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ONEOK, Inc. (OKE) Q4 2022 Earnings Call Transcript

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ONEOK, Inc. (NYSE:OKE) Q4 2022 Earnings Conference Call February 28, 2023 11:00 AM ET

Company Participants

Andrew Ziola - VP, IR & Corporate Affairs

Pierce Norton - President, CEO & Director

Walter Hulse - CFO, Treasurer and EVP, IR & Corporate Development

Kevin Burdick - EVP & Chief Commercial Officer

Sheridan Swords - SVP, Natural Gas Liquids, Gathering & Processing

Conference Call Participants

Brian Reynolds - UBS

Spiro Dounis - Citigroup

Michael Blum - Wells Fargo Securities

Harry Mateer - Barclays Bank

Sunil Sibal - Seaport Research Partners

Neal Dingmann - Truist Securities

Operator

Hello, and invited to nan ONEOK Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions]. Please note, this arena is being recorded. I would now for illustration to move nan convention complete to Mr. Andrew Ziola. Please spell ahead.

Andrew Ziola

Thank you, MJ, and welcome, everyone, to ONEOK's Fourth Quarter and Year-end 2022 Earnings Call. We issued our net merchandise and position aft nan markets closed yesterday, and those materials are connected our website. After our prepared remarks, guidance will beryllium disposable to return your questions.

Statements made during this telephone that mightiness see ONEOK's expectations aliases predictions should beryllium considered forward-looking statements and are covered by nan safe harbor proviso of nan Securities Acts of 1933 and 1934. Actual results could disagree materially from those projected successful forward-looking statements. For a chat of factors that could origin existent results to differ, please mention to our SEC filings. [Operator Instructions].

With that, I'll move nan telephone complete to Pierce Norton, President and Chief Executive Officer. Pearce?

Pierce Norton

Thanks, Andrew, and bully morning, everyone, and convey you for joining america this morning. On today's telephone is Walter Hulse, our Chief Financial Officer and Executive Vice President, Investor Relations and Corporate Development, and Kevin Burdick, Executive Vice President and Chief Commercial Officer. Also disposable to reply your questions are Sheridan Swords, Senior Vice President, Natural Gas Liquids and Natural Gas Gathering and Processing, and Chuck Kelley, Senior Vice President, Natural Gas Pipelines.

Yesterday, we announced beardown 4th fourth and afloat twelvemonth '22 performance. We met our 2022 financial guidance expectations despite weather-related events and a important operational incident. We besides achieved our ninth consecutive twelvemonth of adjusted EBITDA maturation successful 2022. Through nan efforts of our workforce and nan resiliency of our assets, we person provided exceptional worth for our stakeholders and person positioned ONEOK to proceed delivering maturation successful 2023.

I judge nan word resiliency is simply a awesome explanation descriptor of 2022 and will proceed to beryllium a attraction of our operations going forward. Our people, assets and net proceed to beryllium their resiliency elasticity and stability. With yesterday's net announcement, we besides provided 2023 financial and measurement guidance expectations. Higher earthy state processing and NGL volumes and beardown fee-based net are expected to lend to higher net successful 2023 arsenic we proceed to attraction connected some increasing our halfway business and innovating for early opportunities.

There are cardinal differentiators of ONEOK's business that person proven captious to our past occurrence and connection america assurance successful nan future. These differentiators supply stability, resiliency and unsocial opportunities for growth. First, our coagulated and increasing guidelines business, which features strategically positioned assets successful immoderate of nan astir productive U.S. shale basins connected pinch immoderate of nan largest and astir well-capitalized producers successful nan U.S. who supply unchangeable and increasing proviso to our systems.

Our margins successful our halfway businesses are astir 90% fee-based pinch minimum nonstop commodity value vulnerability because of our proactive hedging strategy; second, our beardown equilibrium expanse and investment-grade in installments ratings, which provides important financial flexibility. We've reduced our leverage to beneath 3.5x and important -- a important milestone for us.

We provided investors pinch much than 25 years of dividend stableness and maturation not cutting our dividend during nan COVID situation years and precocious announced a dividend increase. Third, our proven way grounds of intentional and disciplined growth. We proceed to use from important operating leverage crossed our systems, enabling america to proceed focusing connected little capital, high-return projects and investments to support shaper maturation crossed our operations.

Our beardown return connected invested superior is simply a root of pridefulness for ONEOK and is simply a cardinal metric for evaluating our management's squad capacity annually. Our astir 15% ROIC successful 2022 highlights nan scrutiny that we spot connected investments, nan ratio of our superior and nan precocious value of our projects earnings, and this disciplined maturation besides approaches and will continue.

Finally, nan continued request of nan power products and services that we provide, which are captious to our nationalist information and nan value of life, successful which we judge will play an important domiciled successful a transforming power future. U.S. earthy state and earthy state liquids stay abundant and reliable. The products that we move will proceed to supply overmuch needed power domestically and globally.

We participate 2023 from a position of spot driven by a twelvemonth of coagulated financial and operational performance. And arsenic you tin see, location are galore reasons why we are assured and optimistic astir ONEOK's future. With that, I'll move nan telephone complete to Walt for a chat of our financial performance.

Walter Hulse

Thank you, Pierce. As we elaborate successful yesterday's property release, we expect continued maturation successful our businesses successful 2023 aft achieving our 2022 financial guidance moreover pinch immoderate challenging events. ONEOK's 4th fourth and afloat twelvemonth 2022 nett income totaled $485 cardinal and $1.72 billion, respectively, representing increases of 28% for nan 4th fourth and 15% for nan afloat twelvemonth compared pinch nan aforesaid play successful 2021.

Adjusted EBITDA besides accrued year-over-year, totaling $967 cardinal successful nan 4th fourth 2022 and $3.62 cardinal for nan afloat year. Our beardown financial capacity was driven by accrued shaper activity, higher realized commodity prices, higher mean interest rates and higher earthy state retention and proscription services.

In January, we accrued our quarterly dividend to $0.95 per stock aliases $3.82 per stock connected an annualized basis, marking a return to dividend maturation pursuing 3 years of dividend stability. In November 2022, we completed a $750 cardinal elder notes offering owed successful 2032, generating nett proceeds of $742 million, which was chiefly utilized to repay short-term debt.

And conscionable yesterday, we redeemed $425 cardinal of 5% elder notes owed September 23 pinch rate connected hand. Our year-end nett debt-to-EBITDA connected an annualized tally complaint ground was 3.46x, successful statement pinch our antecedently discussed aspirational target of 3.5x aliases less. As it relates to Medford, we reached an statement pinch our insurers successful early January to settee each claims related to nan incident for full security payments of $930 million, which included $100 cardinal that was paid successful 2022.

We received nan remaining $830 cardinal successful nan first 4th of 2023, and applied astir $50 cardinal to an outstanding 2022 security receivable. We provided a array successful our net merchandise showing nan line-by-line details. The remaining $780 cardinal will beryllium recorded arsenic a summation successful our operating income successful nan first 4th of 2023.

As Pierce mentioned, pinch yesterday's net announcement, we provided 2023 financial guidance, including a nett income midpoint of $2.41 cardinal and an EPS midpoint of $5.36 per stock diluted share. We besides provided and adjusted EBITDA midpoint of $4.575 billion. Our guidance includes nan nett effect of nan onetime security colony summation of $780 cardinal and early method related costs, chiefly third-party fractionation, which we estimate will full $240 cardinal successful 2023.

We expect Medford related costs to beryllium importantly little successful 2024 owed to our expertise to afloat utilize nan MB-5 fractionator to substantially trim third-party fractionation costs compared pinch 2023. By taking nan afloat colony of $780 million, little nan $240 cardinal of expected third-party costs successful 2023, you get a full astir $540 cardinal related to nan colony that has been assumed successful our $4.575 cardinal adjusted EBITDA guidance midpoint for 2023.

Excluding nan effect of nan colony and nan third-party costs of $540 million, this still amounts to much than $4 billion, double-digit net maturation which we referenced connected our past net call. We besides expect double-digit net maturation astatine nan midpoint for some earthy state liquids and earthy state gathering and processing segments driven by higher measurement expectations crossed our operations.

Kevin will supply much item connected each of nan operating segments successful a moment. Our 2023 guidance assumes shaper activity associated pinch WTI crude lipid prices successful nan scope of what we are presently seeing successful nan market. We expect full superior expenditures of $1.38 billion, which includes maturation successful attraction capital. This midpoint reflects nan investments basal to support up pinch expected summation successful shaper activity, nan completion of MD5 early successful nan 2nd 4th of 2023 and besides much than $300 cardinal related to MD6 this year.

Excluding nan MD6 expenditures, our full CapEx would person been little than 2022. Our 2023 CapEx guidance does not see nan Saro Connector pipeline aliases immoderate different projects that person not reached a last finance decision. Our regular maturation superior accounts for higher number of good connects and our higher return projects specified arsenic earthy state retention description s, pump stations and compression description s to meet customer needs.

Finally, arsenic it relates to nan 15% replacement minimum taxation associated pinch nan ostentation Reduction Act, we expect nan AMT to person an effect connected our rate taxes opening pinch nan 2024 taxation year. You tin find specifications successful our 10 -K erstwhile it is revenge later today. I will now move nan telephone complete to Kevin for a commercialized update.

Kevin Burdick

Thank you, Walt. We saw beardown afloat twelvemonth earthy state gathering and NGL volumes connected our strategy successful 2022 contempt respective upwind events during nan year, providing continued maturation successful our chiefly fee-based earnings. NGL volumes were peculiarly beardown successful nan Rocky Mountain region, expanding 12% year-over-year owed to higher activity levels and accrued opportunities to retrieve ethane from nan region.

Well connects crossed our operations accrued 24% compared pinch 2021, and we saw a coagulated return of activity successful nan Mid-Continent driving a important summation successful good connections successful nan region and higher earthy state processing volumes connected our system. We'll proceed to spot nan benefits of this activity passim 2023 arsenic volumes ramp.

Our Natural Gas Pipelines conception exceeded its 2022 financial guidance scope connected higher net from semipermanent retention services and higher rates from renegotiated contracts customers proceed to spot nan worth successful our retention assets, and we proceed to measure opportunities to grow these services.

Turning to 2023. A Key drivers for our higher 2023 guidance includes unchangeable shaper activity, providing higher earthy state and NGL volumes crossed our systems, continued spot successful fee-based net and rates and higher expected realized commodity prices owed to hedges placed astatine higher value levels compared pinch 2022.

At nan midpoints, our 2023 measurement guidance would consequence successful a 7% summation successful full NGL volumes and an 11% summation successful full earthy state processing volumes compared pinch 2022. In nan earthy state liquids segment, we expect measurement maturation to beryllium driven by beardown shaper levels, a shaper activity crossed our operations, a continuing nan momentum we saw from producers successful 2022.

Higher mean interest rates will besides lend to nan segment's net arsenic statement escalators proceed to beryllium realized passim nan year. NGL marketplace dynamics constituent toward a continued betterment successful world request pinch China reopening and pinch little earthy state prices, resulting successful an charismatic situation for U.S. pet chems. We expect this existent marketplace to thrust accrued activity from nan U.S. petrochemical manufacture comparative to world pet chems while nan U.S. position being pinch nan U.S. position being 1 of nan lowest connected nan world costs curve.

On our system, we expect nan Permian Basin to enactment successful precocious ethane betterment successful 2023 and for nan Mid-Continent to beryllium successful partial betterment arsenic earthy state prices up and down seasonally. We besides expect to proceed to spot opportunities to incentivize ethane betterment successful nan Rocky Mountain region this year. We are connected way to complete our 125,000 tube per time MB-5 fractionator successful Mont Belvieu early successful nan 2nd 4th of 2023.

And we precocious announced MB-6 which we expect to beryllium complete successful nan first 4th of 2025. Moving connected to nan earthy state gathering and processing segment. We expect measurement maturation again this twelvemonth successful some nan Rocky Mountain and Mid-Continent regions, driven by shaper activity levels, resulting successful much good connections than successful 2022. In nan Rocky Mountain region, we expect processed volumes to turn 11% astatine nan midpoint compared pinch 2022 and averaged astir 1.5 cardinal cubic feet per time successful 2023. Already this year, contempt wintertime weather, we've reached a process volumes arsenic precocious arsenic 1.46 cardinal cubic feet per time successful February, a caller grounds for nan segment.

We completed building connected nan 200 cardinal cubic feet per time Demicks Lake III processing works this month, providing our customers pinch needed capacity arsenic good arsenic operational redundancy. Activity levels successful nan Williston Basin remains strong, peculiarly considering we are conscionable entering March. There are presently much than 40 rigs and 22 completion crews operating successful nan basin compared pinch conscionable complete 30 rigs and 13 completion crews astatine this clip past year.

Producers stay committed to nan region, and we expect a fewer much rigs will return arsenic we move into spring. At our guidance midpoint, we expect to link 500 wells successful nan region this twelvemonth a astir 40% summation compared pinch 2022. We've already connected astir 90 wells done February and person remained dependable astatine much than 20 rigs operating connected our dedicated acreage.

Additionally, location remains a ample inventory of astir 500 DUCs basin-wide pinch astir half connected our acreage. Keep successful mind that successful nan Bakken, shaper economics are driven by crude lipid and customers -- our customers are immoderate of nan largest and astir good capitalized successful nan country. This intends caller fluctuations successful commodity prices and specifically little earthy state prices person not had an effect connected shaper activity levels connected our acreage.

We besides expect gas-to-oil ratios to stay beardown and proceed to inclination higher successful nan future, which tin thrust measurement connected our systems moreover without accrued shaper activity. In nan Mid-Continent region, we proceed to spot affirmative activity pinch astir 10 rigs presently operating connected our acreage and much than 50 crossed nan region.

We expect process volumes to turn 12% astatine our guidance midpoint compared pinch 2022 and mean much than 700 cardinal cubic feet per time successful 2023. Rig activity crossed nan basin will besides proceed to thrust further NGLs to our system. In nan earthy state pipeline segment, we proceed to expect beardown request for earthy state retention and proscription services successful 2023.

At nan extremity of 2022, astir 80% of our earthy state retention capacity was contracted nether semipermanent agreements, and our pipeline proscription capacity was astir 95% contracted. We expect akin levels successful 2023. Work continues connected a task that will grow our retention capabilities successful Oklahoma by 4 cardinal cubic feet and we are presently evaluating reactivating antecedently idled retention accommodation successful Oklahoma and Texas.

Construction besides continues connected our Viking pipeline compression electrification project. The Oklahoma retention description and Viking task are some slated for completion this year. Additionally, successful precocious December 2022, a ONEOK subsidiary revenge a statesmanlike licence exertion pinch nan FERC to conception and run caller world separator crossing accommodation astatine nan U.S. and Mexico border.

The projected separator accommodation would link upstream pinch a imaginable ONEOK intrastate earthy state pipeline called nan Swaro Connector pipeline and pinch a caller pipeline nether improvement successful Mexico for eventual transportation to an export installation connected nan West Coast of Mexico. Since nan announcement, location person been respective affirmative developments related to nan imaginable LNG export project. And a last finance determination connected nan ONEOK pipeline is expected successful mid-2023. Pearce, that concludes my remarks.

Pierce Norton

Thank you, Kevin, and convey you, Walt. We covered a batch today, and we person galore reasons to consciousness assured successful our 2023 guidance and our expectations for much maturation this year. Everything that we've talked astir today, from our 2022 capacity to our early expectations and cardinal differentiators for maturation are each underscored by our committedness and attraction connected information and biology performance.

Our institution and our manufacture aren't immune to incidents, but I'm proud of really we person responded erstwhile challenges do hap and really we proceed moving to amended our capacity going forward, focusing connected information and nan wellness of our labor and nan communities adjacent wherever we operate. From our biology perspective, we've made important advancement toward our greenhouse state emissions simplification target, achieving reductions that equate to astir 20% of our full 2030 simplification target.

Our employees' dedication to gathering customers' needs while operating our assets successful a safe, reliable and environmentally responsible mode continues to thrust our beardown operational maturation and financial capacity twelvemonth aft year, and we're group up good for continued maturation successful 2023. With that, operator, we are now fresh for questions.

Question-and-Answer Session

Operator

[Operator Instructions]. Today's first mobility is from Brian Reynolds pinch UBS.

Brian Reynolds

Maybe to commencement disconnected connected nan guidance. Last year, we had a mates of upwind events and a worldly magnitude of frac capacity travel offline, but guidance was still achieved. While immoderate activity seems to person gotten pushed to 23% from '22, nan '25 guideline yearly seems akin to 2022 original guidelines guidance. So possibly could you conscionable talk astir nan puts and takes this twelvemonth from past twelvemonth and whether this is simply a guidelines guideline retired capacity aliases if we saw immoderate volumes for G&P and NGLs get moved into '23.

Kevin Burdick

Brian, yes, this is Kevin. I deliberation astir apt nan large point is conscionable for illustration you mentioned nan measurement that was off-line and really nan delays we saw erstwhile nan measurement came offline chiefly successful April, erstwhile we had nan terrible conscionable benignant of historical upwind events successful North Dakota, that conscionable delayed not only getting measurement backmost online, which wounded our '22. But it delayed immoderate of nan good connects arsenic we into push backmost into '23. So that's why we consciousness really bully astir our '23 guide.

Yes, we've sewage a important step-up successful good connects. But erstwhile you look astatine nan wells. We've already connected to date, which historically is immoderate of our little months from a good link perspective. and you look astatine nan momentum we benignant of built arsenic we exited '22, we consciousness really bully astir wherever we're astatine volumetrically successful some G&P and NGL retired of nan Bakken.

Brian Reynolds

Great. And arsenic a follow-up conscionable connected superior allocation. It seems for illustration we should person beautiful unchangeable CapEx successful nan adjacent fewer years pinch nan MB-6 build-out. And conscionable fixed nan already announced dividend raise and leverage targets and payout ratios met astatine this point, really should we deliberation astir usage of excess rate going forward?

Pierce Norton

Brian, this is simply a bully mobility to benignant of clear up and really attraction connected what our cardinal strategies are for superior allocation. The first 1 is that we want to put successful high-return integrated projects that are adjacent to our existing footprint. The 2nd point is that we want to support and turn a -- what we mention to arsenic a sustainable dividend.

And what we mean by that is we want to support that dividend maturation location beneath our EPS maturation percent and past besides attraction connected our payout ratio, which I would opportunity that astir 85% are lower. So we were supra 100%. We've sewage it down beneath 100% successful our 2023 guidance. And number three, we want to support our beardown investment-grade in installments ratings pinch a target of that 3.5x debt-to-EBITDA.

And assuming that we've achieved each of those benignant of superior allocation cardinal strategies, if we do person excess rate aliases whatever, we could see stock buybacks. But that's benignant of laying it retired arsenic to what our priorities are from a superior allocation standpoint.

Operator

The adjacent mobility is from Spiro Dounis pinch Citi.

Spiro Dounis

First question, I wanted to touch connected nan third-party frac fees. You guys highlighted Mont Belvieu 5, frac 5 coming online and really benignant of benefiting 2024 from nan third-party frac 3 perspective. But I conjecture conscionable fixed nan truth it does travel connected aliases it sounds for illustration it could travel connected early and 2nd quarter, is location immoderate expertise to leverage that frac arsenic good successful 2023? And to nan grade you've considered immoderate of that successful nan '23 guidance?

Sheridan Swords

Spiro, this is Sheridan. So erstwhile we had nan Medford incident, we went retired correct distant and secured frac capacity that we thought we needed going into '23. And we already took into relationship that MB-5 was going to travel up successful April. So our -- what we contracted for frac capacity is evidently heavier successful nan first portion of nan twelvemonth until MB-5 comes connected and past drops off. And that was each accounted for successful nan colony that we had pinch nan security company.

So we person that already baked in, and that's why there's not that overmuch activity connected nan third-party frac that we have. Obviously, MB-5 will thief america if measurement exceeds our expectation, we will beryllium capable to usage MB-5 for that successful '23.

Spiro Dounis

Got it. Second question, multipart 1 connected nan Sao pipeline. So to nan grade that does scope FID successful mid-'23. I guess, one, would you expect immoderate effect connected nan '23 CapEx budget? Or is that benignant of much of a 2024 positive item? And past if you could conscionable possibly springiness america immoderate consciousness of costs of nan pipeline, if you consenting to return connected JV partners? And past finally, conscionable connected nan 2.8 Bcf a time of eventual creation capacity. Obviously, it's a beautiful large pipe. Should we ideate that, that possibly comes connected successful phases aliases conscionable really to deliberation astir nan cadence there?

Kevin Burdick

Spiro, this is Kevin. Still a batch of your questions were -- that's what we're moving done correct now. We're not going to supply a superior guide. There would beryllium a small money that would beryllium spent if we FID this year. But obviously, nan bulk pinch it coming on, nan anticipation had travel on. And 2025 clip frame, astir of nan superior is going to get pushed -- is going to beryllium pushed out.

Operator

The adjacent mobility comes from Michael Blum pinch Wells Fargo.

Michael Blum

So I wanted to inquire astir ethane recovery. You gave immoderate wide expectations for ethane betterment crossed your footprint. But state prices are beautiful weak. It seems for illustration they're going to enactment location for a while. Can you conscionable talk astir opportunities for ethane recovery, specifically successful nan Bakken and what is really reflected successful guidance?

Sheridan Swords

Yes, Michael, this is Sheridan. We person a very humble magnitude of ethane incentivized ethane successful our guidance, a small spot that we person already contracted and already locked down nan spread. We person not done immoderate much than that. As you said, we do spot a batch of opportunity successful '23 pinch this debased state value which Kevin mentioned successful his remarks, is making nan United States pet chem very advantaged connected utilizing ethane arsenic a feedstock going forward.

And we deliberation that we will proceed to spot much ethane betterment arsenic we spell done nan year, particularly arsenic much request comes connected internationally, which we will propulsion nan Mid-Continent up to beryllium much successful ethane betterment later successful this twelvemonth and will let america to incentivize much ethane retired of nan Bakken astatine wider spreads than what we person done today.

Michael Blum

Okay. Great. And past I besides conscionable wanted to inquire different mobility astir nan frac market. It seems for illustration everyone is adding frac capacity. And truthful I'm wondering if you deliberation that's going to beryllium pressuring rates complete clip astatine Mont Belvieu and wrong that context, really should we deliberation astir frac 6, really overmuch of that is going to beryllium contracted pinch 3rd parties versus held-on account?

Sheridan Swords

The -- Michael, what I'd opportunity astir frac capacity coming online. In nan NGL world, nan group that are building those fracs arsenic us, we statement that measurement and build our fracs to beryllium capable to turn into. So arsenic these fracs travel on, you'd astir apt spot nan spot marketplace beryllium a small spot weaker than it was erstwhile our frac went down. But agelong term, those fracs are contracted and arsenic measurement comes on, they will capable that. In position of MB-6, remember, MB-6 is really conscionable replacing Medford. And truthful MB-6 is wholly contracted arsenic Medford was wholly contracted. So we're really only looking astatine our really adhd to our frac fleet is nan MB-5 that we had substantially contracted earlier nan Medford incident. So I deliberation you'll spot a small spot of softening successful rates successful nan spot market. But agelong term, I do not deliberation you will spot softening of rates.

Operator

The adjacent mobility comes from Harry Mateer pinch Barclays.

Harry Mateer

On nan 3.5x leverage target, Walt, you've spoken astir it arsenic being aspirational for immoderate time. But astatine this point, pinch retired '22 and fixed your '23 guidance, it seems much reality than aspirational. So really are you reasoning astir it now? Is nan scheme to clasp this level going forward? Or are you not fresh to perpetrate to that pinch Sahara up of you? And what is still a beautiful bully lipid value environment?

Walter Hulse

Well, Harry, I deliberation that we've decidedly achieved nan extremity arsenic we beryllium present today, fixed nan truth that we had an $830 cardinal infusion from nan security settlement, complete nan people of nan adjacent mates of years, we evidently will utilize immoderate of that rate to build retired MB-6. And we would expect to travel backmost into that 35% aliases beneath successful nan not-too-distant future. We for illustration that arsenic a spot to springiness america elasticity going forward. But I deliberation nan peers locomotion done our superior allocation thoughts earlier. We're not concerned if it trails down a small spot little arsenic we look for projects. But I would conscionable spell backmost to Pierce's chat astir our superior allocation.

Harry Mateer

Okay. And past my follow-up is conscionable -- I cognize you guys precocious redeemed 1 of your maturities later this year. You person different one. Any guidance you tin springiness america connected imaginable financing plans for nan twelvemonth and really are you readying to negociate imaginable indebtedness superior markets needs.

Walter Hulse

Sure. Well, yes, you're right, that we really did nan make telephone because we could do it astatine par connected nan 4.25% for May. The different coupon that we person later successful nan twelvemonth is 7.5%. So nan make hallway doesn't work. So we'll hold until nan existent contractual telephone date, which I deliberation nan first clip we tin do that is early May. I deliberation you tin presume that fixed nan truth that we person -- had this rate infusion that we will return that retired for rate astatine that constituent successful time. And we'll conscionable measure our needs arsenic we spell done nan twelvemonth if location is simply a request for immoderate further issuance. But arsenic we beryllium today, we will screen disconnected our maturities pinch rate connected hand.

Operator

Next mobility is from Jackie Caleres [ph] pinch Goldman Sachs.

Unidentified Analyst

First, I'd for illustration conscionable to attraction a small spot connected nan macro front. What are your thoughts connected comfortableness level connected backing egress retired of nan basin? And further, are you seeing nan request for Bison River, immoderate different ways to adhd state capacity there?

Kevin Burdick

Jackie, this is Kevin. Just benignant of macro Bakken related from a state takeaway perspective. We've talked earlier that we do judge there's still 300 million, 400 cardinal cubic feet a time of capacity connected Northern Border that nan basin will proceed to value out. So successful different words, displaced state presently flowing down from Canada, location has been a 100 cardinal a time astir task that's benignant of moved southbound and southwest complete to -- connected WBI and gets down into a Cheyenne marketplace that we've signed up for.

There's nan Northern Border unfastened play connected Bison Express that we are actively progressive successful that TC Energy has said they're moving that task and person been pleased pinch nan results truthful far. So there's an opportunity. So from an egress perspective, we consciousness good, obviously, for nan adjacent -- that will get you respective years retired moreover pinch immoderate coagulated growth.

And past obviously, we've sewage connected our NGL system, we've sewage nan expertise to grow if we request to grow it by conscionable adding pump stations, which is not a batch of superior and does not return a batch of clip comparative to immoderate of nan different projects we're talking about. So Basin overall, consciousness very bully astir nan macro environment.

We do not request to spot much rigs show up successful nan basin to execute our guidance. The rigs that are location today, erstwhile you besides look astatine nan -- finishing up immoderate DUCs they've sewage we're successful really bully style to meet nan measurement guidance successful some nan G&P and nan liquids segments arsenic we deliberation astir nan basin.

Unidentified Analyst

Okay. Great. And conscionable 1 speedy follow-up. A small spot much into CapEx. What goes into that upside, downside for nan CapEx range? What's is are there? And could you perchance supply immoderate colour connected nan components aliases segment-level spend? What's nan mostly of that walk specifically allocated to?

Kevin Burdick

We're not going to get into conception by segment. But for illustration Walt mentioned successful his remarks, we're finishing up MB-5. We've sewage MB a beautiful important magnitude of nan MB-6 walk that will hap successful '23. And past nan uptick successful activity erstwhile you deliberation astir nan step-up successful good connects successful some nan Mid-Continent and nan Bakken, that's going to thrust immoderate further superior needs from a good link small horsepower, galore deaths and immoderate pumps present aliases location successful nan NGL segment, those types of things, but those are highly, highly businesslike superior and typically make very beardown returns.

So those are nan types of things that we've seen. And past also, we're seeing -- we've sewage immoderate of those type projects successful nan state pipeline conception arsenic good that we're finishing up erstwhile we talked astir our retention and immoderate different description opportunities.

Operator

The adjacent mobility comes from Neal Dingmann pinch Truth Securities.

Neal Dingmann

At a higher level, we've seen immoderate of nan nationalist E&Ps gobble up immoderate of nan backstage companies and past benignant of slow their gait of activity down. So I was conscionable wondering if you could possibly talk astir immoderate vulnerability you person nationalist versus backstage aliases immoderate observations you've seen if possibly 1 of these deals that happened pinch your assets?

Kevin Burdick

Neil, this is Kevin. We really haven't seen nan impact. And successful immoderate cases, we've seen it spell nan different measurement a small spot wherever possibly immoderate of nan larger publics person shed immoderate of nan acreage that they whitethorn beryllium considering much Tier 2, Tier 3, and we've seen companies that acquired it, spell up and commencement drilling.

So that's been a small spot of a phenomenon. But we person been -- we've seen very accordant finance from nan ample publics that we have, and we've benignant of sewage nan who's who, particularly successful nan Bakken, but besides successful nan Mid-Continent, they've been incredibly accordant pinch nan superior that's been allocated to those basins.

Neal Dingmann

All right. That's a awesome constituent connected nan flip broadside of that. And past for my follow-up, successful nan PRB, 1 of nan ample operators has benignant of said they were shifting to nan Mowry, which comes -- brings a overmuch higher state cut. I conscionable wanted to cheque and spot if you are you seeing -- is that what you're seeing? Or is that what you're readying for? Or is nan benignant of guidance for nan Rockies much truthful astir nan Bakken maturation and possibly nan PRB conscionable assumes mean growth?

Kevin Burdick

Yes. The past is what is nan measurement we deliberation astir it. We've sewage a bully position successful nan G&P segment. We do person a very bully ample position successful our NGL business. There's been respective operators retired location that person talked astir nan Powder and spending much capital. So we do person immoderate humble maturation built in. But nan driver of nan Rockies volumes is going to travel from nan Bakken.

Operator

The adjacent mobility comes from [indiscernible] pinch Bank of America.

Unidentified Analyst

I wanted to touch connected nan implications of building MB-6 to fundamentally switch Medford. I'm assuming that you're going to travel little purity volumes connected sterling and modulation much to Y-grade down to Bellevue connected Arbuckle. And I wanted to cognize nan runway for Arbuckle connected latent capacity earlier you'd person to see an description for nan accrued volumes?

Sheridan Swords

Neil, this is Sheridan. Yes, you're right. As we put MB-6 aliases arsenic we're moving earthy provender today, we're not moving arsenic overmuch purity products connected nan Sterling system. But arsenic it comes to expanding Arbuckle II, we, arsenic we did pinch different pipes, put it successful a ample diameter pipeline that if we request much capacity, it's very easy to put successful a mates of much pump stations, and we get hundreds of thousands of barrels much of capacity connected that pipeline.

And obviously, we are watching that, and we tin respond very quickly. So it's adjacent to opportunity we will not tally retired of earthy provender capacity to Mont Belvieu from nan Mid-Continent.

Unidentified Analyst

Got it. Great. And past nan 2nd mobility related to that erstwhile you look astatine optimization opportunities, obviously, it will beryllium -- person little capacity successful Conway and sometimes you're short propane successful that market. And you person nan expertise to nonstop earthy gasoline up to Canada. How does nan higher capacity successful worth versus Conway effect nan optimization revenues going guardant aft you get nan security proceeds?

Sheridan Swords

Neil, arsenic we look astatine that, it's going to alteration a small bit, but I don't cognize from a financial impact, it's going to person that large of an impact. We -- arsenic we went backmost and looked astatine it arsenic we wished whether aliases not we were going to build Medford backmost aliases do MB-6, we noticed that astir of nan measurement from Medford already flows to Mont Belvieu connected average. And truthful I deliberation I besides look astatine it arsenic this is going to put america backmost successful a position by moving MB-6 down location nan measurement we were earlier we did put successful nan Busan fractionator successful ONEOK.

The Busan fractionator coming has capable measurement to fulfill nan mid-continent marketplace what nan deployment has there. We've transitioned our business to beryllium a small spot much Bellevue anyway. So I deliberation arsenic we'll beryllium capable to return advantage of astir apt spikes successful nan Convoy market, a small spot much than we person successful nan past, and we'll beryllium capable to move -- optimize nan wide provender strategy down to nan fractionators successful Mont Belvieu. So each successful all, I don't deliberation it's going to beryllium that large of an effect connected our optimization business.

Operator

The adjacent mobility is from Robin Reddy [ph] pinch JPMorgan.

Unidentified Analyst

To commencement disconnected benignant of a 2-parter connected nan measurement outlook. I was wondering if you could supply a breakdown of that 10% G&P inlet maturation presumption successful '23 betwixt nan Mid-Con and Bakken. And nan 2nd portion of that mobility was benignant of what's nan correct measurement to deliberation astir volumes and EBITDA maturation successful '24 if you guys person 20-plus rigs connected your acreage for 2 to 3 years.

Kevin Burdick

I deliberation we did supply nan breakdown by Mid-Continent versus Rockies and nan materials for nan guidance scope for '23. So that's successful nan materials. As we deliberation astir nan growth, we've mentioned that it takes astir 15 rigs connected our acreage to clasp volumes flat. So clearly, if we're sitting northbound of 20 rigs connected our acreage and those rigs enactment there, we're going to acquisition growth.

And that would see increasing '24 complete '23 if nan activity levels stay benignant of wherever they're astatine coming successful nan Bakken. And that would besides clasp existent for nan Mid-Continent arsenic good You've besides sewage nan rising state to lipid ratios. So arsenic we move done time, nan gas-to-oil ratios person continued to inclination up, which is besides going to beryllium a tailwind for measurement maturation arsenic we -- particularly if we're keeping these activity levels.

Unidentified Analyst

Got it. Appreciate that. And past I admit that you guys said connected frac fees a spot earlier, but conscionable wondering if possibly you guys could supply a unsmooth consciousness of what third-party frac fees look for illustration per 4th successful '23 and past possibly for 2024 arsenic good fixed for illustration nan incremental measurement maturation possibly could we deliberation astir third-party frac fees successful nan $100 cardinal scope for '24?

Sheridan Swords

Yes. I don't -- we're not going to break down our factories conscionable for competitory reasons connected really we spell done '23. But it's very to opportunity that what we've sewage from nan security institution is going to screen what we're going to salary to third-party fracs successful '23 and '24.

Operator

Today's past mobility comes from Sunil Sibal pinch Seaport Global Securities.

Sunil Sibal

I conscionable wanted to corroborate 1 point pinch respect to your comments connected nan Medford fractionator. I deliberation you mentioned that you considered that to beryllium afloat contracted -- truthful is it adjacent to presume that each your third-party frac leads for 2023 and 2024 are benignant of contracted astatine this constituent of time?

Walter Hulse

Yes. Yes, that's a bully assumption.

Sunil Sibal

Okay. And past connected nan Saguado state pipeline, successful summation to nan FERC approval, I was funny what are different benignant of getting items for that project? And could you look astatine a benignant of a JV aliases a business for that pipeline? And past lastly, would you look to finance each of that, if that were to move up connected your equilibrium expanse aliases you could look astatine immoderate different ways to finance.

Kevin Burdick

Sunil, this is Kevin. I mean we're still, again, early successful nan process from nan pipeline perspective. It would beryllium an intrastate pipeline. So -- we wouldn't request different FERC approvals arsenic it relates to really building nan pipeline if it did scope FID.

As acold arsenic partnerships go, we are looking astatine it arsenic we would ain nan pipeline astatine this point, but arsenic pinch anything, if there's a strategical and economical logic for america to person a partner, we would see that. But again, astatine this point, we're approaching it for illustration we're going to our pipeline would conscionable beryllium portion of that full pipeline work that would get state to nan Gulf Coast -- aliases excuse me, get state to nan West Coast of Mexico.

Sunil Sibal

Got it. And past connected nan financing side, each connected nan equilibrium expanse or...

Walter Hulse

Yes. I mean. So this pipeline is going to beryllium built complete a people of respective years successful nan discourse of our normal CapEx, we would conscionable do it connected our equilibrium expanse unless we recovered an charismatic root of superior that was much businesslike than nan normal way. We ever are keeping our eyes unfastened for that benignant of thing.

But I don't deliberation it would person a important alteration successful our CapEx programme going forward. So not 1 that we would person to alteration our mean course.

Operator

This concludes our question-and-answer session. I would now for illustration to move nan convention backmost complete to Andrew Ziola for immoderate closing remarks.

Andrew Ziola

All right. Thank you all. Our quiet play for nan first 4th starts erstwhile we adjacent our books successful April and extends until we merchandise net successful early May. We'll supply specifications for that convention telephone astatine a later date. Thank you again, and person a bully day.

Operator

The convention has now concluded. Thank you for attending today's presentation. You whitethorn now disconnect.

Editor: Naga



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