Willie Chiang: Yes. The activity balance hasn’t really changed very much. But we do see some growth in the Midland Basin, but we think it will be disproportionately in Delaware Basin.
Operator: Thank you. Our next question comes from the line of Jeremy Tonet of JPMorgan Securities. Please go ahead, Jeremy.
Jeremy Tonet: Just want to come back to the re-contracting, if I could. I want to better understand, I guess, when you say, terms consistent with rates, what that means exactly? Does that mean, like there’s a higher amount contracted at a lower rate or is there something else? Just wondering, why it’s consistent with rates and not just those at the rates?
Willie Chiang: It’s a mix of what we’ve got. What we don’t really want to get into the specifics of every pipe and what the tariff is. I think the key point on that Jeremy is, when you look at the recently built pipes, it’s $1.25 to $1.50. Essentially, what we’re telling you is that, we’ve been able to re-contract successfully with our partners at rates that are competitive with that. Going forward, I think it’s a reset and that we don’t have, we have less that are far out of market as we go forward. As the basin tightens, we would expect that there could be some pressure upwards on that.
Jeremy Tonet: Got it. That’s very helpful. Thank you. Just want to come back to the guidance, if I could. Appreciate that’s early in the year and you don’t want to move it just yet. But with the acquisitions presumably bringing upside to results for the year, are there other headwinds that have materialized so far that would be an offset? Or just trying to better understand the gives and takes or just as the year progresses, you would account for that upside later?
Al Swanson: Jeremy, this is Al. The acquisition of the $110 million is the impact that we’ll be seeing this year would be very modest and well within inside the range we have. Our base business is performing in-line with expectation as Willie mentioned on his prepared remarks. If you run the math on $110 million and recognize that, it’s only a partial year, it was not enough for us to allow for in our business. But our business is performing in-line with what we expected.
Willie Chiang: Jeremy, this is Willie. Just a clarification. The specific $1.25 to $1.50 that was really around Cactus I. However, we’ve got other pipelines that are in the mix and we have a weighted-average concept that we look at, but it really the $1.25 to $1.50 was really just the Cactus I re-contracting.
Operator: Thank you. Our next question comes from the line of John Mackay of Goldman Sachs.
John Mackay: Good morning. Thanks for the time. I just figured, now that you’re having some of these conversations with your shippers around back half of the decade volumes and rates, would just be curious if there’s anything you can share on how the market’s developing for Houston versus Corpus Dynamics, whether or not some of the big export projects proposed out there are kind of playing into those conversations yet? Appreciate it.
Willie Chiang: I would say, they had absolutely no impact on the discussions that we had. I think the view of the offshore export facility get built. You have to think about there’s already a couple of million barrels a day headed to Houston and close to three headed to Corpus. Those balances may not change very much and you have production growth in between. We are talking about a project three to four years from now where you could have 0.5 million to 800,000 barrels a day more production. I think you’re going to move inland less efficient docks offshore maybe take some production growth, but you’ll still be full to Corpus. I don’t it didn’t impact the discussions at all and it’s more of an and as opposed to or.
John Mackay: All right. That’s fair. Maybe just one last one. Maybe just another comment on the weather challenges or otherwise in first quarter, understand general Permian trajectories intact. Just when we’re looking at kind of Permian gathering versus long-haul, was there more of an impact on one versus the other? And maybe just how we think about a 2Q trajectory versus a second half pickup? Thanks.
Jeremy Goebel: This is Jeremy. The way I look at this is the gathering was more impacted by weather, the market impacted the long-haul. It’s just a matter of the bid — was it better for our shippers to buy at Midland, buy at the end of the pipe or at the dock. And so sometimes they’ll just change their behaviors and how they ship and it could be a measure of what are inventories in Cushing and what are demand and turnarounds in Cushing. I’d say the long-haul is impacted by market. The gathering was more impacted by the weather.
Operator: Thank you. Our next question comes from the line of Theresa Chen of Barclays.
Theresa Chen: Good morning. Thank you for taking my questions. First, I wanted to ask about the upcoming maintenance on Wink-to-Webster and how that might translate to incremental throughput on basin pipeline and maybe your Cushing assets given the spot capacity there. Is that an opportunity for incremental earnings, either from a throughput and volumetric perspective or marketing optimization?
Jeremy Goebel: Teresa, this is Jeremy. The way I look at it is the 10 days of scheduled downtime. There’s ways to get it out, right? A lot of that will the export pipes to the Gulf Coast will be full or some capacity there. The barrels do need to get to Colorado City which we can assist with. The barrels will likely flow on to BridgeTex as a result of Wink-to-Webster being down. You see more BridgeTex flows, more Colorado City flows. When it gets to Colorado City, we’re likely to see more basin flows. I think all three of those could happen plus you’ll see significant flows through all the Corpus pipes.
Theresa Chen: Understood. On the WCS front, as TMX is line filling, we are seeing the differentials come in at this point. Give some color on how that’s impacting your marketing activities? Maybe just broadly, looking past this, if you have a rule of thumb on the magnitude impact that differentials on WCS specifically impacts the crude segment just from a quarter-to-quarter basis that would be helpful?
Willie Chiang: Thanks, Theresa. I don’t think we’ll give specific guidance, but what I would say is, it will be included in our outlook. I’d say, there’s plenty of ways for us to optimize around our assets between grades other than WCS. WCS is one component of the marketing activities in Canada, but there also will be storage opportunities and other things as it starts-up, no pipe. Pipe is complicated. That will have difficulty starting up and it will create opportunities. Also flow changes of that magnitude away from the U.S. It may end up more tariff-based opportunities, less market-based opportunities. But we would expect the market-based opportunities to come back as Canadian production grows.
Willie Chiang: Theresa, this is Willie. I think the key point on this is, we’ve always said, with the shift in flow, it’s 400,000 to 600,000 barrels a day potentially. Short-term, there could be some blips. Long-term, we think it’s very healthy because it sends good price signals to the Canadians to develop more resource and it’s quite frankly a great opportunity for the Canadian resource base to increase.
Al Swanson: This is Al. The only thing I would add is that, it’s actually coming online and this stuff is happening pretty well in-line with what we assumed in our original February guidance.
Operator: Thank you. I would now like to turn the conference back to Willie Chiang for closing remarks. Sir?
Willie Chiang: Thank you. As always, we enjoy visiting with you. Thanks for dialing in and your ongoing attention and support of what we’re doing. We look forward to seeing you out on the road. Talk to you soon.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
