PAAPU Q3 2026 earnings call transcript, November 6, 2026

Congrats. I wanted to ask you a little bit more on the 270,000 acre Midland dedication. As you ramp towards the 225 target of volumes, how should we think about the earnings uplift that this opportunity provides? Manal, this is Jeremy Goble. We're going to give you some more guidance on that in February. But think of that as existing production. So it's not a ramp to production. It's just a matter of timing for connection. So that contribution will likely be late 2027, early 2028. when the connection's done. But we'll give you more guidance on capital and timing next year. But we're excited about the opportunity to partner with a top tier producer and look forward to providing those services over a long period of time and expanding our Midland footprint. Perfect, sir. Second question I wanted to ask you. I mean, we understand there's crude volatility, but what are you hearing from the producers generally in the Permian? Do they expect to continue to grow production? Some of the big guys, the exons of the world definitely want to grow. And what we're trying to solve from our side is, when does the Permian aggregate start to get tightened again? Is it late 2028? Is it 2029? When do you see to the point where, you know, these existing Permian pipes, even with the cactus expansion, are like almost 90% full? Got it. Manav, that is a great question. The volatility you experience every day and wait.

Thanks, Manav.

Thank you for the opportunity.

Look, a couple things. Maybe just zeroing in and nitpicking. Just on the quarter itself, 4Q, what's implied here, how do you think a little bit about just implying down? Is there any specific drag here on the fourth coming quarter? And then thinking a little bit more strategically to the last question here, what do you think the timing of evaluating that Cactus 3 expansion is? Vis-a-vis you talk about that 28 timeline for a brownfield expansion. When do you start moving on that and we're getting a little bit more detail on? I presume that that's the brownfield expansion you're getting at here. Julian, this is Al. I'll do the first part. Implied, obviously, in our guidance is about $700 million for the fourth quarter down about 10 from the third quarter. The real change is the market opportunities that we've experienced in 2Q and 3Q. That's really driving the $10 million lower number. Plus the inclusion of Silver Creek for the fourth quarter. If you recall, our view is Silver Creek's an asset that's going to grow meaningfully over the next few years. 4Q included in our forecast is without the benefit of some of that growth, some transition services cost, integration cost, etc., and without the synergy. So those two basically offsets the step down. And some of the market opportunities that we captured kind of as the war started for second quarter and third quarter. Julian, for your second part, the shorter answer is we're continually evaluating them.

Just as you saw this summer, we added 75,000 barrels a day. We're looking at incremental ability to add as the market demands. And so I think you'll see us ramp over that time period. There's segments of pipe we have to build to access additional markets. It's right. I don't know that you'll see one grand announcement, just a series of announcements to get the pipeline ready. And then as contracts and rates are appropriate, we'll add the additional capacity. So I don't think it's going to be one step change, another 300,000 barrels a day, a series of expansions that go.

Got it. Excellent. Thank you. And you picked up what I was trying to put down on that 4Q. On the Silver Creek piece and the contribution. But maybe talking about the PRB more broadly here. I mean, obviously, you're acquiring here. How do you think about diversification in that geography here, post midterms, et cetera? Anything that you'd flag in terms of just more strategic repositioning and adding on the margin maybe? But any points to complement your latest position there? We're very excited about the Silver Spur asset. I think the Powder River Basin is one that we're going to do. Candidly evaluated for over some time period and they're just starting to figure it out so I think it's going to ramp into 2028. We have to continue to build out the system now through 2027 but there's a series of NBC's. There's 915,000 of acreage dedications. There's four to five producers that are already telling us that the wells are better and they cost less. They're looking to potentially add a rig into the system so we can see the Powder River Basin as the next growth wedge in the Rockies and that positions well for us not only on the Silver Spur asset from a gathering standpoint but it also from a pull through benefit to our pipelines and terminals in the Guernsey area headed south through to Cushing. So it's an integrated play for us. It's growth on a standalone basis. It's also an integrated play. So we're excited about the opportunity to work with some of our large producers that are also there. Awesome, guys. I'll leave it there.

Thank you very much.

And then just wanted to maybe talk more broadly about the M&A landscape. You know, a lot of your peers have taken on packages this year. And so is there anything that's remaining? Anything that looks interesting at this point? Yeah, I'll go ahead and take that one. This is Willie. Clearly, we've done a lot of bolt-on M&A or bolt-on acquisitions. So I'll speak about bolt-ons and then broader activities. We've actually been the ones that have been executing on a lot of these bolt-ons. We look at everything. I would tell you that I think the bolt-on opportunities are probably a little less than the pace we've gone in the past. I think we've done 15 of these over the last three or four years. So it's been very critical to our piece. A broader M&A is obviously an opportunity, but right now we focus on our crew business. We've got, you know, anything we do focuses on returns. So if we think about assets that we might bring in or things we may do, it's really focused around capital, discipline, and returns. And it's with that lens that we think about broader M&A. But look at everything. Well positioned. Opportunities come our way. We'll be able to hopefully capture them.

Thank you, team.

Appreciate it.

AJ, that's a great question. I'd say it's a bit of all of the above because

that's what really gets us excited is that the long-term recoveries there's a lot of gas and a lot of NGLs and a lot of excitement but that's going to make those commodities worth a lot less these still going to be oil reservoirs driven by oil so there's a real investment being made to continue to drive additional recovery so on the oil side sliding out the curve having less capital to go chase this big free cash flow generation and a stable balance and on the margin rates going out on the long haul business is a plus but the gathering business should be better the long haul business should be better marketing based opportunities around it so it's just an integrated platform that we have to serve our customers and we look forward to expanding with them okay thank you i'll turn it back thank you one moment for our next question our next question comes from the line of john mckay of

moment sacks your line is now open hey team thank you for the time uh i'll i'll go back to the the midland dedication uh congrats on that i just want to make sure we're thinking about it correctly i know we'll get color later on um kind of associated ebitda and any associated spend but given this is production that's already flowing elsewhere i mean is there a certain acquisition opportunity here for you guys over time on kind of whatever this uh production is touching right now uh john i'd say at this point that's inappropriate for us to talk about but from our standpoint we look forward to executing under the contract that we have all right fair enough and um that's all good please go ahead i'm sorry john this is willie i mean as i think about at high level right our whole business is integrated so we've got we've got gathering interbasin long haul so the the thought of getting another 900 000 dedicated acres into the system uh this is just what we do no absolutely that makes sense i'm sorry maybe i was quoting i misquoted the the tooth that it's 270 000 acres here versus that the 900 was uh up in the on up in silver in the powder river my apologies on that thank you

absolutely and maybe just on that point being you've probably increased the size of the dedicated acreage on the jv by looks like 30 percent uh since you kind of put it together about five years ago i think we're just past that five year anniversary can we take this opportunity to give us your view on kind of the the longer term strategic plan here um you know is there an opportunity to kind of find the the other piece at some point uh is this going to be a kind of vehicle you can kind of continue to grow in maybe just give us an update now that we're uh kind of five years past the launch of it thank you great partnership

30 percent growth over five years is really it's been a great everything else we need to grow as we've proven with them as a partner we can grow with them or if the opportunity comes we could do that so I think there's no obligation to do it there's an opportunity to do it but there's no different than the opportunity to buy in other partners that we've had across our system absolutely that makes sense congrats again on the dedication thank you thanks John thank you one moment for our next question our next question comes online of Pernit Satish

of Wells Fargo your line is now open thanks good morning so I know it's early but maybe you can help us think through some of the puts and takes for 2027 EBITDA I know you know you got a few tailwinds here 50 million cost energies or cost efficiencies and a full year of Silver Creek Cactus 3 probably going to see you know volume growth on the oil side with the flush volumes coming in so I mean you put that all together it does seem like you could see some some reasonable growth in 27 so maybe what are what are some of the key headwinds that or kind of offsetting factors that we should think about when when modeling 27 growth yeah hey this is Al yeah I mean we've we've articulated kind of the four things and I think you answered a meaningful part of our of the question clearly PLA we came in this year pretty highly hedged in the low 60s will probably be in the low to mid 60s by the time we exit with realized prices this year clearly it's setting up for meaningful improvement there $10 a barrel is a little over 40 million dollars so so that's a definite tailwind clearly the production growth the the 200,000 a day that thousand barrels a day that Jeremy mentioned you know a lot of that came light we expect that to benefit 27 in addition to the excess regs and and the 27 growth itself so we see the Permian volumes as a benefit clearly the the investment capital whether it's it's our true investment expansion capital like the recent cactus expansion in addition the the Silver Creek acquisition

as well those benefits will come to 27 and then the additional efficiency gains that we've talked about the incremental 50 million dollars probably the one caveat or quote headwind we would point to if you're taking that the last three quarters of this year the crude is right around 700 million dollars a quarter if you were just taking that annualizing it and then putting all this growth on it clearly we've had some market benefits in those numbers so we would encourage you to maybe dial in a little bit of taking out some of those market opportunities. Maybe we'll see the opportunity to get those in 27 but it wouldn't be we wouldn't come into the year expecting to see a repeat of some of that opportunity. Gotcha. That's helpful and then you know there's several proposed Western Canadian egress projects that could bring more barrels into the mid-continent. I think at least one project that would go directly into Cushing and I don't think they're expanding capacity from Cushing down. So I guess as you look across your asset footprint and I don't know whether it's CapLine or other systems, do you see any opportunities to participate or capture that incremental flow? Bernice, that's a great question and certainly any of the crew projects we're looking at. See if we can benefit, complement, participate. So we'll keep you posted along the way but we're constantly looking at opportunities to see if we can either partner with good projects, participate, create new projects. So we'll have more updates in the next six months if any of that comes to fruition. But certainly things that complement us we're actively looking at on the organic side as well as the acquisition. Very good. Thank you.