KMI

Operator: Welcome to the Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Today's call is being recorded. If you have any objections, please disconnect at this time. I'll now turn the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan. Thank you. You may begin.

Rich Kinder: Thank you, Ted. Before we begin, I'd like to remind you as we always do that that KMI's earnings release today and this call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities and Exchange Act of 1934 as well as certain non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward-looking statements and use of non-GAAP financial measures set forth at the end of our earnings release as well as review our latest filings with the SEC for important material assumptions, expectations and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements. On several of these investor calls, I've expressed my view and that of other leaders and experts in our industry about the potential for extraordinary growth in the demand for natural gas in America and abroad. This optimistic view of the market and its favorable impact on the growth and prosperity of midstream energy companies like Kinder Morgan was embraced during the last year or so by significant number of investors and analysts. That view seemed to accelerate with the perceived opportunity for natural gas to fuel AI and data centers. Recently, that optimistic view has been questioned by some on a couple of different grounds. First, in the aftermath of the DeepSeek announcement, it seemed to some critics that growth in gas demand for data centers and electric power in general was too optimistic. Secondly, the announcement of expanded tariffs by the Trump administration inspired others to question whether this would result in less demand for US LNG, thereby reducing the amount of feedgas required in this country. Let me try to put all of this in perspective by detailing how we view the drivers of natural gas demand growth over the rest of this decade. Let's start with some history as prologue to the future. In 2005, US demand for natural gas was approximately 60 Bcf a day. In 2024, that demand was almost 109 Bcf a day, an increase of roughly 80%. That's pretty astounding growth over that 20-year span. Now let's look at the future growth between now and the end of this decade with all due deference to Mark Twain's famous quip that making predictions is very difficult, especially if they concern the future. Most estimates of growth between now and 2030 range between 20 Bcf and 28 Bcf a day and our internal projections also fall in that range. The overwhelming driver of that growth is increased LNG export demand. We estimate that growth to be somewhere around 16 Bcf a day with the great bulk of that coming from facilities already under construction or that have been FID. To FID a project means it is supported by long-term contracts with creditworthy entities, otherwise, these facilities simply could not be financed. I might add parenthetically that our contracts with LNG export facilities are also supported by long-term contracts. But notwithstanding those facts, the naysayers argue that a trade war with China will lead to a diminution in need for US LNG. In response, let me mention two countervailing factors. First, China has not imported any US LNG since February and yet feedgas demand is setting records, averaging 15.5 Bcf a day in the first quarter and approaching 17 Bcf a day on several recent days. Secondly, our view is that any loss of the Chinese market will be more than offset by the efforts of governments in the EU and Asia to increase the imports of U.S. LNG to reduce trade imbalances and put themselves in a better negotiating position with regard to U.S. tariffs. South Korea and Indonesia, for example, are already in specific discussions on that strategy. And regarding the EU, we believe Europe's apparent and off stated reluctance to ever again allow Russia to be the dominant supplier of natural gas to Europe will obviously increase its use of U.S. LNG. Based on all these factors, we remain very bullish on growth in U.S. LNG exports. Now in addition to growth in LNG feedgas demand, we see nice upticks in exports to Mexico, power demand driven in part by the surge in AI and data centers and residential commercial use. Anecdotally, the new projects we have announced at Kinder Morgan over the last couple of quarters are supported in large part by long-term contracts with utilities in the Southeastern U.S., an indication of the need for more gas to feed electric generation. The point of all this detail is to put into perspective the drivers of demand for the product we transport so that any intelligent investor can make a reasoned assessment of the natural gas market for the rest of this decade and not be whipsawed by the perceived ups and downs of just one or two facets of the growth story. In truth, that growth is supported, we believe, by an array of factors that reflect the strength of natural gas as an important source of energy for years to come. And with that, I'll turn it over to Kim.

Kimberly Allen Dang: Okay. Thanks, Rich. We had a good quarter. The financial results, which David will take you through are essentially in line with our expectations. For the year, we currently expect to exceed budget by at least the contribution from the outright -- Outrigger acquisition. Our natural gas performance versus budget is very strong. In the first quarter, we saw record natural gas demand with demand in the market growing by 6.8 billion cubic feet a day, driven by 10% increase in residential and commercial demand and a 15% increase in LNG demand. Future natural gas fundamentals continue to be strong with demand expected to grow between now and 2030, as Rich just took you through. And I would add that even if a portion of the roughly $7 trillion in new U.S. investment the administration has announced occurs, we believe that would drive demand that is not currently captured in projection. During the quarter, we added approximately $900 million to our project backlog, taking the backlog to $8.8 billion after adjusting for the projects placed in service. Of the $900 million, over 70% is primarily focused on serving power demand. The largest project bridge is a $430 million extension of our Elba Express pipeline supported by a 30-year contract. It will deliver about 325 million cubic feet a day into South Carolina to primarily serve increased power demand and is easily expandable to over a Bcf a day. Of course, there's been a lot of attention paid to tariffs. At this point, we did not believe that the tariffs will have a significant impact on project economics. For our new large projects, Mississippi Crossing, South System Expansion 4, Trident, GCX and Bridge that together comprise approximately two thirds of our backlog, we currently estimate the impact of tariffs to be roughly 1% of project costs. We've worked to mitigate the potential impact by preordering certain equipment, negotiating caps on tariff impacts and securing domestic steel and mill capacity. For these projects, we've locked in the cost of the finished steel pipe and less than 10% is exposed to tariffs. In addition to the extent we get some permitting relief, there may be the opportunity to bring these projects or portions of the project in service earlier than planned, helping to offset any impact of tariffs. From an operations perspective, we're still in the process of evaluating the impact of tariffs. We don't expect it to be material to 2025, but the uncertainty of tariffs along with commodity prices did cause us to be a little bit more conservative in communicating our outlook for the year at this point. During the quarter, we closed on the previously announced $640 million acquisition of the Bakken gathering and processing system, which nicely complements our existing assets in that basement. When you look at the results for the quarter, there isn't much impact from this acquisition given that we only owned it for 45 days and all the transaction costs were expensed in the quarter. But it is performing in line with our expectations. Despite the volatility in the market, we have a very resilient business. Almost two thirds of the EBITDA is generated from take-or-pay contracts. Roughly 30% is fee based or hedged with only 5% of our EBITDA exposed to commodity prices. We expect to continue to generate nice cash flow and fund our attractive backlog of projects, which are substantially backed by long-term contracts from creditworthy entities while maintaining a strong balance sheet. Finally, on management succession, Tom Martin has announced his intention to retire in January 2026, at which time he will assume an advisory role to the Board of Directors and to the office of the Chairman. In that role, he will continue to help the company execute on our tremendous backlog of natural gas projects. At that time, Dax Sanders, who many of you already know, will succeed Tom as President. Dax is currently President of Products -- of the Products Business segment and has a thorough understanding of the company, having been here for approximately 23 years and served in a variety of different roles. Tom and Dax will start the transition process in August, at which time Mike Garthwaite will become President of Products Pipeline. This is the plan we contemplated and prepared for in our succession planning. And with that, I'll turn it over to Tom to give you more details on the business performance for the quarter.

Tom Martin: Thanks, Kim. Starting with the natural gas business unit, transport volumes were up 3% in the quarter versus the first quarter of 2024 with new peak day volume records set on four of our five largest pipeline systems due to the confluence of all the major demand drivers that is residential, commercial, power and LNG during prolonged cold weather in our major market areas in Texas, Louisiana, the Midwest and the East. Natural gas gathering volumes were down 6% in the quarter compared to the first quarter of 2024, driven primarily by lower Haynesville production. Sequential total gathering volumes were down 2%. Our producer customers are still ramping back up after the lower gas prices in Q2 through Q4 of 2024. For the full year, we expect our gathering volumes to average 5% above 2024, but 2% below our 2025 budget. We anticipate gathering volumes will grow over the balance of 2025 given the higher price environment, producer conversations and plans and the need for increased production to meet storage refill demand and LNG demand growth that is ramping-up throughout the year. Looking forward, we continue to see significant incremental project opportunities across our natural gas pipeline network to expand our transport and storage capabilities in support of the growing natural gas market. In our Product Pipeline segment, refined products volumes were up 2%, crude and condensate volumes were up 4% in the quarter compared to the first quarter of 2024. For the full year 2025, refined product volumes are forecasted to be up about 2% higher than 2024, but flat with budget. In March 2025, KMI placed its approximately $17 million Florida jet fuel expansion project into service to enhance jet fuel deliveries to the Orlando, Florida market. The expansion creates a continuous jet fuel system that increases pipeline transportation capacity into the Orlando International Airport, providing a faster return-to-service solution following hurricane-related power outages. The project is fully contracted with 10-year commitments from the Orlando Airline Consortium. In our Terminals business segment, our liquids lease capacity remains high at 94%. The refining cracks and blending margins have softened, they remain supportive of strong rate and utilization at our key hubs at the Houston Ship Channel in New York Harbor. Our Jones Act tanker fleet is fully leased today, 97% leased through 2025 and 94% leased through 2026, assuming likely options are exercised. We have opportunistically chartered a significant percentage of the fleet at higher market rate and extended the average length of firm contract commitments to four years. The CO2 segment experienced slightly lower oil production volumes about 1%, 5% higher NGL volumes and 7% lower CO2 volumes in the quarter versus the first-quarter of 2024. For the full year 2025, oil volumes are forecasted to be 1% below 2024, but 2% above budget. In March 2025, KMI placed its Autumn Hills RNG facility into service. The plant's capacity of 0.8 Bcf of RNG annually now brings KMI's total RNG capacity up to 6.9 Bcf per year. With that, I'll turn it over to David Michels.

David Michels: All right. Thank you, Tom. For the quarter, we are declaring a dividend of $0.2925 per share, which is $1.17 per share annualized and 2% up from last year's dividend. During the first-quarter, we generated net income attributable to KMI of $717 million, down 4% from the first quarter of last year. We generated EPS of $0.32, down $0.01 from last year. Much of that decline is attributable to unfavorable mark-to-market on hedges that have not yet settled and we treat as certain items. On an adjusted net income basis, which excludes those certain items, we generated $766 million and adjusted EPS of $0.34, up 1% and flat from last year, respectively. This quarter growth was driven by greater contributions from our natural gas terminals and CO2 businesses. Our main growth drivers were contributions from our Texas Intrastate natural gas system, attractive capacity sales and park and loan services on our interstate natural gas assets, greater renewable natural gas production and higher contributions from our Jones Act tankers. I would note that some of the natural gas agreements we entered into during the first quarter extend beyond the first quarter and therefore will add contributions during the remainder of the year. These were offset by lower gathering and processing volumes, as Tom mentioned, the impact from our planned splitter facility turnaround and lower RIN pricing in our renewable natural gas businesses. Moving on to our balance sheet, we ended the quarter with $32.8 billion of net debt and 4.1 times net debt to adjusted EBITDA, which is in the middle of our leverage target range of 3.5 times to 4.5 times. The 4.1 times only includes a month and a half of EBITDA from our Outrigger, but it includes all of the acquisition funding. So that metric will decline -- will improve as we add more quarters of the Outrigger contribution. Our net-debt increased by just over $1 billion from the beginning of the year and here's a high-level reconciliation of that change. We had a working capital use of about -- a little bit more than $300 million. That working capital deficit is made up of interest expense payments and first -- typical first quarter payments of bonus and property tax. We generated cash flow from operations of $1.16 billion. We paid dividends of $650 million. We have extended $770 million of total CapEx. We closed on the Outrigger acquisition, which was approximately $650 million and we posted collateral for some of our natural gas hedges of about $90 million, which gets you close to the billion dollar increase in net debt for the year. For the full-year, as Kim mentioned, while it's still early in the year, we expect to exceed budget by at least the contribution from the Outrigger acquisition. And as disclosed in our full-year budget, our budgeted adjusted EBITDA growth was 4%. Just including the Outrigger acquisition, our EBITDA growth would increase to 5%. Our adjusted EPS growth would still remain at an attractive 10% and we're also expecting to still end the year with net debt to adjusted EBITDA of 3.8 times. Most of our 2025 budgeted growth comes from expansion projects. Now that we're more than a quarter into the year, we can say we're on target to place the vast majority of these expansion projects in service on time and on budget or with only minor variances. The largest expansion contributions come from our Evangeline Pass expansion project, which is on-track to come online this summer and multiple projects on our Texas Intrastate system, the largest of which include our South Texas to Houston project, which is near completion and a couple of additional projects that have already been placed into service, including our Webb County and Central Texas expansion. So we're off to a good start to the year. Our -- we're on-track to put our expansion projects in service. We're experiencing favorable performance across our businesses and have sanctioned additional projects that will drive growth well into the future. Finally, based on investor feedback, we do not plan to host a regular Investor Day presentation in person going forward. Like we did this year, we will continue to publish an annual company update, which will include our budget for the year, but won't host the presentation in-person. We will also maintain our objective to provide great transparency to an extensive engagement with our investors. And with that, I'll turn it back to Kim for Q&A.

Kimberly Allen Dang: Okay. Ted, if you'll come back on, we will take questions.

Operator: [Operator Instructions] The first question in the queue is from Michael Blum with Wells Fargo. Your line is now open.

Michael Blum: Thanks. Good afternoon, everyone. I wanted to start talking about the potential additional gas pipeline investments that you are looking out with utilities and data centers. How would you characterize the pace of discussions with customers, I guess, since the last earnings call?

Sital Mody: Michael, this is Sital. Yes. So one, I think it pertains to data centers. There's still, as we try to determine kind of the sites, specific locations that they're looking at where we -- it's still evolving as it pertains to the utilities that are supporting some of these data centers. As you can see, we're actively pursuing opportunities to provide supply to ultimately feed these upcoming data centers. And so I would say the activity level is pretty strong. There's a lot of competition out there across the network. We feel like we're positioned well. And as we talk about Bridge into South Carolina, this is just kind of step one. The platform for growth has been established and we see some incremental opportunities around power and potentially data centers there as we've got this draw put in.

Kimberly Allen Dang: Ad I'll just add a couple of things to that. One, if you look at the additions to the backlog, this quarter, I said approximately 70% of those are related to power. So sometimes it's hard to differentiate between what's data center related and what's power because the power could be going to a data center. I'd also say if you look at our total backlog, like 50% of the projects in our overall backlog are related to power. Where we have seen I think the most concrete activity to date on data centers has been largely the regulated utilities so far. Now there is a -- there are lots of discussions going on as Sital said, a lot of those discussions are happening across the Southern United States and that's an area where we are particularly well-positioned.

Michael Blum: Thanks for all that. That was really helpful. Maybe if I could just drill down on one particular area or region. Can you provide an update on any progress in Arizona regarding either an expansion of EPNG or greenfield project or just how you see that area developing? Thanks.

Sital Mody: Sure, Michael. So one, we see a need out in the Desert Southwest, Arizona included. We have been pursuing both brownfield and greenfield opportunities. We're trying to look at that. Obviously, we're in a competitive situation here. As we get -- if we get any progress here from a customer standpoint, we'll make those announcements at the time. But I can tell you there is interest and we do see there -- we do see a need out West, especially the state of Arizona.

Operator: The next question…

Kimberly Allen Dang: Ted, we'll take the next question.

Operator: Yes. The next question is from Jeremy Tonet with JPMorgan. Your line is open.

Jeremy Tonet: Hi, good afternoon.

Rich Kinder: Good afternoon.

Jeremy Tonet: Maybe picking up in Arizona if I could, and the potential for expansion for the West. Just wondering the docket that was opened in February, the natural gas infrastructure and storage docket that Vice Chair opened, are you expecting anything specific out of there that will inform your views of as far as timing and sizing of expansion further West? And just as you look even further out, I think that there ECA2 could be on the horizon and we'll need to source gas as well. It seems like EPNG would be in play there. So just wondering those two dynamics, any thoughts you could share?

Tom Martin: Well, just once again, I'm going to keep it broad just because we are in a very competitive situation. But both the overall demand is we see coming, right? And I think really both the docket you're talking about and through our conversations with our customers point to the need for incremental capacity needs. You mentioned ECA, that's a longer-term play possibly, but all of that bodes to the need for incremental capacity and how we get there. Ultimately, we decided by our customers and the contracts that they sign.

Kimberly Allen Dang: Yes and I -- let me just make a couple of points overall. I mean, look, there is the potential for data center development in Arizona. I think the Arizona utilities need more power, especially with all the population migration from California and other places into Arizona. I think Mexico has a couple of power plants on the other side of the border that they're going to need natural gas for and you've got the LNG potential off the West Coast. So, there's a lot of good demand factors. Our pipeline, EPNG is full. And so I think to do something out there, you would have to plan it. But it is a nice opportunity and the demand drivers that are present and that we're talking about here on the West are what we're seeing broadly across our whole network.

Tom Martin: And one more thing to add, it's not necessarily just a greenfield opportunity, right? There are significant -- we are looking at brownfield opportunities, smaller expansions that may make sense to unlock incremental capacity into the basin.

Jeremy Tonet: Got it. That's very helpful there. And then just a higher level macro question, if I could. We've seen WTI dip towards 60 and briefly below 60 here and concerns with regard to potential economic weakness ahead, as Rich talked about in the opening comments there. Just wondering, as far as your conversations with your producer customers, any change in tone there such as if WTI does step down into the 50s and stays there for a while in basins that have liquids driven economics, if you think that there could be changes in producer activity there and how that could impact KMI, although it's a smaller part of the business?

Kimberly Allen Dang: Yes. I mean, our gathering business, I think is roughly 8% of our overall business. And if you look at it to date, I think it's too early to make any calls. We haven't -- the conversations that we have had with our producers, they haven't made any changes. I'd say if you look at our gathering assets, you've got the Bakken, which is oil based, but GORs are going up. And then obviously, our -- one of our largest positions is also in the Haynesville. And there that's a dry natural gas play. And I'd say that the conversations there with our customers, as Tom alluded to earlier, have been more bullish where what they're talking about is potentially adding rigs beyond what we expected previously. Now that will take time and we won't see that benefit for later in the year. But I'd say there is -- the natural gas side has been, I think, stronger than the conversations have been stronger than what we were originally expected.

Tom Martin: Yes. And I guess to add one more comment to that, when you think about our geographic basins that we're -- we have our gathering systems in, most of our acreage is in kind of the connections that we're on with Tier 1 acreage. So if you go back to when we were in COVID, I think we withstood the storm pretty well from a price standpoint, even in our liquid plays and the natural offset, as Kim was mentioning, is the dry gas plays when that happens. What we do see is we do see gas demand increasing. And so if the associated gas capacity -- if the associated gas kind of tapers off a little bit, even though we didn't see that, we actually saw GORs increase when crude fell off. We will see a pickup in the Haynesville and the dry gas Eagle Ford plays because the demand has to be met.

Jeremy Tonet: Got it. Thank you for that.

Operator: The next question in the queue is from Manav Gupta with UBS. Your line is open.

Manav Gupta: Good afternoon. My question here is a little bit -- energy equities in general has started pricing in a little bit of a recession. You touch a lot of end markets, whether it's gas or refined products, even jet fuel. In your system, are you seeing any early signs of recessionary demand or what we see in the market is just volatility, the underlying demand in your system is holding up pretty well?

Kimberly Allen Dang: I mean, I'd say a couple of things on that. So far, I think we're holding up pretty well. But refined product volumes in the quarter were up 2%. We saw strong natural gas demand. I think we're going to continue to see strong natural gas demand because -- and growing natural gas demand over the course of the year because a lot of what is driving that is going to be the export LNG. And that -- those volumes are coming on and a lot of those have take-or-pay contracts associated with them. So I think you're going to see an uptick in gas demand over the course of the year. And as Tom said, we've got to refill storage. So one, I think we're too early. And two, I think when you look at natural gas, which is 60% of our business, I think there are some different factors that you really have to consider there than just US recessionary pressures that drive that demand.

Manav Gupta: Thank you. My quick follow up here is, can we get some more details about this new Bridge project that you added to the backlog? And the reason I'm asking is last year you announced the Mississippi Crossing project. And within one month, you ended upsizing the project. So what's the possibility of you upsizing this Bridge project? Thank you.

Tom Martin: Well, look, the possibilities are great, but I'm not going to comment on the timing. Obviously, our customers are going to dictate when we expand. I will tell you, South Carolina is one of the fastest growing states that we see out there. Demand is growing from a power side, from a residential need standpoint. And like I said, the opportunity set around potential data centers could be there. So I think overall, we feel like we're positioned well for future growth. The platform is there now. This helps us establish the platform once this project is completed and we're excited about the opportunity in South Carolina.

Manav Gupta: Thank you so much.

Operator: Next question in the queue is from John Mackay with Goldman Sachs. Your line is open.

John Mackay: Hey, team. Thanks for the time. I wanted to pull a couple of these together. I think on the last call, you kind of made the comment of saying, hey, we've done a lot of very big project announcements, maybe the pace of those will slow. I think you showed today that you're still able to add a ton of small to medium sized ones to keep adding to that backlog. Is this -- not to put you in the spot, was this a outsized kind of win or is this the kind of more regular way kind of backlog additions we could expect to see from here?

Kimberly Allen Dang: Yes. I mean, it's hard to predict, I think what exactly what we're going to be adding to the backlog. But as we've been saying this whole call, I mean, the demand drivers behind the natural gas industry, which is over 60% of our business are very strong. Whether you look at LNG and Rich pointed out there that if you look, the LNG demand is expected to double. And most of that is going to be driven by projects that are FID or under construction. And then he also pointed out that some of these -- as we go through tariff negotiations with some of these countries, that them buying natural gas from the U.S. may be a way that they solve the balance of payments with the U.S.. And so even if you're in a potential trade-war with China, there's other demand that could make-up for that or actually be greater than what the demand coming out of China would be because as Rich pointed out, they haven't been taking very much and natural -- and the LNG demand has been over 17 Bcf, so setting record. I think from the perspective of power and AI, when you look at AI, I think that is going to be in our national security interest to win the AI race. And so I think you'll continue to see demand for AI. And I think also as the costs are -- Rich talked a little bit about DeepSeek, but I think what you're hearing and what we've heard from a lot of the technology players as the cost of that technology comes down, we would expect more people to use it. And so that demand driver is firmly in place. And then if we get more American manufacturing investment, I think that will drive demand growth for natural gas. So I think when you look at that and you say, so what does your outlook for projects look like and it continues to be a robust outlook and I will tell you that we've added 900 on a gross basis to the backlog today. There's another $400 million of projects that our Board approved today, roughly $400 million, that we are close to signing contracts, so they approved on a contingent basis and we haven't added to the backlog because we don't add to the backlog until those contracts are signed. So, I think you can hear that -- I think we feel even in the current economic environment where there is a lot of volatility out there, we feel very good about our business and the opportunities that we have in front of us.

Rich Kinder: Yes, I would just add that we have 70,000 miles of gas pipelines. We moved 40% of the gas in America. And beyond that, we're located in the right places. All this LNG, feedgas demand, the great bulk of it is along the Gulf Coast. A great part of the electric generation growth is also in the Southeastern United States and along the Gulf Coast. So if you just look at where we operate and the size of our operations, I think there's every opportunity to expand our positions. And coming back to Sital's answer a couple of questions ago, the ability to expand off of these expansions that we've already announced is going to be incredible over the next several quarters we believe.

John Mackay: Yes, Rich, I appreciate that. Maybe just one follow up. Kim, you mentioned permitting relief for reform earlier in the call. Just curious if you could give us kind of like latest state of play there. And then specifically just on maybe related note, Bridge coming online in 2030, not outside the realm of normal kind of FERC timelines, but maybe if you can kind of tie that into your view on kind of how long it takes to get things permitted now and where that could maybe go if we get some relief?

Kimberly Allen Dang: Yes, I think we've had some conversations with the administration and with the Energy Dominance Council. And I think those have all been positive conversations with everybody focused on how do we get these projects in-service earlier. And so you will see that we made a filing with the FERC on Monday of this week and that could accelerate timing on permits by up to five months. We'll have to see what the FERC does with that, but I think the administration would be supportive of that. I think you've seen the core come out and the St. Louis office announced -- put out some preliminary guidance and then one of the other core offices put out some final guidance, which reduces time frames. We've had very positive interactions with parks and with fish. And so I think everybody is working in the same direction to try to get these projects in service early. Now, obviously, if we can get the -- them permitted earlier, then we've got to move to the supply-chain. I think that will be somewhat of a challenge, but we'll be looking at ways to get -- to reduce the time that it takes to get these materials onto the right away. And then we'll be looking at whether if we can't get the whole project in service, can we get portions of the project in service early that bring good economic value. So I think we've seen a very good -- we've seen a commitment from the administration to try to expedite the timing on these. I'd also say from a deregulation perspective, we've seen good progress. I think the good neighbor rule as it was drafted is essentially dead. You've seen the greenhouse gas reporting from the SEC. They've withdrawn their support for that. And then you've seen other actions out of EPA where they're proposing to get rid of certain regulations. So I think all-in all, most of what the administration is doing is very positive for our industry.

John Mackay: Thanks for the time. Appreciate it.

Operator: Next question is from Theresa Chen with Barclays. Your line is open.

Theresa Chen: Hello, thank you for taking my questions. First, congratulations to Tom for his retirement and also congratulations to Dax and Mike for stepping into their new roles. And I'd like to start by asking for an update on your strategy in the Bakken on the heels of the Outrigger acquisition coupled with the upcoming HH conversion to NGLs. What are the next steps here for Kinder to capture more economic value in that value chain?

Sital Mody: Hi, Theresa, this is Sital. So one, I think the integration of the Outrigger plant has gone very well. We've got it embedded into our operations. I think the next step is looking for operational synergies, like I said, strategically for us. We got a plant north of the river up in the Bakken, which complements our existing footprint. When you couple that with our residue takeaway and now our planned NGL takeaway, we're just looking strategically at further elements of the value chain. That's really what I would say to this -- at this point. Obviously, up there, we're in a very competitive situation on the NGL side. So I won't comment until we get incremental contracts signed. But needless to say, we are looking at ways to add incremental value and capture more of that full value chain. Did I answer your question?

Theresa Chen: Thank you. Yes. Or as much as you can at this point. Thank you, Sital. On the liquid side of things, just looking towards the pending closures of refineries in California with another one announced this morning, how much volumetric exposure or EBITDA could this impact for your -- could this impact your California pipeline and terminal assets within the product segment?

Sital Mody: Yes. We don't think it will. I mean, the announcement you saw today certainly is not the first announcement on a refinery closure and it probably won't be the last one. But the key to the throughput on our pipelines is the demand at the end of our pipelines. And as long as the demand exists there, as long as people in the interior California, Nevada and Arizona are driving and flying, that demand will still be there. And we think that our pipelines are the safest and most economic way to get that product there. So the sources of supply may change. It may not be coming from the same refineries. Other refineries may make-up for. You may have waterborne barrels coming in either from Washington State or Asia. But we still think that the product has to get to the end-markets and we're the best choice for it.

Theresa Chen: Thank you.

Operator: The next question comes from Neal Dingmann with Truist Securities. Your line is open.

Neal Dingmann: Good afternoon. Thanks for the time. My first question folks is just on M&A specifically. It seems like given you all continue to be focused more on the natural gas demand megatrends, I'm just wondering, would you all consider selling down some energy transition assets to fund these gas initiatives.

Kimberly Allen Dang: Well, I guess, look, we like the assets that we own. And I think right now, we are fully able to fund our CapEx out of out of existing cash-flow. And so I don't think selling assets is the best way generally to fund growth. And so we like the assets. They fit our strategy and not the best way to fund growth. And so we're going to fund our growth out of cash flow. We have capacity on our balance sheet should that -- should we exceed cash-flow in an existing year with respect to expansion CapEx. And then I think also if we ever wanted partners on something, we could bring in partners on new projects at a very attractive cost-of-capital. So I don't look at selling those assets as being the best choice.

Neal Dingmann: No, that makes sense. And then, Kim, just -- something you talked about earlier, just you all mentioned in the prepared remarks just the turbulent times. Is that -- I mean, does that give you more do you think opportunities to, I don't know, necessarily buy distressed assets, but it seems like there's still a lot of smaller deals out there. Does turbulent times like this provide maybe even more opportunities?

Kimberly Allen Dang: It could. Here's what I would say. I would say early in turbulence, I would say that people tend to back away from the market a little bit to just let things settle out. Over the longer-term, if the turbulence causes people to get in trouble, I think that would present opportunity for us over-time.

Neal Dingmann: Well said, thank you so much.

Operator: Next question is from Keith Stanley with Wolfe Research. Your line is open.

Keith Stanley: Hi, good afternoon. I wanted to start the statement in the release on pursuing substantial amount of additional LNG feed gas opportunities. Are you mainly competing to serve new under-construction facilities or is that redundancy projects for existing LNG? And then relatedly, any update on commercial progress on expansion of Trident at some point?

Rich Kinder: Sure. So to your first question on the incremental LNG demand, I think it's a combination where we're looking at new competing -- to be able to supply new facilities that are looking to FID and some that are very close to FID and we're also looking at folks that are optimizing their existing systems, looking for diversity of supply. It's an all of the above approach and I think we're talking to both sides there. On your latter question in terms of progress and I just want to make sure if you could just repeat the last question?

Keith Stanley: Trident…

Rich Kinder: Trident, right? Yes, so progress on Trident. We made some -- we've made significant strides here where we're close to possibly expanding the scale of the project and hopefully here in the next quarter or so, we'll have some positive news to announce, but making good progress. There's a lot of interest. When we think about the West to East movements that we've been talking about for some time, it's a continued theme there that we're seeing.

Keith Stanley: Great. Thanks for that. Second one, I just want to try again on the HH conversion because it's kind of sneaking up on us early next year. Are the contracts you have with customers today to bring NGLs to Guernsey or do they go further than that? And then I think you referenced in the prior question wanting to secure incremental contracts. Can you elaborate at all on the strategy there?

Tom Martin: Well, so at the risk of informing the competition, I'm going to pause on the detailed strategy, but I will tell you we are looking at getting molecules to both Conway and Mont Belvieu at a very high level. And in terms of trying to garner incremental volumes, I think there's opportunities for us to add to the portfolio in terms of volumes that we moved down HH. And that's probably all I'm going to tell you today. I know Theresa tried earlier, but that's it.

Keith Stanley: Understood. Thanks.

Operator: Next question is from Zack Van Everen with TPH. Your line is open.

Zack Van Everen: Hi, all, thanks for taking my question. Maybe going back to the Haynesville, you mentioned growth in the '25 and '26 and we tend to agree with that statement. Could you just remind us -- I know you guys had the projects in '25 for 340 a day for the Haynesville. Could you remind how much capacity is open once those projects are online for that system?

Tom Martin: Yes, so when we talk about hydraulic capacity in the Haynesville, if I recall, last January, we were talking and we were kind of approaching capacity and then we were planning on executing some projects in the second and third quarters. Obviously, in the price environment last year, we kind of fell off from a volume standpoint. I can tell you today, we are kind of approaching that same point we are. So we've got a little bit of flex in the system. But I can -- what we see here is that across the summer, I think we're going to be back at capacity in the Haynesville and we are actually discussing how we get ahead of it once again. So I think there's opportunities there for us to put some, once again, very capital efficient capital in terms of unlocking incremental capacity, but we've got to stay close to our producers and we're obviously going to be very cautious to make sure that we see those volumes coming and then we'll put in the capacity.

Zack Van Everen: Perfect. That makes sense. And then maybe moving over to Texas, your announcement on the Taos pipeline, pretty low capital spend there. Is there opportunity to upscale that or have other opportunities on your Intrastate system within Texas around whether it's power or data center demand?

Tom Martin: Yes, sure. So look that -- the Houston Power Gen project is an example of kind of what we're trying to pursue while relatively it may be small in scale compared to everything else we've been talking about. It's a pretty, once again, very capital efficient project. We just put in our Central Texas pipeline, right, that Dave talked -- David talked about. We put that into service. That's a 30-inch trunk that basically feeds off of PHP into the Austin area. Obviously, there's a lot of activity in and around that area. We're exploring power opportunities. There's organic growth there. And then we're also exploring some data center opportunities in that area. So I think we are positioned well with the platform. And as Rich talked about, you got the straw in there and then there's ancillaries that we can do on top of that straw. So lots of activity on the Intrastate systems. I think both the Houston Power Gen to South Texas to Houston and Central Texas are all examples of very capital efficient projects that can garner very good opportunities.

Zack Van Everen: Got it. Makes sense. Appreciate the time.

Tom Martin: Absolutely.

Operator: And I'm showing no further questions at this time.

Rich Kinder: Okay. Thank you very much. Have a good evening.

Operator: This concludes today's call. Thank you for your participation. You may disconnect at this time.