flexibility and a strong balance sheet. So, that’s what we kind of juggle back and forth. But as you think about the priority and the way I see it, that’s kind of the way that the order. Al?

Al Swanson: Yes. No, that is accurate, Willie. I would add, yes, the note we have coming up in October, $700 million. We exited June with $900 million of cash, so that will be repaid out of that. Again, as I commented on an earlier question, we’ve left our leverage target the same at 3.75% to 4.25% and intend to operate at the low end or below. And that is partially to have some capacity on our balance sheet, to be able to weather through, the industry ups and downs as well as be able to fund things as we need to. Ultimately, at some point in the future, we will look to address the press, but there’s no near-term plan to do that. But over time, we would expect that would be a good use of some of that capacity. And hopefully, it would be taking those out with that. We don’t believe we should be using common equity at this time due to the valuation.

Sunil Sibal: Good. Thanks.

Operator: I show no further questions at this time. I would now like to turn the call back to the company for closing remarks.

Willie Chiang: Thanks. Well, listen, everyone, thanks for your time and joining us this morning. We hope to see you soon and have a nice weekend.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.