Plains All American Pipeline, L.P. (NASDAQ:PAA) Q3 2023 Earnings Call Transcript

John Mackay: I wanted to touch on kind of broader picture for Permian long haul. We’ve had some changes in the market recently, seminal coming out of service, the Gray Oak open season seems like it’s about to go forward. I guess I’d just be curious to hear from your side where you see kind of overall balances for the market over the next couple of years and whether or not we could see more conversions out of crude service and to something else?

Willie Chiang: Yes, John, this is Willie. It’s — there’s a lot of puts and takes to this. When I think about the moves that are — the proposed possible projects, these are, what I would call, smaller increases, maybe 100, 2000 [ph] barrels a day. When we think longer term, with the growth of the Permian, we just — we’re consistent with our views that capacity is going to get tight. I don’t think new build long-haul lines are going to get built. With the Seminole [ph] announcement, it’s taken a little bit out. So there’s a lot of puts and takes against it. But long term, our views have not changed. It’s still going to be tightening capacity in a market that’s going to be harder and hard to hold long-haul lines.

John Mackay: All right. That’s fair. Maybe shifting gears. You touched on the working capital a little bit in the quarter. And I know it’s transitory and should come back. It was just larger than we — it looks like we’ve seen in a couple of quarters. Is there a — when we’re thinking about capital returns next year, potentially buybacks. Is there a kind of minimum level of cash you’d want to see on the balance sheet? And does this quarter’s kind of larger working capital draw, affect that math at all?

Al Swanson: This is Al. We do see a fairly significant quarter-over-quarter working capital flexes. And we used the word working capital as if we’re building inventory and we’re borrowing short term on our credit facilities, it’s a working capital use, although technically, they’re both in working capital. So it’s kind of working capital and merchant requirements. We do see quarter-to-quarter fairly significant moves generally over a 12-month period, all those normalize out. We normally model assuming lower cash balances than what we’ve been running and we’ll be showing that when we show you the year-end balance sheet because the cap balances will have been consumed with the note we just paid down here in October. But normally, we would model about $100 million of cash on the balance sheet and we use our credit facilities in the commercial paper markets to balance this out.

And it is timing. We end up reverting back to more of a normalized balance over the course of a few quarters.

Operator: Thank you for your questions. This concludes today’s conference call. Thank you for participating in today’s call. You may now disconnect. Everyone, have a wonderful day.