Welcome to the Quarterly Earnings Conference Call. [Operator Instructions] Today’s call is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Rich Kinder, Executive Chairman of Kinder Morgan.

Thank you, Ted. And before we begin, as we always do, I’d like to remind you 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 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 that are 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. An analyst recently described Kinder Morgan as a capital-efficient business model leveraged to natural gas infrastructure growth. I largely agree with that assessment, although it omits our significant steps in our energy transition efforts, including renewable natural gas, renewable diesel and potentially carbon capture and sequestration. I spent the last several quarters on this call, describing that capital-efficient business model. And today, I want to spend a bit of time discussing natural gas infrastructure and the value of our existing infrastructure in today’s environment. As we all know, it’s become increasingly difficult to build new greenfield pipeline projects, particularly in the Northeast and other areas outside the U.S. Gulf Coast. While this situation is, in my opinion, unfortunate and poor public policy, it does make existing infrastructure even more valuable. I don’t think that value is fully recognized by the equity markets. The difficulty in building new pipeline and ancillary facilities widens the moat to use long bucket sprays around existing assets at a company like KMI. That’s an obvious source of additional value. But beyond that, having…

Yes. Thanks, Rich. We are having a good year. We are projecting to be nicely above plan for the year and substantially better year-over-year Q3 to Q3, as Kim and David will show you. Some of the outperformance is commodity price tailwinds, but we are also up on commercial and operational performance. Just a couple of highlights. Our capacity sales and renewals in our gas business are strong. Gathering and processing is also up versus plan and up year-over-year. Existing capacity is growing in value on our natural gas network. And we are seeing it across our network on our major interstate systems and on our Texas intrastate system and we are seeing it in both storage and transportation service offerings and we are even seeing it on a previously challenged system, the Midcontinent Express Pipeline. In CO2, SACROC production is well above plan. And of course, we are benefiting from higher commodity prices in this segment, though prices are not as elevated as they were when we talked after Q2. We are facing cost headwinds, mostly because of added work this year. But while costs are up, we are actually doing very well in holding back the impacts of inflation. It’s hard to measure precisely, but based on our analysis of what we can reliably track, we are well below the headline PPI numbers that you are seeing. Actually, we appear to be experiencing about half of that increase. Much good work by our procurement and operations teams and much of this good performance is attributable to our culture. We are frugal with our investors’ money. Looking ahead, we are seeing good opportunities across our network and in gas, in particular, Rich emphasized LNG and that is clearly the biggest long-term opportunity and our network is especially well positioned.…

Okay. Thanks, Steve. Starting with the Natural Gas business segment, transport volumes were roughly flat for the quarter versus the second quarter ‘21 and we saw increased volumes from power demand and that was offset by reduced volumes to Mexico as a result of third-party pipeline capacity added to the market, the pipeline outage on EPNG, the Freeport LNG outage, and continued decline in Rockies production. If you adjusted our volumes for the EPNG and Freeport outages, which are temporary in nature, we estimate volumes would have been up about 4%. Deliveries to LNG facilities off our pipe averaged about 5.2 million dekatherms per day. That’s about 1% higher than the third quarter of ‘21, but it’s lower than the second quarter of this year. Again, that’s due to the Freeport LNG outage. Deliveries to power plant were robust in the quarter. They were up about 11%, driven by record summer power demand, that’s 880 million dekatherms per day of incremental gas moving to power plants. It’s pretty incredible. Our natural gas gathering volumes were up about 13% in the quarter compared to the third quarter of ‘21 and that was driven by the Haynesville volumes, which were up about 70%. Sequentially, volumes are up 6% with big increases in the Bakken, up 14%; Haynesville, 8%; and Eagle Ford, up 7%. Overall, our natural gas gathering volumes were budgeted to increase about 10% for the full year and we are currently on track for about 13%. Overall demand for natural gas is very strong, as both Rich and Steve mentioned, driving the demand for our transport and storage services and we expect that demand to continue to grow. To add on to what Rich and Steve said, our fundamentals group estimates natural gas demand to grow from roughly 100 Bcf…

Thank you, Tim. So for the third quarter of 2022, we are declaring a dividend of $0.2775 per share, which is $1.11 annualized and 3% up from our 2021 dividend. One highlight before I start on the financial performance. We continue to take advantage of our low stock price by repurchasing shares this past quarter. We added over $90 million of repurchases to what we reported last quarter. And so year-to-date, we have now repurchased approximately 21.7 million shares at an average price of $16.94 per share. We believe those share repurchases are going to generate an attractive return for our shareholders. Our savings from the current dividend alone without regard to the terminal value or dividend growth is 6.6%. For the financial performance for the quarter, we generated revenue of $5.2 billion, up $1.35 billion from the third quarter of 2021. The associated cost of sales also increased by $1.16 billion. So combining those two, our gross margin was $195 million higher. Our net income was $576 million, up 16% from $495 million in the third quarter of last year. Our adjusted earnings, which excludes certain items was up 14% compared to the third quarter of last year. On a distributable cash flow basis, our performance was also very strong. The Natural Gas segment was up $69 million with greater volumes on our KinderHawk system, Haynesville, higher recontracting rates on MEP, NGPL and SNG, greater contributions from our Texas Intrastate systems and favorable commodity prices impacting Altamont and Copano South Texas. Our Product segment was down $23 million, driven by a decline in commodity prices impacting our inventory values, lower crude volumes on our HH system as well as higher integrity costs partially offset by higher rate escalations year-over-year. Our Terminal segment was up $7 million with – as…

Alright. Ted, let’s go ahead and open up the channel for questions here and I’ll just remind everybody, limit yourself to one question and a follow-up. And then if you’ve got more, get back in the queue, and we will get to you and get your questions answered. And also, we have a good chunk of our management team sitting around the table here today, and I’ll make sure that you hear from them on questions about their businesses. Alright. Ted, with that, let’s take the first question.

[Operator Instructions] First question in the queue is from Chase Mulvehill, Bank of America. Your line is now open.

Hey, good afternoon, everybody. I guess first thing I wanted to hit on is just kind of Permian residue gas egress. And you’ve got EPNG outage today. And I guess, maybe could you talk about the timing and how much incremental throughput you would see out of Line 2000 of basically EPNG system, which Line 2000 is back up and running.

Okay. Tom Martin?

Yes. So given the nature of that outage, we can’t say too much in detail. But just in general, we see somewhere between 500,000 and 700,000 a day of incremental volumes flowing west when that line is back in service.

Okay, perfect. And unrelated follow-up, I know it’s a little early to talk 2023. I know you’re not going to give us exact numbers or anything, but maybe just some puts and takes as you see the overall business as we kind of look out to 2023?

Yes. It is too early. We’re just in the middle of our annual budget process. And so we will – as we always do, we will give you an update when we’ve got that information complete. But I mean, I think it’s the things that we’ve talked about here today. It’s – we’ve got some nice tailwinds. Who knows what commodity prices are going to look like next year. But we have some nice tailwinds in our Natural Gas business and a good backlog of projects and good project opportunities. And so those are the pluses. On the minuses, we don’t know what’s going to happen with interest rates, but we do have about $7.5 billion of floating rate debt, and we have some renewals on – or some refinancings on about $3.2 billion, which is actually our highest year next year. We don’t see another year above $2.1 billion after that. And so those are some of the big puts and takes.

Okay, perfect. I will turn it back over. Thanks, Steve.

Next question is from Jeremy Tonet with JPMorgan. Your line is now open.

Hi, good afternoon.

Good afternoon.

Capital allocation is a big debate point in the market are focused, if you will, and just wondering if you could update us as how you see your capital allocation philosophy these days? On the one hand, there is a case to be made for repurchases, saw some in the quarter. But how do you weigh, I guess, maybe ramping up the pace of buybacks there relative to the other opportunities you have, especially with regards to RNG consolidation or other energy transition growth CapEx opportunities as you laid out there?

Yes. We look at all of those things. And of course, we’re kind of a broken record on this, but the first in the order of operations, making sure we’ve got a strong balance sheet, we do. And our metrics are proving to be stronger than the long-term approximately 4.5x. And so we’re in good shape there. Having – as David said, at the beginning of the year in the investor contract – conference, having a little extra capacity is a good thing, including for equity investors because it positions you well against the – for the pluses and also against the minuses. Then from there, we want to invest in attractive returning high NPV projects well above our cost of capital that we’re confident we can execute on well. And so that goes to what you see has happened in our backlog and the opportunities that Kim alluded to. And then from there, it’s returning value to shareholders and that’s a combination of a growing, but well-covered dividend. So we’re up 3% of the dividend year-over-year, as David mentioned, and then opportunistic share repurchases, which we’ve done a significant amount of this year. And so that’s kind of the order of operations for how we think about capital allocation and all of it, keeping in mind bringing value to our investors.

Got it. Thank you for that. Very helpful. And just want to circle up with Elba real quick. Just wondering, could Elba be expanded and might you look to monetize more of that or similar assets in the future?

So yes, it can be expanded, and we are going through the evaluation process now, very early days looking at potentially a little over 5 million MTPA – 5 MTPA opportunity there, but again, very early days to know whether that will work, but we do have the space for it. And that would be synergistic with the existing tankage and dock usage there. And as far as selling incremental interest there, I mean, that would be on the existing cash flows, really, any expansion opportunity would be separate and apart from that.

Yes. And to be clear, I mean we like our position in Elba, where we got a very, very nice – we made several very good deals at attractive multiples and actually have pulled in more proceeds than we’ve invested in the facility, and we still own 25% of it and the expansion opportunity that Tom is referring to is outside of the JV. And so if we are able to – and we’re not – it’s not in our backlog, we’re not projecting that for you today, but we are examining the opportunity to do an expansion, which would be to our account.

Got it. Thank you very much.

The next question is from Marc Solecitto with Barclays. Your line is now open.

Hi, good afternoon. So maybe just to start on the guidance language, you referenced trending 4% to 5% above budget for EBITDA. You obviously announced the Elba transaction, strip has come down a bit. But I wonder if you could talk about any other drivers around the subtle change in the language from last quarter?

Yes. Since the last quarter, we’ve seen significant outperformance in the gas group. We’ve got lower sustaining CapEx. On the other hand, as you noted, commodity prices have decreased. We’ve seen lower volumes in the Bakken is – primarily because it took longer for them to recover from an April storm than we anticipated, lower refined products volumes and higher interest.

Got it. That’s helpful. And then in the event of a potential product export ban, I wonder if you could just talk about how your assets would be positioned in that scenario, particularly thinking about storage, product pipes and the Jones Act tankers business?

Yes. But we will start with terminals and ask products [indiscernible] too, John.

From a terminaling standpoint, we think it will be neutral for us. And on the negative side, we will see a decrease at our export docks. And we handle about 50 vessels a month there at about 43,000. So it’s roughly $2 million each month we will see degradation on. But on the positive side, you’ll see an increase in Jones Act volumes. You’ll see an increase in volumes of the Colonial and Explorer pipelines, which were the largest origin point. And you’ll see a spike in my opinion, in the price of storage, both in there and in New York Harbor.

And Dax from a products pipeline...

Yes, for us, it’s probably neutral to positive. I think the West Coast is probably reasonably neutral. But if you look at the Southeast and you’ve got products that back up in PADD 3 and you’ve got to clear that out of there. We certainly have capacity on product Southeast pipeline. And I would expect that the products would move on that, particularly if Colonial moves in or continues to stay in allocation. We clearly have storage position in the Southeast that I think to John’s point would benefit as well. And then probably a little bit less important, but on CFPL, I think that some of the imports that you’re seeing coming into Port Canaveral that get trucked into Central Florida would probably get backed off, and we could see some benefit on CFPL as well, so.

And Marc, just to comment on probability here. I mean, I think that – and some of you have written about this, it won’t have the desired effect, right? It’s not going to improve things at the pump for U.S. consumers. This is a global and integrated market. And as a consequence, we think that as it’s thought through more, it becomes less and less likely to happen.

Got it. That’s very helpful. Appreciate the time.

Next question is from Neal Ding with Truist Securities. Your line is now open.

Good afternoon, guys. Could you talk – you mentioned on CCS, and I’m just wondering maybe in broad stroke, can you talk about the type of opportunities you may be seeing near-term or the magnitude of that? Obviously, I think you guys have a lot of things going on. I’m just wondering what you can talk about? Maybe any details.

Yes, I will start and ask Anthony to – Anthony Ashley, who runs that group to weigh in. But I think, look, the – out of the IRA, the Inflation Reduction Act, there was an increase in the 45Q credit, which is a refundable credit and that increase in the credit has made more sources of CO2 economic for capture. So picking up things like ammonia plants, so we started with kind of processing plants and ethanol plants. Now it’s picking up things like ammonia plants, cement, some coal plants and some natural gas plants. And so we had active discussions going on that kind of pause while we were seeing how that worked out. And then those discussions started picking up. Anthony?

Yes. As Steve mentioned, definitely seen increased activity since the IRA passed, I would say. Our focus areas have been around our existing footprints in West Texas that seem to be off of gas processing plants, which are a little bit smaller opportunities. I would say those are probably the most likely near-term opportunities that happen in the space. But we are having much larger conversations around the U.S., especially around the bigger emissions areas, but those will take a little bit longer to develop and to be able to discuss with you guys.

Got it, guys. Great details. And then just one follow-up. I don’t know if you could say anything, just what do you say currently with – you mentioned the downtime of the volumes associated around Freeport, and I just didn’t know if there is any update you could say what’s going on there?

We don’t have anything other than what you can find out in reading in public and from the company itself.

Got it. Okay, thank you all.

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

Hi, thank you. I wanted to start on RNG. Just curious if you have any takeaways from the BP, Archaea deal and I guess how you’re thinking about the competitive landscape over the long run? And relatedly, are you open to a larger platform deal like this? Or is it pretty clear you’re going to focus more on organic development there?

BP is best to speak on the deal and the prices where they are getting synergies and other sources of value, but just on a bare kind of EBITDA multiple basis without taking into account those other things that they bring to the table. It’s a very attractive valuation and well above that $1.2 billion that identified earlier that based on our investments, our acquisitions and the things that we’re doing. I would say that the focus here is less on M&A at this point. We have a nice platform there, but we continue to have active discussions that are more organic growth.

Thank you. Second question just on interest rates. So the higher rates, if they are sustained over time, does that make you rethink the leverage target at all? Or is it more kind of what you alluded to on maybe keeping a little financial cushion. And then I guess related to that, just – I believe in the past, you’ve hedged some of your variable rate exposure heading into the current year. Have you done any of that to-date? I think you had done that for this year for a fair amount of it.

So, heading into this year, we hedged about $7.5 billion of the $5.1 billion – of the $7 billion of the swaps. So, that is going to roll off in ‘23. So, we will have $7.5 billion of floating in ‘23 and we have not hedged any going into next year. And right now, we don’t think that’s a good opportunity to be able to hedge that. In terms of our policy on floating, the reason that we have the policy on floating is because we have looked over long periods of time, and it looks like that the forward curve over-predicts where floating rate debt is going to trade. And so we want to take advantage of that. And so that means that some years, we are not going to – we are going to pay more. In some years, we are going to pay less, and we are going to pay less for more dollars, right. So, it ends up being a net present value positive trade for us. And so I don’t think that’s not – our policy is not going to change because in 1 year, we have to pay higher interest rates.

And as you know, Keith, it’s worked very well for us over the years. So, over the long term, the approach has been proven value creative.

Yes, it has. Just on the leverage target, too, like you are – there is no – I mean it seems like this is going to fluctuate and the leverage target you are still very comfortable with the 4.5 where things are today.

Yes. Yes, we are. Now as we said and as David said at the beginning of the year, we are targeting to be better than that. And we do think that there is value in having that capacity to take advantage of share repurchases, potential for projects, potential for asset acquisitions, and that sort of thing. So, we have trended a little lower. We are lower right now, yes. Thank you.

Thank you.

Next question is from Jean Ann Salisbury with Bernstein. Your line is now open.

Hi. Two more questions about Permian gas takeaway. So, late 2023 is the target start date for the Permian Highway expansion. Given that there might be demand for that earlier than that, I was wondering if that’s like the kind of project that could be brought on gradually, like you had a compressor that adds 100, for example, and you just sort of gradually do that earlier to late 2023?

And we will just have to see how we get into the year if that’s possible to do. Certainly at – see the same need in the marketplace that you do and we will look to do that if we can, but nothing that we can really speak to with certainty today.

Okay. That’s helpful. Thanks. And then relatedly, I was just wondering if there is any update on the GCX expansion open season or if we should sort of consider that not – maybe not in this upcoming round?

Yes, nothing really new to report there, continuing to market it. As we have talked about in the past, the fuel is sort of the issue in the marketplace at these higher gas prices, but as prices come down, there could be some opportunities there, but nothing really new to speak to right now.

Okay. Great. That’s all for me. Thanks.

Next question is from Brian Reynolds with UBS. Your line is open.

Hi. Thanks for taking my question everyone. Maybe just a quick follow-up on the capital allocation question. There are significant debt maturities coming due in ‘23. So, I was just curious, as you think about the leverage target and just rising rates and the ability to perhaps refinance at lower rates in the future. Kind of curious if you can talk about how you are thinking about refinancing that debt and perhaps using some of the liquidity over the near-term and some of the free cash flow to refinance that over the near-term in the hope of better rates in the back of ‘23. Thanks.

Yes. Brian, we will have a lot more information at the Investor Day. Having just – having completed our budget yet, we have just really just begun our budgeting process. And so we don’t have a lot of detail to provide to you. But I guess just generally speaking, interest rates are much higher now than they have been in the recent past and have been for many years. And so I think we are going to take a patient approach towards locking in rates at these levels. We have the $4 billion of revolver capacity right now that’s available to us. We are sitting on a healthy amount of cash. In addition, so we have flexibility, and we will be patient.

Great. Appreciate that. And thanks for the color on the expected nat gas demand growth of both local and LNG exports in the prepared remarks. I was just curious if you could talk about Kinder’s positioning to support that 16 Bs of nat gas demand growth over the next 7 years. That type of growth implies a lot of CapEx spend along the nat gas value chain. And just given your previous remarks around trying to maintain that 50% market share for LNG, was kind of curious if you could talk about areas of opportunity for future growth around the Permian, Haynesville and Northeast to supply – Northeast to supply that 16 Bs of growth over the next, call it, 7 years? Thanks.

Tom?

Yes. So, I mean clearly, our – as discussed in the earlier remarks, our proximity to the Texas, Louisiana Gulf goes from many of our assets, whether it would be the Texas Intrastate, Tennessee Gas Pipeline, NGPL and others, Kinder Morgan Louisiana. We are in a really great position to expand and extend our network in support of LNG growth and also grow with the Haynesville and the Permian as those volumes grow as well. And I mean the Eagle Ford is another nice – lean Eagle Ford is a nice – another nice opportunity for us to support Texas, Louisiana markets as well. You mentioned the Marcellus/Utica, a lot – a great resource base, a lot harder to get incremental volumes to the Gulf Coast there. So, I think what the market will see is Haynesville growing really concurrently with, if not sooner, than the incremental Permian and the Eagle Ford largely supplying the next wave of projects across Texas, Louisiana, and we think we are in a great position to maintaining our 50% or even exceed that as we go forward.

And look, I think I tried to illustrate the proximity of our network to these outlets, right, to the liquefaction facilities and the capital-efficient nature of the expansions we can do of that network by talking about the 5.7 Bcf that’s under a long-term contract. There is more than that, that’s flowing on our systems, really more like 7 Bcf, but that 5.7 Bcf that’s under contract. The capacity was created with about $1.3 billion of investment. And as we look ahead, look, there could absolutely be chunkier projects, right, bigger builds as you get to the 28 Bcf that Rich mentioned. There could be some bigger ones, but there is also a fair number of $150 million to $300 million projects, call it, roughly that are not ready for prime time. But as we look at people who have not yet FID-ed, but may and we look at where they are sitting on our network, we think we can reach them with expanded quantities with relatively capital-efficient investments.

Good. That’s super helpful.

Next question is from Michael Lapides with Goldman Sachs. Your line is open.

Hi guys. Thank you for taking my question. I actually had two up. First of all, given the volatility in Southern California gas prices, is there any future opportunity to expand EPNG once the outage is done. That’s the first question. Second question is probably one for David. Working capital has been a negative cash drag this year, a little over $500 million. Should we assume that’s just kind of temporary and it reverses, or is this something left over from kind of the muddiness from the first quarter of 2021? Just curious the thoughts on the cash flow impact there.

Tom, start with EPNG.

Yes. So, EPNG, certainly, we continue to look at those opportunities. I think the challenge is getting the proper term on incremental projects that it would take to support capital out there. We have been looking at storage opportunities in Arizona continue to look at that. I think really, the volatility largely revolves around supporting power demand, which I think high deliverability storage is a better solution there. But we are looking at all of that. Again, I think it’s about can we get contracts for the right term to support that kind of capital.

David?

And on the working capital use, we had had a high amount of working capital use of our cash year-to-date. Some of that is going to turn around. The interest expense payments are generally heavier in the first and the third quarters, the second and fourth, you see that turn around a little bit. So, for the full year, I would expect that piece to turn around a bit. We have also – we had a legal settlement and a rate settlement this year, which were unique to 2022. So, I wouldn’t see those as recurring items. Finally, we had some cash margin, which I called out in my reconciliation earlier on the call. Margin calls on our hedging activity, and that’s driven by commodity price fluctuations. That’s – could turn around, but it depends on commodity prices.

Got it. Thank you guys and thanks guys. Much appreciate it.

Next question is from Michael Cusimano with Pickering Energy Partners. Your line is now open.

Hi. Good afternoon everyone. To quickly follow on to – I think it was Keith’s question earlier on RNG. Could you maybe speculate on the value attributed to KMI versus what the Archaea valuation was and how you feel about the options or – curious how you feel about the option you mentioned earlier about maybe like a separate public vehicle down the road?

Yes. So, I mean look, as I try – I am not commenting on BP’s economics, okay. They have a lot that they bring to the table across their portfolio, their user of RINs. There is a whole bunch of things going on there. So, my comment earlier was about really just focusing on the EBITDA and what that multiple looks like in, call it, middle decade. And if you apply that multiple tars, it’s a couple of times at least what we have invested in this business or expect to invest when all those facilities are up and running. And so – and that’s probably appropriate, right. It’s a growing business and a growing opportunity. It’s why we are in it. And we think we will do well with it. Is there an opportunity to monetize at some point in the future when you reach critical mass, yes. But we also like the business. And so we would have to compare those alternatives when we get there.

Got it. That’s helpful. And then on the product segment, can you give a little extra detail on the lower crude volumes maybe where it stands today, if those have fully recovered from the weather outage? And then also, if you can talk a little bit about how like lower refined product prices affected margins. Trying to think of like what’s structural and what’s variable to this quarter?

Yes. So, the biggest driver in crude for the quarter was on HH volumes. So, on HH, they were down roughly 26% year-over-year. And the biggest driver on that is some of the Canadian upgraders are down, which has had, I think PADD 2 refiners paying a pretty good premium for Bakken barrels, which has decreased the – decrease the basis differential to both Guernsey and Cushing, which has had an impact on that. And so hopefully, we will see that as the upgraders come back, that we will start to see a little bit of that basis come back and some additional barrels come on HH. Hiland Crude, to your point, has – or to Steve’s point, has come back from the winter storms in April. We are reasonably close to flat for the prior year, a little bit less than what we had hoped in our budget. We budgeted for 186 wells. Right now, we are forecasting about 154, but a good chunk of those are coming in, in the fourth quarter. And we are seeing some improvements on Hiland Crude in the fourth quarter, and we are looking at hopefully somewhere in the neighborhood of going from kind of, call it, flat to prior year to, call it, 7% above for Hiland Crude. So, we are hoping to – right now, we are seeing some improvements in the fourth quarter.

Okay. Great. And then any comment on the refined product pricing maybe impacting margins and how to think about that going forward? I guess it’s mostly on like the transmix business.

Are you asking about retail prices impacting demand on refined products, or you are asking about – what did you ask? We don’t understand.

Specifically about any variability in your margin that you receive from maybe transmix volumes that fluctuate with refined product commodity prices?

Yes. Well, what I would say is we had – to David’s point, we had – we took a low comp adjustment for closing price as of September, the way that works. Clearly, we can’t – with a low comp adjustment, we can’t write it back up. But as we cycle inventory at higher prices, we can move it through and it works through margin. And right now, where prices are, they are higher than where we marked from a LOCOM perspective. So, I don’t have a specific number on that, but generally speaking, they are high, and you would expect as that inventory cycles through that, that would be a positive.

Got it. Alright. That’s all for me. That was helpful. Appreciate it.

Next question is from Jeremy Tonet with JPMorgan. Your line is open.

Hi. Thanks for squeezing me back in here real quick. Just want to see, after Matterhorn, what your thoughts are on cadence Permian gas production and the need for incremental infrastructure, what type – what year do you think that might materialize at that point?

Is it again – Permian, incremental Permian takeaway?

Yes.

So, it’s very fluid. I mean I think the fundamentals would say later in the decade, but I think some of our customers based on their destination desires may say sooner than that. So, I think sometime between ‘25, ‘26 at the earliest, but I think the fundamentals may say potentially even a little bit later.

So a range of like ‘25 to ‘28, is that what you are thinking about kind of bookending it, just to make sure I understand it correct?

Yes. You got it.

That’s for a big new long haul.

Yes. I mean I think expansions can still be supported along the way but for a big Greenfield project. I think that’s kind of the timeline.

Got it. And just last one real quick. Elba, great price tag there. Do you see other bids like that in the marketplace right now? Just wondering how you see the market interest rates moving up, I thought might depress some interest from private equity, but obviously, you have got quite a nice price tag there. So, just trying to get a feeling on the market and your desire to transact.

Yes. Look, I think we had a unique interesting opportunity around Elba that we were able to capitalize on and we are happy with the price, not just from the price for the base assets, but also the ability to maintain the upside there. But I think interest rates historically have helped drive some of the valuations around infrastructure investors in assets. And so those are rising and probably eating a little bit into the returns that we continue to see interest across the midstream space for our assets from infrastructure investors, particularly as people think about the terminal value opportunities longer term for the space.

That’s very helpful. I will leave it there. Thank you.

And I am showing no further questions at this time. End of Q&A:

Okay. Well, thank you very much. And for you baseball fans, it’s only a couple of hours to the American League Championship Series. For all of you people from New York. Good luck.

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