Oneok Inc (OKE) — Q3 2025 Earnings Call Transcript

Thank you, Bo. We issued our earnings release and presentation after the markets closed yesterday, and those materials are available on our website. After our prepared remarks, management will be available to take your questions. Statements made during this call that might include ONEOK's expectations or predictions should be considered forward-looking statements and are covered by the safe harbor provision of the Securities Acts of 1933 and 1934. Actual results could differ materially from those projected in forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings. With that, I'll turn the call over to Pierce Norton, President and Chief Executive Officer.

Thanks, Megan. Good morning, everyone, and thank you for joining us today. On today's call is Walt Hulse, the Chief Financial Officer, Treasurer and Executive Vice President, Investor Relations and Corporate Development; Sheridan Swords, the Executive Vice President and Chief Commercial Officer. Also on the call are Kevin Burdick, Executive Vice President, Chief Enterprise Service Officer; and Randy Lentz, the Executive Vice President and Chief Operating Officer. Yesterday, we announced higher third quarter results and affirmed our 2025 net income and adjusted EBITDA guidance ranges. We also reaffirmed our expectation to recognize approximately $250 million of synergy-related adjusted EBITDA in 2025. Our third quarter adjusted EBITDA increased 7% compared to the second quarter, once again highlighting the sequential progression of earnings we anticipated this year. Compared with the first quarter of 2025, adjusted EBITDA has increased approximately 20%, driven by volume growth across our operations, steady demand for our services, and the consistent execution of acquisition-related integration strategies by our employees. We believe that ONEOK's long-term market value will be driven by our strong fundamentals, contiguously integrated assets and consistent results from our diversification efforts. Key among these catalysts are ONEOK's significant operating leverage, contiguously integrated assets, synergy earnings with the majority being within our control, and our financial strength and flexibility. So let's start with the operating leverage. We've either recently completed or are nearing completion on projects that will add nearly 600,000 barrels per day of NGL pipeline capacity, more than 200,000 barrels a day of fractionation capacity more than 550 million cubic feet per day of Permian Basin natural gas processing capacity, and an expandable refined products capacity to the growing Denver market. All of these projects are either complete, or expected to be completed within the next 1.5 years. This operating leverage is a key differentiator for ONEOK, providing the ability to capture significant earnings uplift with limited incremental investments. Our contiguously integrated assets, including our extensive NGL and refined product system provide strategic connectivity and growth opportunities. Regarding acquisition-related synergies, we remain on track to realize approximately $250 million of incremental synergies in 2025. By the end of this year, we will have realized nearly $500 million of synergies since closing the Magellan acquisition in September 2023, far exceeding our original expectation. We continue to see meaningful synergy opportunities ahead across all of our acquisitions with the majority of these completely within our control and not dependent on commodity prices. Finally, our financial flexibility strengthens our position and is the cornerstone of ONEOK's business. A strong balance sheet and an intentional and disciplined approach to capital allocation and cash flow generation continue to support our ability to generate long-term value for shareholders. Our established and stable customer base includes some of the largest and most well-capitalized producers, refiners, and downstream customers. Our combination of demand pull and supply push earnings, and our long-standing customer relationships provide resilience through different cycles. ONEOK's strong fundamentals and integrated assets position us well to navigate near-term challenges and continue delivering results for investors and customers. I'll now turn over the call to Walt and Sheridan to provide the financial and commercial updates.

Thank you, Pierce. Third quarter 2025 net income totaled $940 million, or $1.49 per share, a 10% increase compared with the second quarter. Third quarter adjusted EBITDA totaled $2.12 billion, which included $7 million of one-time transaction costs. The acquired EnLink and Medallion assets delivered nearly $470 million in adjusted EBITDA during the third quarter, continuing their meaningful contribution to year-over-year earnings growth. Additionally, we benefited from higher volumes in our natural gas liquids and natural gas gathering and processing segments. During the quarter, we repurchased more than 600,000 shares of common stock and retired more than $500 million in senior notes through a combination of scheduled maturities and repurchases. Year-to-date, we've extinguished over $1.3 billion in senior notes through maturity repayments and repurchases. This combination of share repurchases and debt management reflects our commitment to a balanced capital allocation approach that utilizes multiple available channels to create shareholder value. Our long-term leverage target remains at 3.5x, which we expect to approach in the fourth quarter of 2026 on a run rate basis. With yesterday's earnings announcement, we affirmed our 2025 net income guidance range of $3.17 billion to $3.65 billion, an adjusted EBITDA guidance range of $8 billion to $8.45 billion, which as a reminder, excludes the impact of one-time transaction costs. Year-to-date, transaction costs included in adjusted EBITDA have totaled $59 million. We continue to expect our total capital expenditures, including growth and maintenance capital to be in the range of $2.8 billion to $3.2 billion in 2025. As we finish out the year, we remain focused on capturing additional synergies and operational efficiencies with approximately $250 million in synergy contributions expected for 2025. As discussed last quarter, we don't expect to pay meaningful cash taxes until 2029, which is a year later than we previously anticipated. Additionally, we expect our cash tax rate in 2029 to be below the full 15% corporate alternative minimum tax rate, which is also less than our historical expectations. Since the One Big Beautiful Bill, we now expect to pay more than $1.5 billion less in cash taxes over the next five years, and the corresponding increase in expected free cash flow supports our continued flexibility for capital allocation in the years ahead. I'll now turn the call over to Sheridan for a commercial update.

Thank you, Walt. Starting with the natural gas liquids segment. Total NGL raw feed throughput volumes increased compared with the second quarter, driven by higher volumes in the Permian Basin and Rocky Mountain region. Rocky Mountain region volumes averaged more than 490,000 barrels per day, another record for the region and a 5% increase compared with the second quarter, driven by higher propane plus volume and continued strength in ethane recovery. Gulf Coast/Permian NGL volumes averaged nearly 570,000 barrels per day during the third quarter, and 8% compared with the second quarter driven by the continued ramp-up of newly contracted volumes. In the Mid-Continent, less ethane recovery led to slightly lower volumes compared with the second quarter, but we continue to see consistent C3P+ volumes from the region. Regarding our fractionation operations. Our Mont Belvieu fractionation complex, including our MB-4 fractionator is back to capacity following the incident in early October. After initial safety reviews, we resumed operations at the majority of the complex within 72 hours. Repairs were made in operations at MB-4 resumed within 10 days following an incident. During the downtime, we were able to optimize our fractionation positions in Mont Belvieu and the Mid-Continent, as well as utilize storage. We anticipate working down any inventory build related to this incident in addition to the inventory being held over from the second quarter over the next several months. As we fractionate and sell the inventory, we will be able to recognize the associated earnings. We continue to see opportunities for ethane recovery across our system during the third quarter. Weaker natural gas prices in the Rocky Mountain region have led to greater recovery opportunities, and we expect to continue to see high levels of recovery through the first half of the fourth quarter across our entire system. Related to synergy products, we have now completed the primary Easton asset connections, including Galena Park, East Houston and our Pasadena joint venture, providing key connectivity between our Mont Belvieu NGL assets, and key Houston area refined product terminals. Additional downstream connections will be completed through early 2026. Additionally, the build-out of connectivity between our Conway NGL and Mid-Con refined product asset is on track for completion by year-end of 2025. Both of these projects are expected to provide benefits through increased transportation fees in our natural gas liquids segment, which we have already begun to realize, and also blending uplift in our refined product and crude segment. It's also important to note that these projects provide transportation and blending opportunities with third parties, expanding the optionality of these assets further than ONEOK's own blending business. Moving on to the refined products and crude segment. Third quarter refined product volumes increased sequentially, reflecting increased seasonal demand. When booking year-over-year, we continue to experience some regional supply disruptions along the system related to refinery maintenance, primarily impacting short-haul lower tariff movements. On average, refined products tariff rate benefited from the July adjustments, where we increased rates by mid-single digits as expected. As of mid-September, we've entered the fall blending season. Liquid blending volumes in the third quarter and year-to-date have been higher than expected due to successful synergy execution. Physical blending volumes have increased approximately 15% year-to-date compared to the same period in 2024. Despite tighter margins from lower gasoline prices, increased blending capacity positions for a strong upside in a rising price environment. Our crude oil gathering and long-haul pipelines continue to perform well. Third quarter crude oil volumes increased sequentially demonstrating resiliency of our Midland gathering business. Moving on to the natural gas gathering and processing segment. Volumes increased across all regions compared with the second quarter of 2025 as producers continue to execute their 2025 plans. Looking first at the Permian Basin. Volumes increased 5% compared with the second quarter, averaging 1.55 billion cubic feet per day in the third quarter. Currently, we have 20 active rigs on our dedicated acreage, driving the need for recently announced capacity expansions totaling more than 550 million cubic feet per day across the Midland and Delaware basins. The Permian Basin continues to be a key area of strategic growth for us, and we will continue to be actively engaged and intentional in assessing opportunities to expand and enhance our integrated operations within the basin. In the Mid-Continent, natural gas processing volumes increased 6% compared with the second quarter, highlighting producer resiliency in the basin and strong production results out of the Cherokee formation in Western Oklahoma. There are 11 rigs on our dedicated acreage in Oklahoma. Rocky Mountain region process volumes averaged 1.7 Bcf per day in the third quarter of 2025, a 4% increase compared with the second quarter, and a record for ONEOK in the region. Strong well completions during the second quarter drove third quarter volumes and will continue to benefit throughout the remainder of the year. There are currently 16 rigs on our dedicated acreage. Looking forward, the current commodity price environment will likely drive more moderation and increased optimization of drilling and completion activities across the basins where we operate. However, even in a flat crude oil production environment, strong gas to oil ratios and continued production efficiency point to modest growth in our natural gas and NGLs across our systems. I'll close with our Natural Gas Pipeline segment, which we reported another strong quarter and continues to exceed our original expectations for this point in the year. We continue to optimize the legacy EnLink asset and be opportunistic regarding natural gas pricing dynamics across our strategic assets in the Permian and Gulf Coast areas. We remain well positioned to help meet the growing demand for natural gas, both domestically and for LNG exports, with an extensive pipeline network and key assets located in Oklahoma, Texas, and Louisiana. We are directly connected to major LNG and industrial customers and continue to work on additional opportunities with them. Additionally, we are in active discussions related to numerous potential AI-driven data center projects. The key to these projects remains speed to market, and our intrastate assets are located in premier natural gas supply and demand centers, close to many of these proposed projects, and are well positioned to meet the timing needs of the market. Pierce, that concludes my remarks.

Thank you, Sheridan and Walt. Before we move to Q&A, I want to close by emphasizing that we continue to see opportunities ahead. Importantly, we're executing on our strategy to combine our strategic acquisitions into an even stronger and more resilient business. Our integrated assets are performing well, expanding our reach in key basins and demand markets, and creating an even stronger commercial connectivity across our system. Our integrated assets continue to provide stable, fee-based earnings and position us to capture opportunities across market cycles. We're able to execute our strategy because of the employees across our company. I want to recognize their commitment and contributions to our business, and our vision for ONEOK. Their focus on safety, operational excellence and innovation is a key to our success. As we look ahead, we remain confident in our strategy, our strong fundamentals, and the catalysts that we expect will continue to deliver growth and long-term value for our investors. Operator, we're now ready for questions.

This is Vrathan Reddy standing in for Jeremy. I understand that you are not ready to share specifics for 2026 at this moment. I would like to know if you could outline the positive and negative factors affecting earnings growth as we look towards next year. Specifically, should we still expect mid- to high single-digit growth to be appropriate?

This is Sheridan. The factors that will support our growth into next year include the synergies we've established this year, which are already yielding results, particularly with Easton. We expect to see a full year's impact from that, along with contributions from Conway NGL to Mid-Continent refined products, among other initiatives. Our growth projects are also on track, with the Denver expansion launching midway through the year. We anticipate adding over 500 million a day in processing capacity through 2026 and into early 2027. This increase in capacity will serve as a positive influence as we progress. Additionally, we foresee an expansion in market share within the Permian and other regions, which will further propel our growth. These are the key drivers we believe will shape our growth leading into 2026.

Got it. And then on capital allocation, $45 million of buybacks in the quarter. Could you walk through, I guess, how you think about executing on the buyback versus debt pay down or other capital allocation priorities at this point?

Sure. Well, as we've said in the past, as we get closer to a clear path to our debt-to-EBITDA target of 3.5x, it's going to free up our flexibility to add some stock buybacks to the equation. We continue to be on track with where we think we need to get to from a debt-to-EBITDA standpoint. And with that visibility, we're starting to feel a little bit more flexible in our asset allocation, saw the opportunity to buy back some stock there in the third quarter and did a modest amount. We also saw a pretty nice opportunity on the bond side and executed on that as well.

Maybe we just go back to the '26 guidance. The slide in the deck, you removed the mid-single digit to high single-digit growth language. So I just wanted to make sure I understand the change there and just how you're thinking about '26?

Michael, this is Pierce. What I would say is our focus is on finishing 2025 strong and carrying that momentum into 2026 year. They just went over several of those projects and the different things that are going to impact 2026. We're continuing to have discussions with the drilling plans, with our producers. We're going to be finalizing our 2026 guidance in the early part of the first quarter of 2026. But I'd end this way that we are very confident in our positive trajectory. So as far as guidance for 2026, I'll just ask you to stay tuned.

Okay. Fair enough. Appreciate that. And then just wanted to ask if you could quantify the potential impact of Waha spreads widening. Either can you capture that from your EnLink assets? Or do you have more open capacity on WesTex to capture those spreads than you have historically?

Michael, this is Sheridan. Obviously, the Waha to Katy/Houston Ship Channel spread has had a positive impact especially when you bring together our ONEOK West Texas assets, the West Texas system and the EnLink system and capacity we have on other pipelines, we've been able to leverage that to grow that. We've been able to do that not only on the EnLink side, but also on our legacy ONEOK gathering system. So it has been a positive impact going forward. We will continue to see us use that capacity as we grow our gathering and processing for our customers as we go on as well, but we have seen the ability to move gas on our capacity and also do a lot of parking loans on our system as well.

First question, maybe to start off with capital allocation. Curious how you guys are thinking about maybe where that next marginal dollar CapEx goes. And really, if you could just dig into some of the basins or the asset types between NGLs, gas, and liquids, what's most attractive to you right here?

Well, Spiro, I think we look at every project on a stand-alone basis. We've historically been able to use our strategy of building off our existing asset base that expand and extend approach, which has given us the opportunity to do some very attractive capital projects. That same strategy exists today with more assets. So given the acquisitions we've made, we've got more opportunities to expand and extend. So we look at each and every one of those on a stand-alone basis. That said, I think that our expectation is that CapEx will trend down here over the next several years. As Pierce had mentioned in his remarks, we have a lot of operating leverage in our existing business, whether it be NGL capacity, fractionation capacity that's coming on. So we don't need to continue to expand that. So we do see CapEx starting to trend down.

Got it. Second one, maybe just going to the Sunbelt connector. I was curious to get your thoughts on the competing open season that's out there, how you think your project stacks up? And if there's enough demand in Arizona for maybe everyone to win some business here?

Yes, this is Sheridan. I mean, I would say that we feel the Sunbelt Connector is a very competitive project as we look at the other opportunities out there. Obviously, right now, we're still in the open season. We're still talking to a lot of customers. We've seen a significant amount of interest as we end there. And we think a lot of that is driven by the competitive advantage of this pipeline has is that we are already connected not only to all the Mid-Con refiners in the upper Midwest that we can pull that volume and source to this pipeline, but we also have extensive connectivity into the refining center on the Gulf Coast where we can actually do some very efficient expansions. We already have capacity between the Gulf Coast in El Paso, and we have some very efficient capacity expansion that we can leverage and continue to go forward. So we think we're going to compete very, very nicely going in there. We'll just have to see how the customers come out and where we get them signed up, and how much volume to see how which one of these projects will continue to be built.

Following a notable uptick in volumes across your regions, I wanted to go back to the forward outlook a bit. Given the heightened market concerns around how producer budgets may be evolving in light of recent crude price volatility and understanding that the process is still underway. But can you just give us any sense of any early indications on how you expect volumes across your supply push assets to trend through the next year?

Theresa, this is Pierce. I think we assess our various basins by examining the current drilling activity and the prevailing crude and gas prices. We also evaluate how many rigs are needed in each basin to maintain flat production volumes. At this moment, we are confident that there is sufficient drilling activity to keep our production stable. Additionally, we observe that our gas-to-oil ratios are increasing, particularly in the Bakken, where the ratio is 3.1, and every tenth of that is significant. Based on our calculations, there are enough rigs operating to sustain consistent crude production, and we believe our gas volumes will continue to grow. Sheridan, do you have anything to add?

We discussed the Bakken and are now looking at the Permian. We have sufficient visibility into the volumes coming onto our system today, with completions expected in the last quarter of 2025. This gives us confidence that we will continue to see growth from the Permian into 2026 and beyond. Additionally, we are very optimistic about the Cherokee formation, which appears to show significant resilience even with a slight price downturn in the Mid-Continent. Overall, we remain very positive about our future volumes.

And Theresa, the only thing I'd add to that is, Sheridan mentioned this, but I want to make sure that this gets across, he mentioned competing for other volumes. That's the one thing. We all focus on what's the drilling, what's the acreage dedications. But just as importantly, there's gas that's flowing out there right now that may be going to somebody else. And as those contracts roll off, we feel confident we're going to be able to compete with those volumes as well. Most of them are going into CDPs so not a lot of capital to really connect to our operating leverage. So it's just a point I want to make sure that's made.

And would you be able to provide an update on your LPG export commercialization efforts? How are those conversations going with potential customers? And what kind of interest are you seeing in the market?

This is Sheridan again. First, I want to emphasize that we have sufficient supply to build our stock, which has attracted a lot of interest in our docks for some time now, and that interest continues. Regarding our contracting strategy, we are currently very satisfied with our position. While we cannot disclose many details due to the competitive nature of the market, we are pleased with where we stand.

There's been some rumblings that there may be kind of a call on the Mid-Con gas complex over the next year or 2 to meet all the LNG that's ramping. Is that something that you're hearing from your customers? And I guess, Sheridan, do you have a sense of if gas egress could become a limitation there for gas and NGL growth out of the Mid-Con?

What I would say right now is that we are noticing some people possibly shifting towards a more gassy segment of the Mid-Continent, which we have always indicated has some gas potential. As gas becomes more attractive, we will see more drilling directed towards the gas sector, benefiting our G&P and NGL areas. I believe there is still significant opportunity for growth in the Mid-Continent before we face any limitations on egress. We are prepared to implement solutions to increase gas extraction from the region if necessary. This is part of the reason we have confidence in our growth projections for the Mid-Continent as we observe this shift towards a more gas-focused play.

That makes sense. And it seems like year-to-date in your processing and NGL volumes, Bakken is trending a bit above the guide and Permian is trending a bit lower than the guide. Can you just talk about the dynamics of that and how much has to do with ONEOK's market share in those basins versus basin growth overall versus your expectation?

We started with the Permian Basin, where the larger pads that were delayed early in the year caused us to come out a bit slower than anticipated. However, as those pads have come online, we have reached the volume levels we expected at this time when we developed our plan. We are satisfied with our current volumes in the Permian Basin. In the Bakken, we have achieved record volumes on the NGL side, largely due to ethane recovery. The discretionary ethane we can introduce has benefited from the wide spreads created by the low gas prices in the Bakken over the summer. This allowed us to take advantage of the situation by putting ethane into our system and delivering it to the Belvieu complex. We are very pleased with this progress, and it will continue into the fourth quarter.

We are in the midst of the AI revolution. I believe NVIDIA's market cap reached $5 trillion this morning. In your comments, you mentioned various ways we can benefit from this revolution. Could you elaborate? Where could ONEOK find opportunities as we enter this data center construction surge in the U.S.?

Yes. This is Sheridan again. We have been approached by over 30 different projects related to data centers. These projects are being developed near natural gas pipelines to support their electricity generation needs. We have reviewed several of these projects and found some that are very close to our pipeline, giving us a competitive advantage in supplying them. These will not require significant capital investment; instead, they are expected to offer good returns with lower capital costs. We are seeing a substantial number of these opportunities where we believe our speed to market and proximity to the data centers will help us capture our fair share.

Perfect. My quick follow-up here is you and your partners recently announced the Eiger Express pipeline. Help us understand the importance of this project? And why do you see the need for this project to go ahead?

Yes. On the Eiger Express project, we're really excited about that as we continue to see the demand from LNG and a lot of that demand is needed to be supplied out of the Permian Basin. We still see growth in that area. The Eiger was a nice complement to the Matterhorn. And because of the ownership we had in Matterhorn, we were able to see inside of that. And that project was FID when they had enough firm commitments from customers to be able to make an acceptable return. They've been continuing to be able to get more contracts on that. So we're very pleased where the Eiger project is going, and it allows us to put complete our integration, be able to put gas out of our gas plants onto a pipeline that we get some equity back in and be able to grow with it. So we're very excited about the Eiger project.

Well, the only thing I'd add to that, Manav, is that you've got the capacity that's currently out of there. One of the reasons that you see some of these widening of the spreads is because of the tightness of that capacity. So there is extra capacity that's needed in the 10 Bcf of LNG that's been basically built down in Louisiana and Texas, primarily in Texas. It's going to need this gas. And so it's not like we're building the pipe for 10 Bcf. It's just only a portion of that. So the demand side of this thing is very positive to fill it up.

I wanted to follow up on Sunbelt first. So in the past, you've talked to potentially working with partners. Could that include refiners or other strategics? And are there any discussions going on, on that front that could help commercialize the project?

We've commented that we would deal with partners. And what I would say, they need to be a strategic partner. They need to bring something to it. And we're continuing to open to that. Obviously, if there's we would not comment on any conversations that are going on at this time, but we are open to a partnership as we've said before.

Okay. Great. Second one, I think in the prepared remarks, you alluded to the Permian as kind of a core strategic focus for the company. Given it's a very competitive market, especially these days, do you feel like you could benefit from more scale in the Permian overall? And then separately, can you remind us where you are in the process of some of the EnLink volumes transitioning over to ONEOK pipelines in your system?

I'll start with the last question first. Regarding EnLink volumes, you're referring to the NGL volumes from the legacy EnLink plants that won't be going to the ONEOK NGL system. We anticipate these volumes to gradually shift to our system, with about 50,000 barrels a day expected to transition from 2026 to 2028, coinciding with the expiration of those contracts. Once those contracts end, they'll move directly to our system. We appreciate scalability in the Permian, where we are already planning to add another 500 million a day of processing capacity. We aim to grow in that region and prefer organic growth as it is the most cost-effective approach. While we are exploring M&A opportunities, we will proceed with caution and a disciplined strategy for any potential acquisitions.

You talked about, I think in response to Jean Ann's question, just the ramp on kind of Permian G&P relative to the guide. Can you also just spend a minute or 2 on the crude side? I think also the year-to-date is looking a little softer versus the full year. Maybe just bridge us to the volume guidance.

When we examine our crude volumes, we see a slight decrease overall, but it's important to break that down into different parts. The primary area of decline is in our low-volume, high-margin business. However, in our main gathering crude business, we are operating within our expected range and are optimistic about our growth prospects. Specifically, our crude volume from long-haul and the HDS system in Belvieu is slightly down, as is some short-haul volume in Midland. Nevertheless, our core business, which involves taking crude from leases and batteries through our system, is performing as anticipated, and that remains the key factor for this segment.

All right. That's helpful. I appreciate that. And maybe staying in the segment. Now it's the Easton kind of integration pretty well done. You're going to get more on the Conway side tied in next year. Are you able to frame up in kind of, let's say, like a mid-cycle environment, or what have you? This overall size of the blending business on a kind of, like, annual run rate basis at this point?

When considering the blending business, it's important to note that there is a fluctuation component that varies from year to year. However, due to our synergies and other factors I mentioned, we have successfully increased the volume by 15%. This positions us well for when prices and spreads return to more normal levels, allowing us to seize opportunities for growth. As we implement more synergy projects, we anticipate further increasing our earnings from blending and ensuring we have the necessary volume to reach markets that were previously unprofitable for us.

It’s important to remember that 90% of our business relies on volume times fee, while the last spread in commodities accounts for only 10%. Even though we really like and are growing our blending business, it still represents a small portion of our overall business.

I just wanted to revisit your comments on the guidance. I understand that your focus is on finishing 2025 strong. In this context, considering the MB-4 incident we had, is the midpoint of the full year guidance, which is $8.225 billion, still a reliable target for the fourth quarter goals?

Well, I think what we have said is that we are confident to be within the range. We've affirmed that range. And we're going to see how the fourth quarter continues to play out. But at this point, we're going to keep it in the range, and we're very confident of achieving there.

Okay. And then one clarification on Bakken. From Sheridan's comments, it seems like you mentioned that you have 16 rigs running on your system. I believe last quarter that was 15. So is there a pickup in rigs? So first of all, I want you to clarify that? And then how should we think about that number trending, especially as you go into discussions with your customers?

Yes, it is up one. I mean, there's a lot of flexibility in those rigs moving on and off, but we are up rig on our business that we like. As we think about trending into 2026, the producers are still in their budget process right now. As they continue to come out that, we hear more from them. We'll be able to reassess what 2026 looks like in terms of rig count and volumes and everything else like that. But we have good momentum into 2026, so we like, so we're optimistic.

I wanted to ask about the quarterly results. In your disclosure, you mentioned that the NGL segment benefited from selling product out of inventory and the timing of operational gains and losses. Could you elaborate on those comments a bit more? I'm trying to understand the underlying earnings for the quarter. I also have a follow-up question.

This is Sheridan. In our NGL segment, we mentioned selling purity products. In our marketing business, there are times when we hold products for storage and sell them at different times of the year. This can result in us shifting earnings across quarters. We experienced a boost by selling some products in the third quarter, which was mainly due to the timing of our sales. Regarding our refined products, over the year, we generally find ourselves slightly long on volume. However, we strategically choose times throughout the year to sell our excess, and we took that opportunity in the third quarter.

Got it. My follow-up is more strategic. It appears that your EBITDA growth rate will inevitably decline from the impressive rates of the past few years to what you've indicated as mid- to high single digits. We're eager to see where it lands next year. As you consider drawing in capital for your equity, how critical is it to sustain your competitive growth rate? Or do you believe that your EBITDA growth rate isn't the primary factor in attracting equity capital, and there are other ways to achieve that?

Having a positive growth rate will undoubtedly attract investors to the stock. Looking at our history, we have experienced cycles where commodity prices fluctuated. Since 2014, we have achieved positive EBITDA growth every year, and we expect this trend to continue. Right now, we need to clarify how the producers will engage in the upcoming year before we can provide specific guidance, which we will do at the start of the first quarter. Our business is incredibly resilient, and we are confident in our ability to grow through 2026. We will focus on capital allocation, prioritizing high-quality projects. Additionally, our cash flow profile suggests we will have the opportunity to repurchase stock in the coming years, which could positively impact our performance. Ultimately, we will continue to pursue earnings growth moving forward.

The only thing I'd add to that is I'd encourage you to go back and look at the data for, like, crude oil prices between 2008, 2009, 2015 to 2016, 2020. It really paints the story of what Walt just said, about how we've been able to grow our EBITDA through these different down cycles. And one thing I would say because most of us have been in this business over 40 years, with every down cycle there's usually an up cycle. You don't get into another down cycle, so you have an up cycle. So it will come back, and we're confident to manage through the down cycle.

Thanks, Bo. Our quiet period for the fourth quarter starts when we close our books early next year and extends until we release earnings in late February. We'll provide details for that conference call at a later date. As a reminder, our IR team will be available throughout the day for any follow-ups. Thanks, everyone, and have a good day.