Kinder Morgan Inc - Class P (KMI) — Q1 2025 Earnings Call Transcript

Thank you, Ted. Before we begin, I'd like to remind you as we always do 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 a 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 US LNG to reduce trade imbalances and put themselves in a better negotiating position with regard to US 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 oft-stated reluctance to ever again allow Russia to be the dominant supplier of natural gas to Europe will obviously increase its use of US LNG. Based on all these factors, we remain very bullish on growth in US 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 US, 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.

Thank you, Rich. We had a successful quarter, with financial results aligning with our expectations, which David will discuss shortly. For the year, we anticipate exceeding our budget, especially due to the contribution from the Outrigger acquisition. Our performance in natural gas is robust, as we experienced record demand in the first quarter, growing by 6.8 billion cubic feet a day, thanks to a 10% rise in residential and commercial demand and a 15% increase in LNG demand. Looking ahead, we expect strong fundamentals for natural gas, with demand projected to increase until 2030. Additionally, if part of the $7 trillion in new U.S. investments announced by the administration materializes, it could further boost demand beyond current forecasts. During the quarter, we added roughly $900 million to our project backlog, which now stands at $8.8 billion after accounting for projects placed in service. More than 70% of this new backlog primarily addresses power demand. The largest project is a $430 million extension of our Elba Express pipeline, which is backed by a 30-year contract and will supply about 325 million cubic feet a day to support rising power demand in South Carolina, with the potential to expand beyond a billion cubic feet a day. There has been considerable focus on tariffs, but we do not anticipate a significant impact on project economics. For our major projects, which make up about two-thirds of our backlog, we estimate the tariff impact to be around 1% of project costs. We've taken steps to minimize this by preordering equipment, negotiating tariff impact caps, and securing domestic steel and mill capacity. We've locked in costs for finished steel pipe, with less than 10% exposed to tariffs. Moreover, if we receive any permitting relief, we may be able to bring some projects online sooner, helping to mitigate any tariff impact. Operationally, we are still assessing the effect of tariffs, but we do not foresee it being material in 2025. However, the uncertainty surrounding tariffs and commodity prices has led us to adopt a more cautious outlook for the year. During the quarter, we finalized the previously announced $640 million acquisition of the Bakken gathering and processing system, which fits well with our existing assets in that region. While this acquisition didn't significantly impact our quarterly results, as we only owned it for 45 days and expensed all transaction costs, it is performing as expected. Despite market volatility, our business remains resilient, with nearly two-thirds of our EBITDA derived from take-or-pay contracts. Around 30% is fee-based or hedged, leaving just 5% of our EBITDA vulnerable to commodity prices. We expect to maintain strong cash flow and continue funding our attractive backlog of projects, which are primarily supported by long-term contracts with creditworthy parties, while also keeping a robust balance sheet. Finally, regarding management succession, Tom Martin plans to retire in January 2026, transitioning to an advisory role with the Board of Directors and the office of the Chairman, where he will assist in executing our backlog of natural gas projects. Dax Sanders will take over as President, bringing extensive experience from his 23-year tenure at the company, where he has held various positions. Tom and Dax will initiate the transition in August, at which point Mike Garthwaite will step up as President of Products Pipeline. This plan reflects our succession strategy. I’ll now hand it over to Tom for further insights on our business performance for the quarter.

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 and 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 rates 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.

Thank you, Tom. For the quarter, we are declaring a dividend of $0.2925 per share, which amounts to $1.17 per share annualized and reflects a 2% increase from last year's dividend. During the first quarter, we reported net income attributable to KMI of $717 million, which is a 4% decrease from the same period last year. Our earnings per share was $0.32, down $0.01 from last year. This decline is largely due to unfavorable mark-to-market adjustments on hedges that are still unsettled and we classify as certain items. On an adjusted basis, excluding these certain items, we reported $766 million in adjusted net income and adjusted earnings per share of $0.34, representing a 1% increase and stable performance, respectively, compared to last year. The growth this quarter was primarily driven by greater contributions from our natural gas terminals and CO2 businesses. Key growth factors included contributions from our Texas Intrastate natural gas system, attractive capacity sales, and park and loan services on our interstate natural gas assets, alongside increased renewable natural gas production and higher contributions from our Jones Act tankers. It’s worth noting that some of the natural gas agreements we entered into during the first quarter will continue to provide contributions for the remainder of the year. These were partially offset by lower gathering and processing volumes, the impact from our planned facility turnaround, and reduced RIN pricing in our renewable natural gas operations. Regarding our balance sheet, we concluded the quarter with $32.8 billion in net debt and a net debt to adjusted EBITDA ratio of 4.1 times, which sits in the middle of our leverage target range of 3.5 to 4.5 times. The 4.1 times figure includes only a month and a half of EBITDA from our Outrigger acquisition but encompasses all acquisition funding. This metric will improve as we log additional quarters of contributions from Outrigger. Our net debt has risen by just over $1 billion since the start of the year, largely due to working capital usage exceeding $300 million, which includes interest expense payments and typical first-quarter obligations like bonuses and property taxes. We generated cash flow from operations of $1.16 billion and distributed $650 million in dividends. We also invested $770 million in total capital expenditures and finalized the Outrigger acquisition at around $650 million. Additionally, we provided collateral of about $90 million for some of our natural gas hedges, which accounts for the substantial increase in net debt this year. As Kim mentioned, it is still early in the year, but we anticipate exceeding our budget, significantly due to the Outrigger acquisition. In line with our full-year budget, we initially projected adjusted EBITDA growth of 4%. However, incorporating the Outrigger acquisition bumps our expected EBITDA growth to 5%, while maintaining an attractive adjusted EPS growth target of 10%. We are still forecasting a net debt to adjusted EBITDA ratio of 3.8 times by year-end. Most of our anticipated growth for 2025 is tied to expansion projects. Now that we’re over a quarter into the year, we can confirm we are on track to launch the majority of these expansions on time and within budget or with minor variances. The largest contributions are expected from our Evangeline Pass expansion project, slated to become operational this summer, and several projects on our Texas Intrastate system. Among these, our South Texas to Houston project is nearing completion, while additional projects, including the Webb County and Central Texas expansions, have already been initiated. We’re off to a strong start to the year, making progress with our expansion initiatives, experiencing positive performance across our operations, and approving new projects that will propel continued growth. Lastly, responding to investor feedback, we will not be hosting an in-person Investor Day presentation moving forward. Instead, as we did this year, we’ll publish an annual company update that will outline our budget but will not include a live presentation. We remain committed to offering significant transparency and engaging closely with our investors. Now, I’ll turn it over to Kim for questions and answers.

Okay. Ted, if you'll come back on, we will take questions.

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?

Michael, this is Sital. So, regarding data centers, we are still determining the specific locations that are being considered, and the situation is evolving with the utilities that support these data centers. We are actively pursuing opportunities to supply the necessary resources for these upcoming facilities. The level of activity is quite strong, and there is significant competition in the market. We believe we are well-positioned. As we discuss our expansion into South Carolina, this is just the beginning. We have established a foundation for growth, and we see additional opportunities related to power and potentially data centers as we move forward.

I'll add a couple of points to that. First, approximately 70% of the additions to the backlog this quarter are related to power. It can be challenging to distinguish between what's specifically for data centers and what's for power since the power could be used by a data center. Additionally, around 50% of our total backlog consists of projects related to power. So far, the most tangible activity in data centers has primarily been seen with regulated utilities. There are many discussions taking place, particularly across the Southern United States, where we are well-positioned.

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.

Sure, Michael. We have identified a need in the Desert Southwest, including Arizona. We are exploring both brownfield and greenfield opportunities in that region. We are aware of the competitive landscape and will make announcements when we see progress with customers. There is significant interest and a clear necessity in the West, particularly in Arizona.

Ted, we'll take the next question.

Hi, good afternoon.

Good afternoon.

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?

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.

Yes, I want to make a couple of overall points. There is potential for data center development in Arizona, as the state's utilities require more power due to increased population migration from California and other regions. Additionally, there are power plants in Mexico that will need natural gas, and we have LNG potential off the West Coast. This presents several strong demand factors. Our pipeline, EPNG, is currently full, so any initiative in that area would require planning. However, it represents a solid opportunity, and the demand drivers we are discussing for the West are reflective of trends we are observing across our entire network.

And one more thing to add, it's not necessarily just a new opportunity. We are looking at existing opportunities, smaller expansions that may make sense to unlock incremental capacity into the basin.

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?

Yes. Our gathering business represents about 8% of our overall operations. At this point, it's too soon to draw any conclusions. The discussions with our producers indicate that they haven't made any changes. Looking at our gathering assets, we have the Bakken, which is oil-based, but gas-to-oil ratios are increasing. Additionally, one of our major positions is in the Haynesville, which focuses on dry natural gas. The conversations with our customers there have shown a more positive outlook, with discussions about potentially adding more rigs than we had anticipated. This will take time, and we likely won't see the advantages until later in the year. Overall, the natural gas sector has demonstrated stronger engagement than we initially expected.

Yes. To add one more comment, when considering our geographic basins where we have our gathering systems, most of our acreage is aligned with Tier 1 acreage. Looking back to when we faced COVID, we managed to endure the challenges fairly well from a price perspective, even in our liquid plays. The natural counterbalance, as Kim mentioned, is the dry gas plays during that period. We are noticing an increase in gas demand. If the capacity for associated gas decreases slightly, we still observed an increase in gas-to-oil ratios when crude prices fell. We anticipate a resurgence in the Haynesville and the dry gas Eagle Ford plays because there is a need to meet that demand.

Got it. Thank you for that.

Good afternoon. My question is about energy equities, which seem to be starting to factor in a potential recession. You cater to various end markets, including gas, refined products, and jet fuel. Are you noticing any initial signs of recession-related demand in your system, or is the market turbulence merely a reflection of volatility while the underlying demand remains strong?

I would like to mention a few things regarding that. Overall, I think we're managing quite well. Refined product volumes increased by 2% this quarter, and we observed robust demand for natural gas. I believe this strong demand will persist throughout the year, primarily driven by export LNG, with many of those volumes linked to take-or-pay contracts. Therefore, we can expect an increase in gas demand as the year progresses. Additionally, as Tom noted, we need to replenish storage. So, I feel it's still too early to make definitive conclusions. Furthermore, considering that natural gas comprises 60% of our business, there are various factors to consider beyond just US recessionary pressures affecting that demand.

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 up upsizing the project. So what's the possibility of you upsizing this Bridge project? Thank you.

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.

Thank you so much.

Hey, team. Thanks for your time. I wanted to bring a few points together. On the last call, you mentioned that while you’ve made many large project announcements, the pace might slow down. However, today’s presentation shows that you continue to add numerous small to medium-sized projects, which enhances the backlog. Is this an exceptional achievement, or can we anticipate this level of backlog additions as a regular occurrence moving forward?

It's difficult to predict exactly what we'll be adding to the backlog. However, as we've discussed throughout this call, the demand factors in the natural gas sector, which makes up over 60% of our business, remain strong. LNG demand is expected to double, largely fueled by projects that are either in the final investment decision stage or currently under construction. Additionally, during tariff negotiations, countries may purchase natural gas from the US as a means to balance their payments, even amidst a potential trade conflict with China. Other demand sources could compensate for or even exceed the demand from China, particularly since China has not been consuming significant amounts, while LNG demand has hit record highs of over 17 Bcf. Regarding power and AI, it is crucial for our national security to succeed in the AI domain, which will drive ongoing demand for AI technologies. We anticipate that as technology costs decrease, more users will emerge, solidifying that demand driver. An increase in American manufacturing investment could also spur natural gas demand growth. Consequently, our outlook for projects remains robust. To date, we have added 900 million to the backlog, and our Board has conditionally approved another $400 million worth of projects that are close to signing contracts. We do not count projects in the backlog until those contracts are finalized. Despite the current economic volatility, we feel optimistic about our business and the opportunities ahead.

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.

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 the latest state of play there. And then specifically just on maybe a 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?

Yes, we've had discussions with the administration and the Energy Dominance Council, and those conversations have been positive, focusing on how to get projects into service sooner. We filed with FERC earlier this week, which could potentially speed up permit timing by up to five months. We’ll see how FERC responds, but the administration is likely to support it. The core offices have issued preliminary and final guidance, which suggests a reduction in time frames. Our interactions with parks and fish have also been very positive, and everyone seems to be working together to expedite these projects. If we can secure earlier permits, we will need to tackle the supply chain, which may pose some challenges. We’re exploring ways to minimize the time required to get materials onto the right of way and consider whether portions of the project can be put into service early for economic benefits. Overall, we've noted strong commitment from the administration to facilitate faster project timelines. Regarding deregulation, progress has been notable; the good neighbor rule appears to be effectively eliminated, and the SEC has withdrawn support for greenhouse gas reporting. Additionally, EPA is proposing to eliminate certain regulations. Overall, the administration's actions are largely beneficial for our industry.

Thanks for the time. Appreciate it.

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?

Hi, Theresa, this is Sital. The integration of the Outrigger plant has gone very well, and we have successfully embedded it into our operations. The next step is to explore operational synergies, which is strategically important for us. We have a plant located north of the river in the Bakken that complements our existing footprint. Combining that with our residue takeaway and our planned NGL takeaway, we are strategically considering further elements of the value chain. At this point, I would note that we are in a highly competitive situation regarding NGLs, so I won't comment further until we secure additional contracts. However, we are actively seeking ways to add incremental value and capture more of the entire value chain. Did I answer your question?

Thank you, Sital. Regarding the liquid side of things and the pending closures of refineries in California, including one announced this morning, what is the potential impact on your California pipeline and terminal assets in terms of volumetric exposure or EBITDA?

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.

Thank you.

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?

We value the assets we currently hold and believe we can fully finance our capital expenditures with our existing cash flow. Therefore, selling assets isn't the preferred method for funding growth. Our assets align with our strategy, and we plan to use cash flow for growth. Additionally, our balance sheet has the capacity to support expansion capital expenditures if cash flow exceeds expectations in a given year. If we decide to partner on new projects, we can do so at an attractive cost of capital, so I don't see selling assets as the best option.

No, that makes sense. Kim, could you elaborate on what you mentioned earlier about the turbulent times? Do you think this situation creates more opportunities for acquiring distressed assets, or perhaps there are still many smaller deals available? Do turbulent times like this offer additional opportunities?

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.

Hi, good afternoon. I wanted to start the statement in the release on pursuing a 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 the expansion of Trident at some point?

Sure. Regarding your first question about the increased LNG demand, it's a mix of factors. We are focusing on supplying new facilities that are nearing their final investment decisions, as well as those optimizing their existing systems and seeking diverse supply options. We are engaging with both groups. As for your second question about progress, could you please repeat the last part?

Trident…

Yes, we have made significant progress on Trident and may soon expand the scale of the project. We hope to have positive news to share in the next quarter. There is a lot of interest, and the West to East movements we've discussed continue to be relevant.

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?

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.

Understood. Thanks.

Hi, everyone, thank you for taking my question. Regarding the Haynesville, you mentioned growth in 2025 and 2026, and we agree with that. Could you remind us how much capacity will be available once the projects for 340 a day in 2025 are online for that system?

When discussing hydraulic capacity in the Haynesville, I recall that last January we were nearing capacity and planned to execute some projects in the second and third quarters. Due to last year's price environment, we experienced a decline in volume. Currently, we are approaching that same capacity point. There is some flexibility in the system, and I believe that over the summer we will return to capacity in the Haynesville. We are even exploring ways to get ahead of it again. There are opportunities for us to invest in capital-efficient measures to unlock additional capacity, but we need to stay closely connected with our producers and be cautious to ensure we see the volumes coming in before increasing capacity.

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?

Yes, certainly. The Houston Power Generation project exemplifies our goals, even though it may be smaller in scale compared to other initiatives we've discussed. It is a highly capital-efficient project. We recently put our Central Texas pipeline into service, which is a 30-inch trunk that feeds into the Austin area. This area is experiencing a lot of activity, and we are looking into power opportunities and organic growth there. Additionally, we are exploring potential data center opportunities in that region. I believe we are well-positioned with our platform. As Rich mentioned, we have foundational elements in place, with additional opportunities for enhancement. There is significant activity across our Intrastate systems, and the projects from Houston Power Generation to South Texas to Central Texas are great examples of capital-efficient initiatives that present excellent opportunities.

Got it. Makes sense. Appreciate the time.

Absolutely.

Okay. Thank you very much. Have a good evening.