Dax leads Kinder's M&A program, their strategy formation, as well as capital allocation decisions. He will be presenting a few slides, and then we'll carry on with a few questions, and then eventually open up for more questions from the audience. Thank you.
Very good. Thanks a lot. I'm just going to give you 2 slides here, just an overview. I know some of you are probably pretty familiar with Kinder Morgan, some of you may be less so. Just a little bit of an orientation towards the company, who we are, what we're all about, and to get things going, and then we'll go into the far side. This is our typical map overview. If you look up in the top right corner, you see we really have 4 main business segments. Natural gas, which is everything from long-haul natural gas pipes to gas storage to a midstream business which is just over 60% of contribution on earnings before DD&A basis. We've got refined products pipelines business and a terminals business, both of which are about 15% of overall EBDDA.
We've got our fourth business segment, we refer to as CO2, but it's an enhanced oil recovery segment, which is together in aggregate about 10%, and it really consists of two different businesses. One is enhanced oil recovery, which is actually extracting oil through tertiary recovery out of the ground, which is about 6%. The CO2 and transport, which is pulling CO2 out of the ground in Colorado, transporting it into the Permian, and using it both for our own account as well as selling it to third parties. Those two together account for about 10%. Just a couple of highlights here again, on the natural gas front, 70,000 miles of natural gas pipelines, 657 Bcf of gas storage capacity. We have the largest gas storage network in North America, as well as the largest network of natural gas pipelines.
We've got key connectivity to really all the major basins, all the major supply demand hubs, and are well connected both from domestic consumption, domestic supply, as well as an international consumption perspective. Largest independent transporter of refined products, 1.7 million barrels a day of refined products, 6,900 miles of refined products pipelines, and a good chunk of other liquids, which are mainly crude and natural gas liquids. On the terminal side, largest independent terminal operator in the U.S., 157 terminals, 16 Jones Act tankers, I think very notably on that, I'm sure we'll talk about exports a little bit, but we've got in the Houston Ship Channel alone, which we consider to be a hub, 40 million barrels of storage, and 11 ship docks, which gives us tremendous optionality. On the CO2 front, as I mentioned, we do 1.2 Bcf a day of CO2.
Just a couple of highlights here. Market cap over $40 billion, one of the 10 largest energy companies in the S&P 500. The next bullet point I think is very important, 15% of the company is owned by management. Obviously Rich has by far the biggest stake, but he's not the only one. I think there is significant insider ownership, both from a management and a board perspective. We have really very much a principal mentality versus an agent mentality running the company. Based on our current dividend, which is $1 a share, a 5% yield, we have telegraphed that we will raise that dividend to $1.25 in 2020. That's sort of the last bit of specific dividend guidance we've given. We are on record as saying we will raise the dividend to $1.25 run rate next year.
That's 25% growth above where we are right now. We've got a $2 billion share buyback plan in place that we announced a couple of years ago that we've used about a quarter of. We've got that in place and absolutely available. Just looking at this slide, just talking about, I think one thing that's really important, a lot of people talk about fee-based cash flows and take-or-pay cash flows. 66% of our cash flow is take-or-pay. You add on another 25%, which has some volumetric exposure to it, that gets you to about 91%. I think very importantly, we have again, 91% fee based and 66%, which is take-or-pay. From our customer perspective, we've got roughly 77% of our customers are either investment grade rated or there is some element of substantial credit support associated with them.
This is just the last slide I want to cover before we go into the conversation, and we'll delve more into this in the conversation, I think. From a balance sheet perspective, balance sheet is incredibly important to us. We've got $4.1 billion of available cash and liquidity. We've got a target net debt to EBITDA of around 4.5 times, as we said publicly on the last call. Based on where we look right now, we'll end the year at about 4.6, although if the Canadian acquisition or Canadian divestiture closed early, if it closed and we used all the proceeds from Cochin US, we would be at about 4.4 times. We fought hard over the last 2 or 3 years to get to 4.5 times. We're a solid BBB credit, and that is a very salient goal of ours.
From a dividend perspective, I already talked about that, $1 going to $1.25. From a capital project perspective, capital projects are a high priority of ours. We spend $2 billion-$3 billion a year on capital projects, we think that's going to continue certainly for the foreseeable future. We also had, as I said, we've got a buyback in place and the ability to execute on that to the extent that we find ourselves in a position where that's more attractive than other alternatives. With that, we can transition on over to the.
Thank you, Dax.
Fireside chat.
Great. Thank you, Dax. Maybe I'll throw you a couple, and then we'll open it up to the audience.
Sure.
First, just at a high level, throughout this year, we saw that the production growth outlook and the commodity demand outlook as well moderate throughout the course of the year. Looking into next year, the outlook is still, I think we're still getting clarity on where producers stand. I think beginning this year, when you had the analyst day, we had a longer-term outlook to 2025 and beyond and how KMI sees the growth ahead. Just given what has transpired throughout the year, do you have any updated thoughts on what midstream growth opportunities that you're banking the growth?
Yeah. If you look at our backlog right now, we've got $4.1 billion in the backlog. About $2.8 billion of that is from the natural gas segment. As I said, we think that we're going to be able to invest somewhere in the neighborhood of $2 billion to $3 billion a year in expansion projects. We've been able to do that historically. As we look at things right now, we believe that will continue. There could be a little bit of softening on that, but we do believe that in the near term, but not in a big way. We believe that we're going to be able to continue. I think that a good chunk of it will come from the natural gas segment. Natural gas continues to have both supply push and demand pull dynamics that are favorable to incremental projects.
Now, again, obviously we're going to be very deliberate about making sure that we have the deals that we need. We're not going to force investment. We're not going to drop our return criteria. We do believe that the need will continue.
Great. Maybe just to follow up on the progress of your Permian takeaway projects in general, you have been sort of the leader there in providing the takeaway capacity for gas. Obviously you have two pipelines, one already that has started, and second one starting in 2021. The third one, Permian Pass, which is still, I think, under development. In general, what is your outlook for the demand for Permian takeaway looking ahead? If you can touch on some of your conversations with producers with regards to the third pipe.
Yeah. The first pipe, as you say, was GCX, which we put into service in September. That was two Bcf a day of takeaway capacity. We've got in progress right now our Permian Highway Pipeline, which previously we had scheduled to be in service by the end of this year. That's $2.1 billion and 2 Bcf a day of takeaway capacity out of the Permian into the Katy Hub. That, on our last call, we obviously updated and said that we were pushing that forward by a quarter, so it'll be first quarter of 2021. I think there haven't really been any further developments on that. We've got 85%, roughly, of the right of way procured. We've got construction underway on spread 1.
We have some of the regulatory permitting stuff was such that that's really what drove the one-quarter delay. We've got a very good line of sight to getting it completed and online as we suggested.
With respect to the third pipe, obviously the third pipe to the market is the Whistler Pipeline, which has been FID. That's not a pipeline of ours. That's been FID'd, we obviously don't have any specific insight into that. The P3 pipe would be the third for us, the fourth for the market. We're still having conversations with producers. As we said on the call, the market may not be ready for it into 2022. It may be further. The screen still suggests the spreads are still there, the market still suggests that the production's coming. The ultimate arbiter of whether or not it's needed is whether people sign up for it, we're clearly going to be very disciplined about whether we do it or not going forward without the commitments.
We're continuing those conversations, and we're also very cognizant of the fact that you've got to be more considerate of the ultimate terminal value of a fourth pipeline coming out of there. The Whistler Pipeline is roughly 2 Bcf a day. That's 6 Bcf a day. This would effectively be 8 Bcf a day coming out of the Permian. Anyway, we're thinking about all those. It goes part and parcel to your first comment about people being very cognizant of the amount of balance sheet space they have and what they're covering up.
Maybe if we can delve into that a little bit. You mentioned the current spreads seem to support it. The last I checked, Waha Henry Hub forward spreads in 2022, 2023, it's roughly in the 60 to, call it $0.75.
Yeah
per MMBtu. If you consider your gas transportation cost in the $0.50 to $0.60 per MMBtu, it seems like based on market pricing, there is need for a fourth pipe. If you can maybe provide a bit more color on what is the hesitation on customer part. Is it really just on being more capital disciplined and not wanting to enter into contracts at this stage?
Yeah, I think it is. We spend a lot of time talking to our customers. We spend a lot of time working to understand them. At the end of the day, I think it's finite capital resources and realizing that there's six Bcf of egress capacity out there. The one thing the screen doesn't necessarily tell you is what the spot market's going to be like when you actually get to that point, and what the depth and what the liquidity is when you actually put the steel on the ground. Again, I think that the most important thing for us is to be in front of our customers, to talk to our customers, to understand what their needs are, and to be ready for them when they're ready. If the market's ready for it, they'll sign up for it, but not until then.
Mm-hmm. Maybe switching gears a little bit and thinking further downstream and LNG. Obviously, I think everyone is happy that Elba Island is finally in service.
As are we. Yes.
I really wanted you to touch a little bit more on that and if you can comment on some of the learnings Kinder Morgan had from that project. Maybe thinking ahead, you have the Gulf LNG project.
Yeah
that you have talked about before, maybe a bit more update on where that is. Just in general, thinking about what your perspective is on thinking return economics in just supplying-
Yeah
to a facility versus supplying and then partnering on the project as well.
We've got our finger in LNG, and specific with respect to plants in two different places. Elba, the one you mentioned, the one that's kind of closest in front of us, is in Elba Island, Georgia, and we just completed the first MMLS unit of 10 that we're doing for Shell. We placed that into service recently. We've got nine more units to put into place. The next three units will come into place by the end of the year. The remaining six will be in place by the first half of next year. That's a liquefaction project that we own half of. We brought in a private equity partner, EIG, several years ago, and they own the balance of it.
Just to refresh your memory, we had with respect to the project economics, 70% of the economics on the actual LNG were triggered with the first unit coming into place. When you factor in the other ancillary infrastructure pipeline and terminals and stuff, it actually is 80% of the overall economics. We're already getting sort of 80% of the economics from that. It was a complicated process. I think we learned a lot certainly in terms of getting the next MMLS units in place. This is a Shell technology that is manufactured by a company that in Texas that is a subsidiary or was a subsidiary of GE. They're manufacturing it to Shell's standards, transporting it up to Elba Island, Georgia. Then we have a Japanese EPC contractor under our supervision assembling them.
There were a lot of cooks in the kitchen and a lot of pieces to sort of get together. We got the facility up and running, and we learned a lot of lessons that we're applying on the next ones. Again, that'll be fully in service by the middle of next year. There's a possibility of a smaller expansion with Shell at some point, but that'll be totally up to Shell. Those are 20-year take-or-pay contracts we've got on this facility. The other facility that we've got is Gulf LNG, and that was a legacy El Paso facility, regas facility that was completed in 2011. That's in Pascagoula, Mississippi, and it's a brownfield site. It's one of the last, not the last permitted brownfield site. It's got a full FERC permit associated with it, and it's right for LNG development or liquefaction development.
As it stands right now, we've got some legacy regas contracts that we've got some disputes we've got to settle before a liquefaction project is really viable. I think whether or not if we get those kind of worked through whether we actually get that developed into a viable liquefaction project, I don't know. I will say there may be better people out there to do that than we are. I think we don't have a really deep history of developing LNG projects. There may be people we may look to do that with somebody else. We may look to monetize that with somebody else if that opportunity ever sort of brought itself out. I think your final question was regarding specific projects or our infrastructure around it.
We've seen tremendous opportunity for our network surrounding the other projects and to be able to deliver molecules to other projects. We've had several expansion projects to be able to deliver. I think we're always looking at different opportunities. We certainly looked at plenty of other incremental LNG projects, but I think that the real sweet spot for us is to continue to deploy capital on our network, around our network, supplying other facilities that are coming in place.
If I may, to the question about whether we would see Kinder do more of JV projects like Elba Island. Just trying to marry that with how you reviewed your participation in the offshore oil terminal project.
Yeah.
Can you give us more clarity on how you review your expected project economics and whether a new project like Elba would fit that exercise?
No, good question. I think, well, the Elba JV that we did, the deal, that was a unique situation. We're always willing to JV something with somebody to the extent that they bring something to the table. Both of our Permian pipelines, recent Permian pipeline, both GCX as well as Permian Highway have partners, have equity partners. Elba, it started out as 50% being owned by Shell.
We bought Shell. Shell decided they wanted to sell out, so we bought Shell's 50%, and then we ran a process and brought in some private equity money to fund the other piece. That was a time several years ago when balance sheet capacity was incredibly precious. I think any new project that we look at, we're going to look at it first and foremost through the lens of our hurdle rate, our 15% hurdle rate. If we've got all the capital available to be able to deploy it at that rate, I think we would prefer to do it. Now, to the extent that there's a project that's larger than we're comfortable with or something where a partner brings something to the table.
don't have, we absolutely will look to bring partners in. Most of our partnerships have worked out well, and I think we do a pretty good job of bringing in good partners and people we can work with well. We're always open to doing that.
Got you. Maybe switching to your products segment. Thinking about the refined products business.
that's been fairly stable, fairly supportive of your free cash flow growth efforts. In terms of exports of gasoline and distillates.
Yeah
out of Gulf Coast. You have a chunky market share of U.S. exports. What is your outlook with regards to that exports, and do you expect your business to grow along with the market, or do you plan on trying to grow your market share?
Yeah. Well, I think both. The area that touches us the most is in our Terminals Business Segment, and along the Texas Gulf Coast. As I mentioned, up there we've got roughly 40 million barrels of storage and 11 ship docks.
Some additional barge docks. The ship docks are the ones that are most relevant. Right now we're doing roughly 350,000 barrels a day, something along those lines. We've had roughly a load of mid-teens CAGR over the past whatever, 10-15 years, something like that. We still got 25%, I think, all in all, 25% available additional capacity for export. We think that. The thing about the Gulf Coast, I think that's incredibly important is you have obviously a lot of crude coming into the area.
You've got the most important refining complex, certainly in North America, if not the world right there.
Right.
It's kind of just ground central for refined products production and export. No, we think that it's ripe for additional growth.
Just a quick follow-up on that. How much do you think you have sight into benefit from IMO to you guys?
Yeah. Not sure that we've totally quantified that. Clearly, I think there will be some benefit. We've got some heavy, some bunkering business, but I think the overall benefits there'll be some benefits.
Right. I do have a list of questions. I can keep going, but if you do have questions, feel free to raise your hand.
Dax, thanks for the time.
Yeah. Thanks for coming.
You mentioned the $2 billion to $3 billion a year in CapEx, and you said that may soften in the near term. If we play out the scenario where that does soften, would you guys look to do perhaps some more share buybacks? You mentioned that you have a $2 billion program. You used a quarter of it. Maybe or would you look at perhaps M&A any?
Yeah
there would be great.
The answer is both, all the above. I think the way that we sort of think about it is, as we sit here, you start with a balance sheet and as we've said, approximately 4.5x. To the extent that we found ourselves in a situation, somebody asked earlier and somebody said, "Well, what if you had a whole bunch of money that fell out of the sky or something on something?" "Would you use it to delever?" I think our view is we want to stick, 4.5 is sort of the number, but if we had, you could see us certainly with potentially the Canadian proceeds, hang some on the balance sheet for a bit, for some opportunity, drop down a little bit lower for potentially M&A dislocation, better buyback opportunities, that type of thing.
I think as we sit here right now, our first priority is are the projects. To the extent that we can invest $2 billion-$3 billion a year in projects that are 15% return, we would prefer to do that. We are absolutely not going to force that. We will never sit back and say, "Well, we told people two and a half, so by God, the next project's only an 8% return, so we got to get it done." We'll never do that. We'll stick to our return targets. After that, I think certainly buybacks or the ability to create additional optionality on the balance sheet. We obviously talk about dividends. At the right time. Obviously, dividend policy is obviously the thing that is you're least able to sort of change or make any adjustments to. The $1.25 is the farthest we've gone out.
After that, it'll be a KMI board decision. The KMI board has not made a decision on that yet. I would expect that it's probably something that approximates the growth in the business over time. Sort of everything else will fall out of that as I articulated it.
Maybe, because I just have a quick one on the nat gas pipe dynamic out of the Permian. You mentioned the fourth one, the market's not ready for it. Instead of having a brand new fourth pipe, would it be possible to do more compression on the two that you would have or even the third, or would it actually need to be?
Yeah. With our 2, I can't speak totally about Whistler, on our 2, they're both 42-inch, and they're fully horsepowered up. We basically horsepowered them all the way up. We did look at larger pipe at 46-inch, putting a 46-inch out there. Once you get to that size, sourcing it becomes difficult, and it's much more difficult to source it in the tariff issues that we went through, made that sort of path that we didn't want to go down. The short answer to your question is, those pipes are both 42-inch and fully horsepowered up. It would need to be either a new pipe or it would probably be a new pipe versus all new pipe in the ground on the same right of way.
Maybe just one last one. It sounds like M&A is the top priority, but if you are looking at the spectrum of opportunities, any sort of indication of interest in certain types of assets or geolocation?
Yeah. The first thing I would say, and I'm sorry, that was a part of your question that I didn't address. M&A, we have always had, as we like to say, the offense on the field. We've never taken it off. We spend a lot of time thinking about M&A, different opportunities. I think that where we are, we have obviously two different ways to pay for something, cash or equity. I think that for us to go do something, you just saw the Southcross small acquisition we did, $76 million, which is very small, but highly attractive. We absolutely, again, we spend a lot of time looking at this, but it's difficult. First, you've got to like the assets, the valuations got to line up, and you got to get past the social issues.
Anything we do, though, we certainly don't sit back and say, "We got to have this kind of asset or this or this basin." That leads you to a bad deal. We will focus on financial metrics, and if we do something, it'll be something that we're very confident is highly attractive.
Dax, a philosophical question on your target net debt to EBITDA of 4.5 times. The oil and gas world is changing, and it's slowing down, and we heard over the last two days that things are really changing. Why is 4.5 the optimal target range? Why not lower? How are you thinking about it philosophically, again?
Yeah. I'd say a few things that went into it. Our calculus tells us that, again, we could certainly have what we've said is around four and a half, as I said, we could certainly temporarily drift below that. I think a big part of it is credit rating driven. We have as a goal to be, as we say, a very solid BBB credit. I think that our view is we want to manage the optimal place from a debt capacity perspective, debt credit perspective, such that we don't think that we would get that much incremental benefit from a cost of debt perspective by taking another, whatever, call it $8 billion of EBITDA, call it paying down another $4 billion worth of debt out of the chute to get to call it four turns and putting that completely on the balance sheet.
We feel like where we are, we are very solid. We're not on the edge from a BBB perspective. We're a solid BBB perspective. We're a solid BBB. We just obviously went through the upgrade process. I guess the short way to say it is we believe the spot that we're in has an optimal amount of risk, balances the risk, balances return to equity holders versus debt holders, and we don't get a whole lot by going further from that. Look, we certainly think about potential stress tests and downside cases. As Anthony always points out, back in the credit issues we went through back in 2016 off of roughly the EBITDA, we've got $7.8 billion of EBITDA. The bankruptcies, the whatever hundred of bankruptcies that happened during that time, we took a hit of $10 million.
That's really the way we think about it. We do think about it a lot. We have, and we continue to.
Maybe one more from me on exports again and to Mexico.
Yeah
for your natural gas. I think recently, the Mexican government had some requests in terms of contracting, and I think there was some news headlines around that. Obviously, Mexico is still a big market for you guys.
Yeah.
What is your current outlook in terms of what the incremental growth opportunities are there? Just in terms of downstream and storage infrastructure-wise, do you have any concerns there?
What we have right now in terms of presence with Mexico is we have one pipeline into Mexico that we built circa 2003. It's called our Mier-Monterrey Pipeline. It goes South Texas into Monterrey. Aside from that, the strategy that we've generally adhered to that's worked really well for us, and we've looked at plenty of stuff in Mexico, but we've never really gotten there on incremental stuff in Mexico. We have built a decent bit of capacity both off of EPNG as well as our intrastate midstream network in Texas and further westward to the border to pipelines there, where we've had people build to us and effectively connect and take the capacity. That's a strategy that's worked well for us. We like that. I think that we don't really have any concerns.
I think there is an initiative in Mexico to work towards consuming a lot more of their own natural gas, which from their perspective certainly makes sense. If that happens, then I think we'll deal with it. It hasn't happened thus far today. We like our position. I don't see us going in deploying much capital in the country of Mexico, and I don't see much downside, at least at this point, to the infrastructure that we have that goes and connects to the border.
Got it. On the CO2 business, I'm sure you have been asked this a lot in the past and the questions have sort of died down recently, but thinking about your longer-term strategy there, where do you stand today? Second follow-up to that is, since you have already been moderating spending there, should we expect that to continue over time before you make a big strategy change?
Yeah. I would say, first and foremost, that's a business that we've acquired and built up over time. There is no question that it is a business that certainly on the EOR part piece, the E&P piece is different. It's a business that doesn't look just like the rest of our businesses. It's obviously, it truly is oil production. I think it's a business where we like to spawn, we're very comfortable with. The way that we think about that business is we don't, in terms of putting additional capital into it, we don't sit back and ever think about it through the lens of replacing production.
We don't say, "Well, we've got to maintain 50,000 barrels a day of production, and we need to invest to do whatever." We look at it purely on a return on capital. Our hurdle rate in that business is substantially higher than it is anywhere else. Generally, it's a minimum of 20% on every dollar deployed in that business. We've got to feel very comfortable that we're going to get it. Now historically, those opportunities have presented themselves. SACROC is where I wouldn't expect that you would see much growth going forward from Katz, Goldsmith or those fields. Yates is kind of steady eddy. SACROC is a field that has been just steady for us over time. Most of the really attractive projects we found have been sort of around SACROC, like Hawaii and Bullseye and some of the other projects we found.
Tall Cotton is a project that we were hoping was going to go and the oil is still there, the oil that we found is still there. At the current price, we weren't getting the returns that we were hoping to get from it. That's where the lion's share of the capital reduction came from. We're going to always be disciplined about the business. We're not going to invest for production. We're going to invest for return on capital. Longer term, again, we are absolutely happy to own that business. There's a lot of talk that comes up about it every now and then, I would say, this is not just sort of smart rhetoric. Truly, everything we own is for sale every day at the right price.
That business is something that, again, we are perfectly happy if the right thing came up, we'd be happy to entertain it. We're perfectly happy to own and operate that business, and we think we've got a great team that does a very good job of it.
Mm-hmm. Since you brought it up, in terms of asset sales, Mr. Kinder had some comments around.
Yeah
the multiples that you could trade some assets at, especially given the private equity capital that's out there. First question, is there any color you can provide on any sort of inbounds you have received on particular types of assets? Secondly, given your size in the industry, and given the private equity capital that is out there, what's your perspective on that and how long do you think that would last?
There's certainly a lot of capital out there. There's a lot of capital floating around looking to be deployed, certainly in the infrastructure space. Just tailing off from Rich's comments on the call, we're in pretty constant dialogue with different people about different things. We receive lots of inbounds. He's exactly right on that. You could see us do potentially a couple of different things. Look, I will say, having a whiteboard spitballing conversation with somebody on the phone on the left bookend, getting it to the right bookend of actually having ink on a piece of paper. There's a lot of daylight between those places. You never know if you're actually going to get anything done. There's a lot of risk to getting something done when a conversation starts. You could see, obviously we've done some small asset divestitures here and there.
We've got a generally high bar. We see value in recycling capital, but we've got a generally a pretty high bar for selling assets, and generally need to find somebody that has a view on an asset that's substantially greater than what our view of it is. There's also obviously the potential for at some point we could potentially do something larger where we take something larger than a single asset and sell a piece of it to somebody, a passive piece of it to passive capital, something like that.
That's another form.
Right
that we might do could take.
We have a few minutes here, so if
Hi, Dax. Can I ask a quick one on just on recontracting? I'm not sure, one, is there a big risk of that in your business? If so, where are you seeing that? Are you seeing pressure on rates or do you feel like steel in the ground is very valuable and you can still kind of hold the current rates?
Yeah, what I would say is there's nothing beyond the stuff that we've disclosed with respect to some of the point-to-point basis pipes like FEP and MEP and Ruby. Some of those contracts are rolling this year/next year. Obviously the basis differentials between those places are substantially less than what the contracts were. That's stuff that we've talked about in the past. Ruby, I think the market well knows what the Opal-Malin spread is on Ruby. Those contracts are coming to fruition. Double H, the contracts on that roll next year, that's much, much smaller. That pipeline is pretty heavily utilized. Those are kind of the main places. Obviously, in our refined products business, that's Energy Policy Act of 1992. We don't have contracts there. In the terminals business, our contracts are rolling all the time.
That's kind of what I'd call I think that's what you're getting at, those pieces, so yeah.
Maybe a last quick one. In terms of thinking about future growth, where do you think is the next marginal growth opportunities for KMI? Permian, Bakken, Haynesville?
Yeah. Tough to call it by basin. I think we probably have a pretty high degree of confidence that it's going to be natural gas oriented. It's probably going to have a demand consumption component to it. I could see something. The betting money probably places it on the Permian, if you had to be very basin specific. I think it's more likely that it's skewed towards natural gas, that we can pick that, and we can't exactly the basin, but probably has something to do with Gulf Permian. If I had to guess, it's probably given the fact that 70% of the incremental consumption growth in natural gas in the U.S. is coming in Texas, Louisiana. It's probably natural gas, and it's probably somewhere in Texas, Louisiana. If I had to guess.
Great. Thank you for all the answers. I think that's all the time we have. Thank you so much, Dax.
Thank you. Thanks for having me.