Greetings, and welcome to the Magellan Midstream Partners Q2 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach the operator, please press star zero. As a reminder, this conference is being recorded Thursday, July 28, 2022. It is now my pleasure to turn the conference over to Aaron Milford, President and CEO. Please go ahead. Hello, and thank you for joining us today to discuss Magellan's Q2 financial results. Before getting started, we must remind you that management will be making forward-looking statements as defined by the Securities and Exchange Commission. Such statements are based on our current judgments regarding the factors that could impact the future performance of Magellan, but actual outcomes could be materially different. You should review the risk factors and other information discussed in our filings with the Securities and Exchange Commission and form your own opinions about Magellan's future performance. As we previously announced, we closed on the sale of our independent terminals network on June eighth and have been actively putting those proceeds to work. Including working capital adjustments, we received a total of $447 million for these assets and deployed $190 million during the Q2 into our equity buyback program, underscoring our commitment to maximizing long-term value for our investors. Today, we've continued our trend of solid financial performance with Q2 results that slightly beat our EPU guidance. With that, I'll now turn the call over to our CFO, Jeff Holman, to briefly review our Q2 financial results versus the year ago period. I'll be back to discuss a few more areas of interest before answering your questions. Thanks, Aaron. First, let me mention that, as usual, I'll be making references to certain non-GAAP financial metrics, including operating margin, distributable cash flow or DCF, and free cash flow. We've included exhibits to our earnings release that reconcile these metrics to their nearest GAAP measures. Earlier this morning, we reported Q2 net income of $354 million compared to $280 million in Q2 2021. As noted in our press release, these results include a $162 million gain in the current period related to the sale of our independent terminals network, which is reflected in income from discontinued operations, and a $70 million gain in the prior period, primarily related to the sale of a portion of our interest in the Pasadena Marine Terminal joint venture. Excluding both of these gains, net income decreased about $18 million quarter over quarter. Adjusted earnings per unit for the quarter, which excludes the impact of mark-to-market adjustments, was $1.94. Further excluding the $0.77. Favorable impact of the gain on the sale of discontinued operations, earnings per unit was $1.17, exceeding our guidance for the quarter of $1.12. I'll remind you that the EPU guidance we gave for the quarter did not include the gain on the sale. DCF for the quarter, at $228 million, was $40 million lower than last year. Free cash flow for the quarter was $649 million, resulting in free cash flow after distributions of about $429 million. A detailed description of quarter-over-quarter variances is available in the earnings release we issued this morning. As usual, I'll just touch on a few highlights of the quarterly results. Starting with our refined products segment, operating margin of $246 million was 8% lower than the 2021 period. I'll provide more detail shortly, but in summary, the resulting decrease between periods was primarily due to an increase in operating expense, which is partially offset by an increase in transportation revenue and product margin. Drivers of the increase in transportation and terminals revenue included record high quarterly transportation volumes resulting from additional contributions from our recent Texas expansions and higher South Texas volumes, which move at a lower rate, as well as continued demand recovery from pandemic levels, especially of aviation fuel. For the quarter, total refined products volumes increased 3% versus 2021 levels. In addition, our average transportation rates increased year-over-year due primarily to the mid-year 2021 tariff increase, while tender revenue benefited from the more favorable commodity environment. These benefits more than offset lower storage revenue, which, similar to last quarter, was impacted by lower utilization and rates following recent contract expiration. As a reminder, the prior period still benefited from some contracts entered when the market was in steep contango, and now those contracts have rolled off, while the currently backwardated market has resulted in lower demand for our storage services. Operating expenses for the refined segment increased during the Q2 2022. I'll note that with the exception of power costs, which did increase slightly year-over-year, most of the increase for the quarter was not directly related to inflation, but instead represented a couple other discrete circumstances. In particular, we experienced less favorable product overages during the quarter, which reduced operating expense. Product overages and shortages fluctuate period to period with the operation of the pipeline, and these fluctuations can have a more pronounced effect in periods of elevated prices, which we saw this quarter. Additionally, the refined product segment experienced higher property taxes, primarily as a result of recently completed expansion projects. Product margin was favorable compared to the Q2 2021, primarily due to higher gas liquids blending margins and slightly higher volumes. Our realized margins increased year-over-year to about $0.40 per gallon versus closer to $0.35 per gallon in the prior year period. As we noted on last quarter's call, basis differentials have been wider than normal recently, and these wider differentials have offset some of the benefit we otherwise would have expected from our blending business. Further, these favorable gas liquids blending results were partially offset by higher unrealized losses in the current period related to our hedging activities, just given the volatility in prices this year and the fact that we have outstanding hedges through next spring. Turning to our crude oil business, Q2 operating margin was approximately $108 million, slightly higher than the 2021 period. Longhorn volumes averaged a little over 200,000 barrels per day compared to 260,000 barrels per day in the Q2 2021, primarily due to the timing of when our committed shippers have elected to move volume under their commitments, as well as the expiration of a few of our smaller marketing commitments over the past year, which move at a lower rate. Volumes on our Houston distribution system increased versus the prior year period, with more tariff shipments resulting from a new pipeline connection to our system. In addition, terminal throughput fees increased as more customers elected to use the simplified pricing structure for our services within the Houston area. We continue to see growing customer interest in such arrangements, with the result that while we have added connections to the HDS and the volume of physical barrels we move has increased, much of the resulting incremental revenues are showing up as terminal throughput fees rather than as transportation revenues that get reflected in our transportation statistics. Looking briefly at expenses, operating expenses for the crude oil segment increased slightly, primarily due to the higher integrity and maintenance spending, in particular on the splitter, which had a turnaround this quarter, partially offset by lower power costs as a result both of lower Longhorn volumes and our ongoing optimization efforts. Moving on to our crude oil joint ventures. BridgeTex volumes were approximately 215,000 barrels per day in Q2 2022, down from nearly 315,000 barrels per day in 2021, due primarily again to the timing of when our committed shippers have elected to move volumes under their commitments. We did once again recognize the additional deficiency revenue for the BridgeTex pipeline during the quarter, which offset the lower volumes. I'll note that although this recognition of deficiency revenue results in a benefit to equity earnings, the associated cash payments were already received from customers in prior periods, and our proportionate share of those payments were distributed to us by our joint ventures and recognized by us as DCF at that time. Finally, on Saddlehorn, volumes averaged about 220,000 barrels per day, about the same as in the 2021 period, albeit at lower rates due to the expiration of the initial contracts on the line late last year. There are just a few other items I'd like to touch on. First, I'll note that net interest expense increased slightly, primarily due to a higher average debt balance during the quarter. That balance came down somewhat when we received the proceeds from the independent terminal sale. As of June 30, the face value of our outstanding debt was $5 billion, with a weighted average interest rate on that debt of about 4.4%. Our leverage ratio at the end of the quarter was 3.3x for compliance purposes, which incorporates the gain we realized on the sale of our independent terminals. Excluding that gain, leverage would have been about 3.7x. That brings us to the last item I'll touch on today, which is capital allocation. I want to reiterate what I know you have heard us say before, we remain committed to maintaining the financial discipline we are known for while delivering long-term value for our investors through a combination of capital investments, cash distributions, and equity repurchases. As already discussed, we received the proceeds from the sale of our independent terminals network during the Q2 and began actively putting those proceeds to work through our buyback program. We repurchased nearly 2.9 million units in the Q2 at an average purchase price of $48.79 per unit, for a total spend of $190 million. Year to date, we have allocated $240 million to unit repurchases, bringing the total since inception to $1.04 billion. So far in 2022, we have returned nearly $680 million to our investors through a combination of unit repurchases and cash distributions, including our recently announced distribution, which pays out next month. That number is closer to $900 million. Further, we continue to see unit repurchases as an important focus of our ongoing capital allocation efforts, and as previously stated, we currently expect free cash flow after distributions to generally be used to repurchase our equity. Of course, as we are always careful to note, the timing, price, and volume of any unit repurchases will depend on a number of factors, including expected expansion capital spending, free cash flow available, balance sheet metrics, legal and regulatory requirements, as well as market conditions and the trading price of our equity. In particular, I'll note that we remain committed to our long-standing four times leverage limit. With that, I'll turn the call back over to Aaron. Thank you, Jeff. Concerning guidance, we're still projecting annual DCF of $1.09 billion, consistent with our previous expectations for 2022. You may recall that we increased our annual guidance last quarter to capture the benefit of the higher commodity pricing environment to Magellan's financial results. As we look forward from here, there are a number of things we're keeping our eye on, including a volatile commodity environment, the impact of inflation on our expenses, the impact of higher prices on refined products demand, as well as general economic conditions. We do not expect a material impact from these items to our annual guidance. Concerning refined products demand, while we didn't detect any notable demand destruction due to higher fuel prices during the first half of the year, we did see a little weakness during early July. With declining fuel prices over the last few weeks, it's not yet clear to us that this early July weakness is a developing trend. Specific to our commodity activities, we've continued to lock in additional hedges over the past few months related to gas liquids blending, with more than 80% of our upcoming fall blending now hedged at margins of nearly $0.50 per gallon. All in, we still expect blending margins for the current year to average around $0.40 per gallon. We have also made significant progress in hedging next year's blending as well, with 70% of our expected spring 2023 activity hedged at margins in excess of $0.60 per gallon. As we discussed last quarter, the recent basis differential between NYMEX futures, hedged contract prices, and actual prices for products physically settled in our Midcontinent region continue to be wider and more volatile than normal, which negatively impacts the overall margin we realize from our blending activities. If this basis differential were to return to more historical levels, we would expect the margin we realize from future blending activity to increase by another $0.05-$0.10 per gallon, including our hedged volumes. Moving on to expansion capital. We continue to actively pursue additional projects to grow our business in a prudent manner. Based on projects already committed, we now expect to spend approximately $80 million in 2022 on expansion capital. This estimate is $10 million higher than last quarter, in part due to the addition of a new project to increase our gas liquids blending capabilities at our East Houston terminal. As you may recall, we target low-risk expansion opportunities that meet or exceed our 6.0x-8.0x EBITDA multiple threshold. In the current environment, we still believe that around $100 million per year is a reasonable assumption for expansion capital spending. Although not yet included in our spending estimates, the open season for the potential expansion of our Texas refined products pipeline to El Paso was previously extended and is currently set to expire tomorrow. Significant interest has been received from the industry, with potential customers simply needing a bit more time to make a final decision and for us to finalize the scope of the project based on any commitments we receive. Before wrapping up our prepared remarks, I'd like to briefly speak to inflation and tariff rates for a moment, knowing that this is a topic of interest. Consistent with our previous guidance, we increased our indexed rates by the 8.7% allowable by the index earlier this month, which, as you may recall, reflects about 30% of our refined products markets. While in the remainder of our markets, we increased tariffs by an average of 5% for an all-in increase of 6%, effective July 1. As we have discussed, we project these increases to outpace the increases in our expenses for the year, in part due to our continued focus on optimization opportunities that ensure we're operating as efficiently as possible while preserving the safety and integrity of our assets. As I think everyone is probably aware, the PPI for finished goods metric used for the first index is up 15.5% year to date through June, which is a level we simply haven't seen since the index was established in the early 1990s. As I just noted, we typically adjust our refined product tariff rates in the 30% of our markets that follow the index by the allowable FERC index change each year. Our baseline expectation is that we'll generally continue that approach going forward. However, given the current inflation backdrop, we will be paying close attention to numerous factors between now and July of next year, including competitive conditions and customer dynamics, as well as the trajectory of our own costs. We'll approach next year's rate increases thoughtfully and deliberately, as always, with a view to long-term value creation for our unit holders. With that, operator, we are now ready to open the call for questions. Thank you. If you would like to register a question or comment, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. One moment, please. The first question comes from Theresa Chen of Barclays. Please go ahead. Hi there. Thank you for taking my questions. Aaron, I wanted to touch first on your comments about inflation and the expected rate increase going into 2023. Understand that, you know, for the 30% that is subject to FERC indexation, you have a you know very deliberate process there. For the rest of your refined products footprint, the 70% subject to market rates, is there upside risk to that mid-single digit rate increase that you've been able to get for the past few years given the inflation pressures that we're seeing today? When we think about our market rates and our index rates, as you mentioned, we have a thoughtful process where we go by, market by market and make sure that we're making good long-term decisions. When you look at the market rates versus the index rates, you know, those haven't always followed by the same amounts. I don't feel like we're tied to, the market rates needing to follow the index rates. The process that we'll go through is looking at those market-based rates, looking at the competitive dynamics, and making the decision, you know, at that time. Obviously, this year, we didn't raise the market-based rates as dramatically as we raised the index rates. I don't know if that pattern will necessarily continue. It may. I think on inflation for us or the general comment I would make is we feel that we'll be able to raise our rates at a rate that will exceed our cost inflation and through that, you know, benefit. The question's going to be when we get to July, what's the market look like and how much of that benefit are we gonna be able to realize? Does that answer your question, Teresa? Yes. Thank you. On the subject of cost inflation, the refined products operating expenses this quarter, I'm just seeing that significant step-up. Can you just remind us what a normalized run rate should be from here? A normalized run rate for expenses generally? For that refined products expense line, the $136 million for the quarter. Yeah. I don't know if we've typically given a normalized rate per se. I would say that this year, again, I mean, this quarter had a number of unusual one-time type items. Again, as we went through them or product shortage is one of the big ones, this quarter. We had property taxes. The expected impact of overages in particular is gonna be usually a slight positive on average. But it varies from month to month, quarter- to- quarter. Sometimes if you go back over the years in our transcripts, occasionally it's a variance item, sometimes positive, sometimes negative. When we have high prices, it can be a little bit more pronounced. So, we would expect that to normalize. It's not a run rate number this quarter at all. Y ou'd have to normalize for that for sure. Again, there were a number of those one-time type items that contributed to that. Okay. On the equity earnings, just looking at the step down from last quarter, to your earlier point, Jeff, about the volume volatility as well as how you get paid from your equity joint ventures on a distributed basis, when would you expect the deficiency revenues to be paid back? Paid back. To be clear, on the crude side particularly, where we've had those deficiency revenues, BridgeTex is the one we called out. We've received the payments and received the distributions related to those to the quarter. There's and it depends on the particular contracts, if there's deficiency like that, sometimes there are credits that can be used in the future. We've been paid. Mm-hmm. We received. Okay. We've received distributions related to that. Thank you. Sure. Thank you. The next question comes from Jeremy Tonet of J.P. Morgan. Please go ahead. Hi. Good afternoon. Good afternoon, Jeremy. Thanks. I just wanted to kind of parse through a little bit in the quarter here, if you could help us, think through if you might be able to quantify the impact of product overages as a headwind versus other cost headwinds? Yeah. Jeremy, that is an area about $50 million. Got it. The other cost headwinds, I guess, if overages is kind of, you know, ephemeral, the other costs such as property taxes, higher power costs, are these sticky or just the give and takes for those costs over time? Yeah. Directionally, it's a fair question. Directionally, they're not sticky. Power is probably a little. There's a little bit of inflation in power costs. The property tax, there's a little bit that relates to our expansion projects coming online and being assessed at higher values, and we hope that's sticky because that means, I mean, it's reflective of those assets performing well. Most of it, last year we had some favorable property tax impacts actually from true-ups from prior year. That was in the $1 million-$9 million all in effect on the quarter, the negative property tax. I'd say about half that's probably sticking, about half of it isn't. Again, it just reflects the expansion of our asset base. Power costs, it's really small increases at this point. We did have some other favorable power expenses at this time last year, where we were still booking some of the favorability of power hedges we had in place during the winter storm, and some of that showed up in Q2. Period-over-period, that contributed to a negative variance in comparison. That, of course, that's not sticky. Small digits on power, small digits on taxes, and the rest of it's just one time. Got it. That's very helpful. Thanks. I'll leave it there. Thank you, Jeremy. Thank you. The next question comes from Keith Stanley, Wolfe Research. Please go ahead. Hi. Good afternoon. I wanted to start on the approach to buybacks from here. Obviously, a lot of progress in Q2. The cash balance is kind of low now at the end of the quarter because you repaid some of the CP borrowings. Thinking about buybacks going forward, should we assume that's tied more to ongoing free cash flow? Or would you draw potentially on commercial paper to buy back stock in the future? Sorry, it's long-winded, but relatedly, Moody's, about a month ago, they affirmed your obviously very good Baa1 rating. There was a line in there about wanting to rebuild headroom under the leverage ceiling. Is that factoring into your thinking at all? Or is it, we're under 4.0x, we're feeling good about that? Let's take them in order. On the question around CP, I guess. Yeah, I mean, cash is fungible. When, you know, cash from proceeds come in and we pay down CP, that's really just, financing decisions in the form of that. It's really no magic. If we borrow, and now that having paid down CP, if we use the, CP to finance repurchases, it's kind of a wash. Y es, we could finance repurchases with CP. I would not look to our cash balance. If you look back in history, we've never had a lot of cash to finance our repurchase activity for any stretch of time. That's all just financing decisions. It's really gonna be driven by other factors, like the ones I mentioned, rather than short-term financing considerations like that. On Moody's, is it coming into our thinking? No more than the 4.0x leverage limit has always come into our thinking. W e've had good dialogue with Moody's. They understand what we're doing. I think if you're looking on a trailing period and not working in the proceeds, then you know, it might look a little tighter than it looks currently on leverage. I think our understanding with them is quite clear. We're committed to 4.0x, and I think they understand that. It's really not changing our thinking. I think they're just, underscoring the importance of that commitment on their side. Thanks. Just a quick one. The refined products volume, so it sounds like you haven't seen very much at all as far as demand destruction to date. Is the forecast for the year for refined products volume still to be up about 4% versus 2021? As we think about the whole year, we think we're gonna be pretty close to what we thought we'd be at the beginning of the year. There's a lot, sort of moving around. You're right in that we haven't seen any direct evidence of what I would call any material demand destruction from higher prices. As I mentioned in my comments, early July, we saw some weakness, but that seems to have abated as the, you know, the pump prices have essentially fallen. We don't see that trend continuing. A ll in, I think we're gonna be, you know, pretty close to what we had originally thought. I don't think there's gonna be any real surprises there, generally speaking. Thank you. Thank you. The next question comes from Praneeth Satish of Wells Fargo. Please go ahead. Thanks. Sorry to belabor this point, but on the product overages, I guess I just wanted to be clear. Was this more of a one-time expense because this quarter, I guess you had maybe a shortfall of product and therefore had to make a payment and it won't continue? Or, is this gonna remain kind of a volatile line item, due to the higher oil price environment? Well, volatile is probably a little strong, but it does fluctuate, and it has always fluctuated. That's not new. Like I say, usually it's not enough to merit a mention, but it certainly has been many a time before merit a mention. We've had to mention it as we try to explain variances. I wouldn't expect to hear it, but I wouldn't be surprised to hear about it. There's nothing unusual. It's just the typical operation of the pipeline. It's fairly complicated. A very, very small amount of the total amount of products we handle, when we settle out at the end of the month to compare our book inventory to our physical inventory, it doesn't take very much to have an impact, particularly when prices are high. Again, the expected value from that, on a typical year over any stretch of time, it's usually a small positive in our favor. M onth- to- month, it can vary. So the expected value is a slight positive. Yeah, you could, you know, it wouldn't be expected that we would have continued negatives. That would be not expected at all. Often, frankly, when you're doing these kind of calculation, a positive is followed by a negative and vice versa, such that it all kind of evens out. That's the way that works. Don't be surprised if you hear about it again, but it'd be surprising to have a string of negatives. Okay. Got it. That's clear. I'm sorry if I missed this, but just in terms of BridgeTex volumes, they were down quite a bit in Q2, I think down 20% sequentially. Just wondering what's driving that. Thanks. Well, again, the shippers on the line, you know, have commitments, and in some cases, they have commitments elsewhere as well, and they have their own operations that they're just trying to optimize. You know, we had some volumes that normally would have been delivered to us in our commitments, that the shipper made other arrangements with during the quarter and, or, changed their pattern of behavior. We still get paid. That's the beauty of commitments. You know, it's not something we prefer. We prefer to get tenders on that and everything else. It has some small impacts on us if they don't ship. You know, that's a pattern that's unusual, and we don't expect it to recur. Obviously, it's a particular set of events or circumstances that would cause that. We haven't seen it very often, and we're not projecting it to continue through the year. Got it. Thanks. Thank you. The next question comes from Neil Mehta of Bank of America. Please go ahead. Hi. Thanks for taking my question. I wanted to refer to a part of the release for the guidance for 2022, where you said the recent decline in commodity prices could offset some of the overages in terms of your budget that you've hit this year. Just trying to walk through the different line items there. Are you kind of referring to RBOB- butane spreads? With oil prices coming down, I would assume that you know, with gasoline prices coming down as well, that would eliminate some demand destruction, and that would be good. Then the other part would be the Midland- to- MEH spread, whether that's widening or contracting and what you're seeing there. If you could just kind of walk through the puts and takes there, when you look at commodity sensitivity for the H2 of the year. Yeah. I think you've hit on a key point overall, and that is with the commodities market and the volatility that's going on there are a lot of puts and takes. Generally speaking, our butane margins are still coming in fairly strong, especially compared to recent history. The volatility on the butane blending margins has been the basis differential between our hedges and when we actually physically settle them, that's muted what I would say some of the upside potential that we would have otherwise expected in our butane margins. That's one area that, as you look at the back half of the year, we're gonna be monitoring that basis volatility. Unfortunately, it's a very difficult risk to efficiently hedge. If you look at commodity prices more generally on our business outside of butane blending margins, higher prices mean higher tender revenues. As Jeff mentioned earlier, as we look at a year or a long period of time, we are typically on the positive side of gains and losses such that higher prices drive a better performance from that regard. Tender deductions, higher prices for the net product gains we have, those are all tailwinds for us. As those prices go up or down, that potential obviously goes up and down with it. I n terms of high commodity prices and the gives and puts on demand, as we've mentioned many times in the past, gasoline and generally, transportation demand is fairly inelastic. I think we were maybe testing that a little bit in early July with the prices we saw at the pump then. We haven't, I don't think, broken that inelasticity. I still think it's very inelastic. Even with higher commodity prices, as long as, they stay within sort of an expected range and are not too extreme, we don't see a lot of commodity risk, you know, whether prices are up or down, really driving that volume one way or the other unless you get to an extreme, which again, we may have tested in July, but we've come off of those extremes. When you put it all together, we had a really strong or high-priced commodity environment that we thought, obviously was gonna provide a lot of benefits. As those prices have come down, some of that benefit is gonna be more muted than what we had originally thought it might be. I mean, it's really that simple. Even when you put all that together, what I wanna reiterate is our guidance of $1.09 billion is still intact. Taking all of that, all the puts, the takes, all the ins and the outs, looking at, the general economic environment for the back half of the year, we're keeping our eye on those things. We think as we sit here right now, our guidance and the expectations that we've set are still on the table and still what we're going to be able to achieve. I think part of the disconnect, which may not be the right word, but I think we had expectations that had commodity prices stayed where they were at and continued to go higher, that we might see more upside than what we're essentially seeing right now. It's for the reasons we just talked about. It's the basis differential, and it's just a lot of puts and takes. It seems like a little bit of a downer in terms of performance, to be honest with you. But the reality is we're hitting expectations. Even with all that volatility, we expect to perform well. Right. If I could follow up on the basis between the New York Harbor and Midcontinent region. Do you see when blending margins are higher that positively correlates to a higher basis? Or is that something that's uncorrelated and you could see a lower basis and higher margins next year? Is there, you know, what's your thoughts on that? Yeah. I don't think the basis is driven by the outright margin or the outright price. It's relative to what's been going on in the world, and we've been dealing with some, you know, really dynamic things. You know, New York Harbor, with the events going on in Europe, we think for many months is being bid up higher and higher and higher. When you look at the Midcontinent and you look at that relative trade between New York Harbor being bid up and maybe Midcontinent not being bid up as much, it creates a wider basis. I don't think it's correlated to the margin level or correlated to the absolute price. I think it really is a relative phenomenon between the two markets, one being impacted more so by world events than the other, in this particular instance. No, I would not say that they're correlated. I n my comments, we try to point out that, if that basis behavior goes back to what we think is more normal, there's some upside on the table for us as we look forward. But it continues to stay wide and it continues to be volatile. Got it. Thank you very much. Thank you. The next question comes from Michael Cusimano of Pickering Energy Partners. Please go ahead. Hi. Good afternoon, everyone. I wanted to talk about the splitter. If you could frame out how you're thinking about maybe like the recontracting environment, and then depending on how that goes, maybe like what the sensitivity is with, refined products revenues and, and what that upside or downside could look like. Well, as we sit here today and we look at the splitter, there's a lot of fundamental value in the splitter. You may recall, not to rehash too much, but we operate it. We have a customer that provides the inputs and takes the outputs, and that initial contract will be, up for renewal, next year. T he question, which is a logical one, is what's gonna happen? You know, that customer is still interested. We have other folks interested in the splitter. What I'd point to is that there's fundamental value in that splitter that we think provides a lot of comfort for us in terms of it continuing to be an economic and a contributor for us moving forward. That may mean that we recontract it with our current customer. It may mean that we recontract with someone else. It may mean that we operate it potentially for ourselves. I would say that third option is our least preferred, frankly, but it's something that we're thinking about. In terms of sensitivities, we've already sort of built in some views on, how we think that could go in our own mind, and I don't think it's gonna be material one way or the other, quite frankly, for us. We think we've got a good setup here that the contracting of the splitter should become, not be a material driver one way or the other. In terms of the specific sensitivity for you, I don't have a number for you other than what I've seen has been fairly immaterial in the aggregate. again, we're pretty confident we're gonna get it recontracted or find a different way to continue to see value. Because to be frank with you, I mean, the value of the splitter is probably as high now as it's ever been when you look at it fundamentally. Sure. Yeah, that makes sense. Then one more. If I could revisit BridgeTex. On the commercial side, I was hoping you could talk through maybe what that dynamic that is driving the volumes down. Like, are customers looking to bring volumes into Corpus Christi for maybe like more Brent-linked pricing, you know, with it being strong this past quarter? Or is there a Cushing pull maybe away from Houston that was temporary? You know, any color there as to what customers could be looking to do? Well, I think what's happening is the customer, you know, they have a commitment to us, so they know that, you know, if they don't move on our line, they've got to pay a deficiency. It may be there are other markets they wanna move into for a short period of time. Corpus could be one of those. When I'm looking at the dynamics, I'm not sure Cushing would be that market, but the international market or Corpus Christi could be a where they're making a decision where it's better for me to take it to Corpus Christi, get a better value, pay the deficiency, and I'm still net better off. I mean, those are the decisions that they're making. That's an example of potential decisions that our shippers could be making. That's also the value to us in terms of the commitments. You know, we still earn the economics that we expected to earn. I don't think that's necessarily a trend. We don't expect that to continue forever, but there are moments where they may be making those decisions for sure. Okay. Got it. Is your margin better or worse if they elect for deficiency payments? I guess, do you offset what would be the variable cost in flowing that? Yeah. I mean, generally. Not? Yeah. Generally speaking, we're going to make more money if they actually move it. I mean, on tender deductions, potential movements downstream, different revenue streams that come with it. We have a strong preference for folks to move it. But that's sort of. Yeah, it's better if they move it, but if they don't move it's not like the economics are such that we're harmed in a great deal. It's just that we're not earning some of the downstream revenue that we might otherwise earn, and we're not earning tender deduct. I guess to answer your question specifically, the margin's probably less if they don't move it, but it's not such that we're losing money if they don't move it, or it's still not a good economic proposition for us. Yeah, we're not losing a lot. We do save a little on power, to your point. I mentioned that in the context of Longhorn. We did have slightly favorable crude power expenses partly due to the fact that Longhorn also had that dynamic this quarter. Okay. Got it. Great. That's all I had. I appreciate the color. Thank you. Thank you. The next question comes from James Carreker of U.S. Capital Advisors. Please go ahead. Hi. Thanks for the question. Just wondering if I could talk a little bit about the reaffirmation of guidance. Implicitly implies about $100 million more DCF in the second half of this year versus the first half of this year. Just wondering if you'd walk through some of the drivers. Obviously, you've got the tariff increases that hit July 1, but you no longer own the independent terminals. Trying to walk through maybe why second half is looking to be so much stronger. Sure. The first thing I would note is, one, the tariff increase is in the middle part of the year. The second piece I would note is that there is a seasonality to our business. If you look, we often have, because of the timing of the butane blending activity, the fall is usually more significant activity in the fall than it is in the spring. There's some seasonality that comes with particularly our blending business, and then also our underlying pipeline has some seasonality to it. There's some seasonality that's just sort of built in that in many ways, the H2 of the year just tends to have more activity and do fundamentally better. It's higher tariff rates, it's more activity due to seasonality in the back half of the year. Those are really probably the two primary drivers. Yeah, the locked-in blending margins are a little bit higher as well. Again, subject to basis, we expect that to be stronger in the second half of the year than it was in the first. Okay. Just thinking, you know, bigger picture about the Permian, just wondering if there's any indications about with continued growth on the production volumes there, when you guys look at forward spreads, you know, has there been any improvement, even in I guess not spot necessarily, but looking out to 2023, looking out to 2024, to the extent that there are transactions happening on those timeframes? If you look at the forward curve for the differential between, you know, Midland and Houston or East Houston, the forward curve shows that there should be improving differentials over time. If you look right now what's happening, I wouldn't say that we're seeing dramatic improvements today in that differential and what we can earn today versus what we could earn yesterday. Directionally speaking, the forward curve is pricing in wider differentials. We would expect those to improve from here. You're right, production continues to grow. As that production grows, it should, minimize through time the amount of excess capacity out of the basin, which should continue to drive. It all makes fundamental sense that we should start seeing some higher differentials. I still think the question is when are they gonna show up, where you can actually realize them, and start seeing them in the results? We're just not there yet, but we certainly see the potential for improvement as we look out over 2023, and certainly as into 2024 and beyond. Thank you. Just if I could fit one more in. It just seemed like the hedge adjustments this quarter were quite a bit bigger than we normally see, and obviously, that's a symptom of the volatility. Just wondering if there's anything else there. I know this is nitpicky accounting question, but I thought it was interesting the net income adjustment had a positive adjustment with respect to the commodity-related adjustments, but the adjusted EBITDA from net income to adjusted EBITDA was negative. Just wondering why those are kind of in opposite directions or any other color on just kind of what happened with derivatives during the quarter. Well, first, there is no other story other than just the volatility in prices. Okay. It's just when you have large moves and just the timing, sort of the path of hedges, if I can call it that, where depending on when you put your hedges on and when you took them off, you know, you're gonna see more or less that. We had put on some hedges last fall that had, you know, large swings. In some cases, you've got hedges that you've taken off or you have hedges related to which you've had income impacts in prior periods. They don't affect current income at all, but they do affect DCF the way we calculate it, where we say we're gonna match up DCF with when the hedged transaction settles. Even though the income statement was impacted in prior periods, the adjusted EBITDA will be hit in this period when we reconcile the DCF. They're a little apples and oranges. They're definitely related, but the pattern between the two is more complicated than I think than you're saying, or you would not expect them to move together. There's no reason to expect them to move together, if that makes sense. Okay. I appreciate that. This is a good example of that, where we had, you know, if we had losses in the Q1, let's say on some hedges, and they affected first quarter net income, then we bring that into a reconciliation for this quarter's DCF. Because when we settled the trades in this quarter, we said, "Okay, that prior period income hit, we're bringing into this period and now reducing EBITDA for those." Does that make sense? I think so. Maybe we can follow up offline. Yeah, it's a whole course Paul can put you through. Appreciate it. No, it's not too complicated, but you just have to get in the mindset to trace this through. There, it definitely flows, and it all evens out over time. It's just timing. Thank you. As a reminder, via the phone lines, you may press the one followed by the four to register a question or comment. Once again, that is the one, four. The next question comes from Michael Lapides of Goldman Sachs. Please go ahead. Hey, guys. Thanks for taking my question. Just curious, we're in late July. Obviously, you're doing your planning and probably starting that or well into it for next year. How should we think about capital allocation across, I don't know, growth CapEx, in across your leverage metrics and kind of puts and takes there a little bit and across maybe utilization of the remaining almost, I don't know, almost half a billion dollar of the unit buyback program you have outstanding. Just, at this point in the year, it seems, unless something just pops up, unlikely that there's a material growth CapEx project kinda hitting you that would start next year. Just I'll step back and would love your thoughts. Well, as on capital allocation, Michael, it really is as simple as we say. It's, we wanna look for projects that create value and grow if we find them. If we don't find them and we think there's value in our units, we're gonna buy it back. And it's not gonna be more complicated than that. As I look forward, in my comments, we mentioned, the $100 million per year of expansion CapEx remaining to be a reasonable assumption. We still think that. As we look forward, keeping expansion capital sort on average around that $100 million based on what we see right now is probably a reasonable assumption. If you look at our leverage then, and our 4.0x commitment, we're gonna still have capacity to buy back units. If you look at our free cash flow, we're gonna have the capacity to buy back units, and that's what we'll expect to do, again, assuming there's still value there. I don't know. There's not really, more precision I can put on that right now saying, next year's CapEx is gonna be Y, therefore we're only gonna buy back Z worth of units or have, a certain amount of free cash flow. We're not quite in that equation at this moment. As we sit here, we've got room left on our buyback program. We see value. We're gonna continue to execute that buyback program while also, to the extent we find growth capital, we'll deploy it and maximize value through all of those different avenues. I don't have any specificity to give you beyond what we've already provided. You used the term, as long as you see value a number of times. How do you and the board kind of figure out, hey, this is the valuation level where we're happy to be buying back units, and hey, this is the valuation level where maybe that's not the most appropriate use of our capital? Well, look, we probably do it in a very similar way that you all may do it, in that we run a discounted cash flow model. I'm not gonna get into all of our assumptions, but we look at what we think the future potential of this company is. What I would argue is we do it under a bunch of different scenarios, and we evaluate those scenarios from a discounted cash flow perspective, and that gives us what I'm gonna say a range. You know, I wouldn't say that it's point estimates, that it's a range, it's an area. It's with that analysis that we look at, you know, how things are going in the market today and evaluate it that way. I think it's a little too complex just to have a point estimate. It's not so complex that we shouldn't have what we think is a really confident range with a broad set of considerations. It's no more complicated than that. Got it. Thank you, Aaron. Much appreciated. Thank you. That was our final question. Aaron Milford, I'll turn the call back over to you for any closing remarks. Well, thank you all for your time today, and we continue to appreciate your continued interest in Magellan. Hope you all have a great day. Thank you. This does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you, and have a good day.