Enterprise Products Partners (EPD) Q1 2023 Earnings Call Transcript

Enterprise Products Partners (EPD 0.48%)
Q1 2023 Earnings Call
May 02, 2023, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Q1 2023 Enterprise Products Partners LP earnings conference call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session.

[Operator instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Randy Burkhalter, VP of investor relations. Please go ahead.

Randy Burkhalter -- Vice President, Investor Relations

Thank you, Gigi, and welcome, everyone. Good morning. And welcome to the Enterprise Products Partners conference call to discuss first quarter earnings. Our speakers today will be co-chief executive officers of Enterprise's general partner, Jim Teague and Randy Fowler.

Other members of our senior management team are also in attendance for the call today. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 based on the beliefs of the company, as well as assumptions made by and information currently available to Enterprise's management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call.

And so, with that, I'll turn the call over to Jim.

Jim Teague -- Director and Co-Chief Executive Officer

Thank you, Randy. Today, we announced Enterprise off to another good start for the year. We reported adjusted EBITDA of 2.3 billion for the first quarter of 2023. We generated 1.9 billion of distributable cash flow, providing 1.8 times coverage.

We retained 863 million of DCF for the first quarter. We reported seven operating records and one financial record in the quarter, mostly related to our pipeline activities and export volumes across multiple commodities. We have record pipeline and fee-based natural gas processing volumes, record NGL marine terminal volumes, and near-record total marine terminal volumes. In March alone, our marine terminals loaded over 70 million barrels of NGLs, crude oil, refined products, and petrochemicals for export.

Our NGL and natural gas pipeline businesses, as well as our natural gas marketing and octane enhancement activities, also reported strong increases in gross operating margin compared to the first quarter last year. We also saw strong margins in our refined products business, offset by lower volumes in our propylene business, where PDH 1 was down to 24 days during the first quarter for planned maintenance. We remain on schedule to put approximately $3.8 billion of major projects in service this year. In the second quarter, we will commission PDH 2 and the expansion of the Acadian gas pipeline system.

In the second half of the year, we will complete our 19th NGO fractionator, two natural gas processing plants in the Permian, and put the first phase of the Texas Western products pipeline in service. We're running essentially full across all our assets, with the exception of the Rockies. We have significant expansions in our ethane, ethylene, propylene, and LPG systems. We're upgrading export capacity and adding geographic diversity to our ethane export assets with positions at Morgan's Point, and now Beaumont, and expanding our LPG and propylene capacity at our Houston Ship Channel facility.

Our ethylene export facility has been full since day one, and we're expanding that by 50%. Ethylene exports have moved from being only consumed by a handful of niche players and point-to-point movements, with significant growth in demand by several petrochemicals in Asia, Europe, and the Americas. We recently completed new ethane export contracts that add 240,000 barrels a day with multiple counterparties. On spot, we received our record of decision this past November and expect to get other permits and our license in the second half of the year.

We are way ahead of other applicants, and we know what it takes to get a record of decision. Two buoys in a motorboat hooked up to a ship won't cut it. We will have a 24-7 manned platform, paper combustion, and two pipelines that provide the ability to load multiple grades of crude oil and also able to evacuate those lines during a hurricane. This is on -- time is on our side as we commercialize this project because we don't think it's needed until 2027.

While the second quarter can be our weakest seasonally, we remain constructive on global market fundamentals, even though the forward curve doesn't reflect that. In addition to low global inventory, we also note that OPEC+ seems to be intent on managing global balances. On the demand side, expectations for most consultants range from 1.4 million to 2 million barrels a day for global demand growth in 2023. OPEC+ economists say they are standing by their forecast of 2.3 million barrels a day demand growth by the end of 2023.

From our perspective, that sounds rich, although the last five weeks, U.S. crude inventories have drawn 20 million barrels, countering these bullish fundamentals and concerns about the global economies, with central banks continuing to signal additional rate increases to time inflation. Meanwhile, while the Chinese continue to ramp up travel in a huge way, their industrial manufacturing surprised to the downside when their PMI turned negative yesterday. Regardless of the near-term mixed signals, which continued to signal a range-bound market near term, for us it's very hard to make a bearish call for oil in the medium to long term.

And it's hard for us to be too constructive on natural gas. A wide gas-to-crude spread gives U.S. petrochemicals a structural feedstock advantage that, in our view, is permanent. Case in point is the current operating environment where the U.S.

ethylene industry is the only region that has been consistently profitable, while the rest of the world have been very selective in what they crack and how they operate. Single-use plastics are doing good. They're profitable, while durables have their challenges and their headwinds. Meanwhile, the U.S.

refining industry is one of the most competitive and technologically capable in the world. In short, we expect U.S. production to continue to grow. We expect demand at our docks will likewise continue to grow.

If you want to know where we're going, look at what we're doing. We continue to expand our ability to export hydrocarbons out of the U.S. to points all over the world where it's needed. With that, I'll turn it over to Randy.

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Thank you, Jim, and good morning, everyone. Starting with income statement items. Net income attributable to common unit holders for the first quarter of 2023 increased 7.3% to $1.4 billion or $0.63 per common unit on a fully diluted basis. This compares to $1.3 billion or $0.59 per common unit for the first quarter of 2022.

Adjusted cash flow from operations, or adjusted CFFO, which is cash flow from operating activities before changes in working capital, was $2 billion for both the first quarters of 2023 and 2022. We declared a distribution of $0.49 per common unit for the first quarter of 2023, which is 5.4% higher than the distribution declared for the first quarter of the prior year. This distribution will be paid May 12th the common unit holders of record as of close of business on April 28. As we mentioned on our February earnings call, we will evaluate another increase midyear.

In March, we repurchased approximately 683,000 common units at an average price of $24.89 per unit for a total cost of approximately $17 million. In addition, on a combined basis, our DRIP and employee unit purchase program purchased another 1.7 million common units on the open market during the quarter. For the 12 months ending March 31, 2023, Enterprise paid out approximately $4.2 billion of distributions to limited partners. In addition, we also repurchased $267 million of common units off the open market.

As a result, our payout ratio of adjusted cash flow from operations was 55% for this period, and our payout ratio of adjusted free cash flow was 75% for this 12-month period. Total capital investments in the first quarter of 2023 were $654 million, which included 570 million of organic growth capital projects and 84 million of sustaining capital expenditures. Our major growth projects that are sanctioned and under construction remains unchanged at $6.1 billion. We currently expect our 2023 growth capital expenditures will be in the range of 2.4 billion to 2.8 billion, which includes possible expenditures associated with projects under development and not yet sanctioned.

Frankly, I have a hard time seeing us get to the upper end of this range. The changes to our capex ranges for 2023 and 2024 since our recent analyst day are projects under development, which are substantially comprised of potential expansions of our Permian gathering and processing systems and our NGL distribution system including exports. None of this creep is associated with cost overruns or delays. We expect 2023 sustaining capital expenditures will be approximately $400 million.

Our total debt principal outstanding was approximately $28.9 billion at the end of the quarter. Assuming the final maturity of our hybrids, the weighted average life of our debt portfolio is approximately 20 years. Our weighted average cost of debt is 4.6%. At March 31, approximately 97% of our debt was fixed rate.

Our consolidated liquidity was approximately $4 billion at the end of the first quarter, which includes 3.9 billion of availability under our credit facilities and 76 million of unrestricted cash on hand. In March 2023, we entered into a new $1.5 billion 364-day revolving credit agreement and a new $2.7 billion revolving multiyear agreement that matures in March 2028. These agreements replaced our prior credit facilities. For the 12 months ended March 31, 2023, our adjusted EBITDA increased 11.7% to 9.4 billion compared to our trailing 12 months as of March 31, 2022.

We ended the quarter with a consolidated leverage ratio of 3.0 on a net basis after adjusting debt for the partial equity treatment of our hybrid debt and reduced by the partner's unrestricted cash on hand. Earlier this year, we announced a lower leverage target of 3.0 times plus or minus a quarter in a range from 2.75 times to 3.25 times. This change in financial policy, our lower leverage, along with an established track record of growing stable fee-based cash flows and strong credit metrics resulted in standard importers upgrading our senior unsecured credit rating to A- with a stable outlook. We are appreciative of this recognition as the only A- rated extreme energy company.

With that, Randy, we can open it up for questions.

Randy Burkhalter -- Vice President, Investor Relations

OK. Excuse me. Thank you, Randy. Gigi, I would like to remind our listeners that when they ask questions to limit their questions to one question and one follow-up, please.

We can go ahead and start with our Q&A.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Spiro Dounis from Citi.

Spiro Dounis -- Citi -- Analyst

Thanks, operator. Good morning, guys. First question on pet-chem, was particularly strong this quarter, at least relative to what we had expected. And I know in the past, you'd all talked about maybe a six to nine-month period or a lag on inventories getting worked down globally before that really started to tighten.

And so, I'm just curious, Jim, I know you mentioned the weaker-than-expected PMI, but is something happening maybe sooner than you'll had expected? Or are we still sort of waiting to see that destocking effect take place later the year?

Jim Teague -- Director and Co-Chief Executive Officer

I'll let Chris D'Anna answer you.

Chris D'Anna -- Senior Vice President, Petrochemicals

Spiro, yeah, I think what really happened in this first quarter is that, it was more of a supply shortage than stronger demand. I mean, we had decent demand just coming off of the fourth quarter. It was really weak. But ultimately, it was reduced supply from a couple PDHs being offline.

Spiro Dounis -- Citi -- Analyst

Got it. OK. That's helpful, Chris. Second question, just turning to Shin Oak, yeah, you all were sort of looking at potential alternatives there to expanding that pipeline.

Just curious if you give us an update there on maybe what some of the potential alternatives could be and how you're thinking about the timing to make a decision there.

Jim Teague -- Director and Co-Chief Executive Officer

I probably don't want to tell you what the alternatives are, but I will tell you, you know, we're trying to be capital disciplined. And then, in the course of trying to do that, I guess we've kind of confused people, but we will loop Shin Oak. If we can find some options that defer that capital, then we'll probably do that. But make no mistake, our intent is we are going to loop Shin Oak, and we've got a deadline on -- and there's a deadline on the permit that we're going to have to be aware of.

Spiro Dounis -- Citi -- Analyst

Got it. Understood.

Jim Teague -- Director and Co-Chief Executive Officer

Does that clear it up?

Spiro Dounis -- Citi -- Analyst

It does. I appreciate your color, crystal clear. Thank you, guys.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Jean Salisbury from Bernstein.

Jean Salisbury -- AllianceBernstein -- Analyst

Hi, good morning. NGO marketing has been falling in recent quarters and was quite low in this quarter. Can you talk through the drivers of this and if you see this as a trough?

Jim Teague -- Director and Co-Chief Executive Officer

Lower commodity prices, but where is this, Tug?

Tug Hanley -- Senior Vice President, Pipelines and Terminals

I think, if you look at what we did last quarter in 2022, the first quarter of 2022, I think we had some very good opportunities in that quarter with our storage program that we didn't have in the market this quarter. Commodity prices probably have a little bit to do with it, but there was just probably some opportunities last year that we didn't see this year.

Jean Salisbury -- AllianceBernstein -- Analyst

OK. That makes sense. And then, kind of a broader question, once the Houston Ship Channel is expanded, does Enterprise think forecast Houston crude prices trading at least at parity to Corpus, or maybe even a premium?

Jim Teague -- Director and Co-Chief Executive Officer

Who wants to take that? You, Tony, or who --

Brent Secrest -- Executive Vice President, Chief Commercial Officer

So, there's a couple things we're doing, Jean Ann, and --

Jim Teague -- Director and Co-Chief Executive Officer

Talk about the -- Jean Ann mentions it in her write-up, talk about the -- Jean Ann says that the pipelines at Corpus are full.

Brent Secrest -- Executive Vice President, Chief Commercial Officer

Yeah, so we're getting incremental barrels --

Jean Salisbury -- AllianceBernstein -- Analyst

I'm sure you'll get to that, Brent.

Brent Secrest -- Executive Vice President, Chief Commercial Officer

We're getting some incremental barrels kind of month over month, and I'll just say if you stay, Permian grows 40,000 to 50,000 barrels a month that we're getting our fair share on the Houston Dustin pipelines. There's some premiums that happen at Corpus on the docks. I wouldn't say those premiums are that much higher, and I wouldn't say that they're day in and day out. I think what you're seeing us doing on our system, Jean Ann, is we've implemented a new quality program.

And so, if you look at the quality of crude oil that we're getting right now across our docks, it's the best quality that we've seen since we've been up in operation, and I think it compares with anything that Corpus can offer. So, I think some of that is going to be equalized. Some of the freight advantages, we'll have to overcome. But I think, over time, if you look at where our program is going on crude oil, I think that we're going to eventually get there.

Jim Teague -- Director and Co-Chief Executive Officer

And what was your objective in changing the -- why did we change quality mark?

Brent Secrest -- Executive Vice President, Chief Commercial Officer

I mean, we did it for a couple reasons, but, I mean, one thing is we listened to our customers and we listened to our customers both on the production side. We listened to it -- listened to them on the refinery side here in Houston. And then, also, our export customers. But if you started going through the program on what we identified, there's probably a couple of folks out there that we're trying to do a little bit too much aggressive blending.

And we've effectively eliminated them and done a lot more routine testing in terms of maintaining the quality that we can offer these customers downstream. Ultimately, that's going to achieve higher prices.

Jean Salisbury -- AllianceBernstein -- Analyst

That's super helpful, Brent, as always. Thank you so much, and thanks for taking my question.

Brent Secrest -- Executive Vice President, Chief Commercial Officer

Thank you.

Operator

One moment for our next question. Our next question comes through the line of Brian Reynolds from UBS.

Brian Reynolds -- UBS -- Analyst

Hi. Good morning, everyone. Maybe just to talk on distribution outlook and expectations. We've seen enterprise raise kind of in that 1% to 5% range over the, you know, since 2018.

Looking forward with leverage below three times in free cash flow, you know, still hovering around a billion dollars after dividends in the next few years. Kind of curious if we could see that DPU growth rate, you know, go above 5% or, perhaps, you know, or more capex kind of temper that distribution growth expectation. Thanks.

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Yeah. Hey, Brian. This is Randy. Yeah, thanks for the question.

I think coming in and really looking, you know, at a range of 1% to 5% and going back to 2018, I would probably differ in my perspective of how I would look at it because from 2017 through, call it, 2020, 2021. We were really in a mode of transitioning from more of the external funding model to now more of an internal funding model. And so that we were very measured on what we did in distribution growth to be able to grow into that internally funded model. Since that point in time, I would really say since, over the last couple of years, two years, we have grown more in the range of, call it, 4% to 6%.

You know, and like I said, we'll come in -- as I mentioned in the prepared remarks, we'll come in and discuss with the board here, middle of this year, as far as what we want to do for the rest of this year on distribution growth. And, you know, again, we've demonstrated good EBITDA growth. Jim mentioned $3.8 billion worth of projects going into service for the remainder of the year. That gives us good cash flow growth that'll support distribution growth down the road.

And I really hate to come in and get more granular than that because I don't want to usurp our board or front run our board. But I think we'll look to continue to come in and provide distribution growth and buybacks for that matter as far as getting capital back to investors.

Brian Reynolds -- UBS -- Analyst

Great. Appreciate it. We'll wait for that midyear update. And then, you know, as my follow-up question, I'll take the capex question.

You know, projects under development have increased by a billion for '23 and '24. You talked about in your prepared new marks that you see, you know, limited ability to get to the high end, of that range. So, kind of curious if you can just talk about, perhaps, some of the projects in the hopper. And then, within the existing capex backlog, was there any capex inflation or, perhaps, pull-forward of capex into '23 and '24 that we should be thinking about? Thanks.

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Yeah, I'll take the first part of the question. There was not any cost of any overruns or delays on projects. In fact, Graham and his engineering team have done a great job of delivering projects on time and more often than not slightly under budget. And really, the change that we've had since analyst day are more projects that we've I guess we've got a good bit of confidence in and we included them in the range.

But they're still subject to being completely underwritten through commercial contracts and rather not elaborate into much detail. We'll just come in and go back in. And again, what I said in the prepared remarks, and a lot of it is what we talked about at our analyst day, where we're seeing most of the opportunities for growth are gathering and processing in the Permian broadly. It is also in our NGL distribution system, including export facilities.

So, just seeing a lot of demand on that front.

Brian Reynolds -- UBS -- Analyst

Great. I'll leave it there. Enjoy the rest of your morning, everyone.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Michael Blum from Wells Fargo.

Michael Blum -- Wells Fargo Securities -- Analyst

Thanks. Good morning, everyone. I wanted to ask about the marine export, particularly the LPG in SA, and it came in, you know, really strong this quarter. Just want to get your color on the market what demand looks like, and are -- do you think these levels are sustainable from here? Thanks.

Jim Teague -- Director and Co-Chief Executive Officer

Tug, do you want to take that? Would you --

Tug Hanley -- Senior Vice President, Pipelines and Terminals

This is Tug. Yeah, we did definitely see strong demand this last quarter, and we're going to expect to continue to see that demand. Really comes down to productions continuing to grow. It's still a supply push, and the barrel is still having a price to clear across the water.

Jim Teague -- Director and Co-Chief Executive Officer

You know, Michael, I was -- I've been surprised pleasantly so at how well we've done on our ethane export, and I'm surprised that we're able to do 240,000 barrels a day of new contracts with more to come.

Michael Blum -- Wells Fargo Securities -- Analyst

Very good. That's all I have today. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes in the line of Tristan Richardson from Scotiabank.

Tristan Richardson -- Scotiabank -- Analyst

Hi, good morning, guys. Could you talk a little bit about PDH 2? And overall, in the pet-chem segment, how should we think maybe about that fee-based mix pro forma once that asset comes online relative to the sort of 70%-ish fee-based we typically see in that segment?

Jim Teague -- Director and Co-Chief Executive Officer

I think this 100% fee-based. Isn't it, Chris?

Chris D'Anna -- Senior Vice President, Petrochemicals

That's correct.

Jim Teague -- Director and Co-Chief Executive Officer

So, it's a 100% fee-based with all creditworthy customers. And we always -- Graham is sitting to my left. They always come in. We can do more than whatever the nameplate is, so we'll probably have some extra pounds to play with.

Tristan Richardson -- Scotiabank -- Analyst

Great. And then, maybe just on EHT export expansion, could you talk a little bit about the mix of products you're seeing? I mean, you talked a lot about refrigeration at analyst day, and I think you highlighted that that expansion could be 120 a day. Should we think of it as pretty fungible across products or primarily focused on LPG? And then could the scope change for that project just given sort of the strength you're seeing across the dock indicated by the first quarter?

Brent Secrest -- Executive Vice President, Chief Commercial Officer

Yeah, this is Brent. So, I think in terms of where it stands right now, it's propane, butane, and some propylene slated on -- slated to come on the second half of '25. We continue to look, Tristan, at -- is there another project there? But it's all under evaluation. But right now, it's slated to come on the second half of '25.

Chris D'Anna -- Senior Vice President, Petrochemicals

And I just want a correct the number. You said 120,000 barrels a day are LPG export expands into north of 170,000 barrels a day.

Tristan Richardson -- Scotiabank -- Analyst

Got it. Helpful.

Jim Teague -- Director and Co-Chief Executive Officer

And we're talking about the ship channel widening is what you might explain that. Bob, can you explain what you get out of the ship channel widening for Tristan?

Bob Sanders -- Executive Vice President, Asset Optimization

Yes, sir. So, when Project 11 is complete on the widening, which we expect to be by the end of '24, first quarter of '25, it'll add four to five hours of daylight. And most of the products we deal with are daylight-restricted. So, that's easily an incremental 15% to 20% additional cargos that can come in if needs be.

Jim Teague -- Director and Co-Chief Executive Officer

Which means you or Zach, you sell out your refrigeration now?

Bob Sanders -- Executive Vice President, Asset Optimization

On the contrast.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Chase Mulvehill from Bank of America.

Chase Mulvehill -- Bank of America Merrill Lynch -- Analyst

Hey, good morning, everybody. I guess, a lot of grounds been covered, but can I ask on processing margins in the Permian and kind of relative to your fee floors. You know, obviously, Waha is seeing a lot of pressure. So, you know, are we kind of at those fee floors for Waha at this point? And then, also, just an update on kind of how you're thinking about, I think, you know, it's 400 MCF a day of latent capacity on your Texas interstate pipelines, just how you're thinking about, you know, still holding it open, or contracting it up? And updates on kind of how you see Permian natural gas egress between the Brownfield additions and when Matterhorn comes online.

Jim Teague -- Director and Co-Chief Executive Officer

Natalie and Tug?

Natalie Gayden -- Senior Vice President, Natural Gas

I'll answer the fee floor question. Post-Navitas, so the first quarter of '23, we did hit more fee floors than, I guess, the end of '22. But less volume is being subject to the fee floor. So, I'd call it 75% of the volumes.

And it's not very far under the fee floor. So, long story short, I see probably upside the rest of the year.

Tug Hanley -- Senior Vice President, Pipelines and Terminals

This is Tug. On the pipeline capacity question, we still have open pipeline capacity. We are utilizing every day as marketing. But just like every decision here at Enterprise, there's opportunity to work with Natalie for a long-term contract opportunity.

We'll evaluate that or we'll evaluate to continue to hold it open for spot opportunity.

Jim Teague -- Director and Co-Chief Executive Officer

When we feel like it's the right time, we will contract that capacity.

Chase Mulvehill -- Bank of America Merrill Lynch -- Analyst

OK. Great. Makes sense. An unrelated follow-up on octane enhancement, you're still generating, you know, some nice gross operating margin there and really some nice nonfee, but gross operating margin is [Inaudible] and butane spreads are still wide.

So, I'd be curious kind of your thoughts on how you see these spreads playing out the rest of '23 and how much you have hedged at this point.

Jim Teague -- Director and Co-Chief Executive Officer

You want me to take it or you want --

Tug Hanley -- Senior Vice President, Pipelines and Terminals

So, we have, right now, I think that octane enhancements about 75% hedged. We feel pretty good about where those margins are going to be. There was an earlier question about LPG pricing, and I think as you see this production come on, you look at the ability for propane and butane to go find markets. I could see that being somewhat challenged.

And that's to the benefit of octane enhancement program. Are we going to see as good a margins that we saw from the MTB uplift that we saw earlier this year? Probably not. But it's still a very good business for us.

Chase Mulvehill -- Bank of America Merrill Lynch -- Analyst

OK, perfect. I'll turn it back over. Appreciate it.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Jeremy Tonet from JPMorgan Securities LLC.

Jeremy Tonet -- JPMorgan Chase and Company -- Analyst

Hi, good morning.

Tug Hanley -- Senior Vice President, Pipelines and Terminals

Hey, Jeremy.

Jeremy Tonet -- JPMorgan Chase and Company -- Analyst

Just wanted to kind of pick up a bit, I guess, on the Permian and natural gas. There's been some conversation out there with GOR ratios increasing. And just wondering if you could talk about what your experience or thoughts are there and how you see that, I guess, kind of impacting basin production is helpful.

Tony Chovanec -- Vice President, Fundamentals and Supply Appraisal

Yeah, Jeremy, this is Tony --

Jeremy Tonet -- JPMorgan Chase and Company -- Analyst

And take away dynamic side.

Tony Chovanec -- Vice President, Fundamentals and Supply Appraisal

OK. Go ahead. All right. Yes, GORs, when we looked at the basin holistically, are absolutely going up.

It's largely driven by the preponderance of drilling in the more gassy areas and think Delaware Basin compared to say the Midland Basin. So, there's no question that the GORs are going up. And, that's how midstreams are contracting and that's what producers are doing. Producers look at their portfolio, they look at what they plan to drill.

And gas, GORs, the decline over time, oil declines faster than natural gas does. So, that impacts the long-term outlook in this regard. Jim, one note, does that mean you have less crude? Yeah. And I think there's a misconception, thanks for that, Jim, that we don't have the amount of crude that we had before because GORs in -- that's absolutely is not the fact.

And you can look at our forecast, which we stand by. You have a lot of both. That's the bottom line. You have a lot of crude, there's been no change in those curves as we forecast.

You have a lot of very rich gas. So, the answer is it doesn't mean less crude. And ultimately this is not a bad story. It's not a bad story for Enterprise.

It's a great story.

Jeremy Tonet -- JPMorgan Chase and Company -- Analyst

Got it. That's very helpful there. And then, just wanted to kind of come back to the LPG and pet-chem side. And you've touched on this a few different times across the call.

But just wanted to see, I guess, what patterns you're seeing over the balance of the year. LPG exports is that kind of one time in nature and surprised? Do you see this strength continuing? People are concerned about a recession. How do you see LPG exports and pet-chem I guess kind of being impacted by these trends looking forward?

Jim Teague -- Director and Co-Chief Executive Officer

I think, and I'll hand it to Brent, but, you know, LPGs got a price to export. Period. And price creates demand, and it's going to have to price the export, and there'll be demand for it, right?

Brent Secrest -- Executive Vice President, Chief Commercial Officer

Yeah. I mean, the only thing I'd add if, so, that's our fundamental belief. And it'll have to go fight to maintain some sort of margin if there's some sort of issue, obviously, at Enterprise. We have a pretty good shock absorber, which is our storage footprint.

And if you can play this out because there's another question about LPG export. So, and why we're expanding our export capacity is because the market needs it. And if you look at infrastructure bottlenecks, our belief is that is the production comes online, it'll price the export. But at some point, the export capacity isn't going to be there.

And that's an opportunity for folks like Enterprise to participate in that market. And if you go out even further and you look at the overall demand, especially what's coming out of China with PDHs, there's going be a period of time in there in '25, '26, '27 timeframe, where the U.S. producer has to catch up to the overall capacity and the overall demand. But all this is going to be healthy for the system.

Jeremy Tonet -- JPMorgan Chase and Company -- Analyst

Great. Thank you very much.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Colton Bean from Tudor, Pickering, Holt and Company.

Colton Bean -- Tudor, Pickering, Holt and Company -- Analyst

Morning. Randy, coming back to Brian's question from a different angle. Do you all view leverage as more of an output or are you intent on managing toward the target range? Meaning, are there any items you view as a balancing mechanism, whether that be distribution growth, buybacks, capex, or would you let leverage drift below the range in any given year?

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Colton, the range that we have out there, I think, is a sufficient range for us, you know, for the foreseeable future. That really comes in and gives us a lot of flexibility to come in and fund organic growth. You know, if we see a surge in organic growth projects, I think, it gives us the flexibility to handle that stay in the range. I think it gives us the flexibility to come in.

And if we see an acquisition opportunity that we want to use cash or incurred debt for, I think it gives us plenty of flexibility to do that, as well as come in and continue to provide distribution growth and buybacks. So, I know I'm not probably answering the question the way you wanted it to, but that range of 2.75 to 3.25 gives us a lot of flexibility. And, you know, when we get all these new growth capital projects coming online, and again, we've got a lot under construction now, and I think we'll see more of that EBITDA, certainly full year of that EBITDA show up in 2024, 2025. And then, I think at that point in time, we'll reassess.

Colton Bean -- Tudor, Pickering, Holt and Company -- Analyst

OK. And so, it sounds like for the near term, expecting to stay within that range, and the question was more angled toward, it seems like you guys are more likely to break the bottom end than the top end. And so, just, you know, if we'd see a ramp in distribution growth or buybacks, if it looks like you all were drifting into, you know, call it mid-2s or even low-2s.

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Colton, I'd just hate to get the cart ahead of the horse. Let us get there first. And then -- and let us see what the situation looks like when that prevails. And, you know, I think we're going to do the responsible thing once we get to that point.

Colton Bean -- Tudor, Pickering, Holt and Company -- Analyst

That's perfect. And then, maybe shifting over to gathering. So, I think there's a $25 million step up in the Rocky Mountain region called out. From what we were seeing, it looked like regional pricing was actually down, specifically in the San Juan, which I think is where you have those gathering fees indexed.

So, I guess, can you explain kind of what the uplift was there quarter on quarter?

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Yes. Really, I think, what we were seeing was really for a period of time -- I think especially January, we really saw strong natural gas prices more driven by California, both up in the Rockies and in the San Juan. Tony, I don't know if you want to --

Tony Chovanec -- Vice President, Fundamentals and Supply Appraisal

Completely agree. Phenomenal prices and definitely an outlier. And that's because utilities just wanted to prepare and say we have to have the gas.

Colton Bean -- Tudor, Pickering, Holt and Company -- Analyst

Thank you.

Operator

Thank you. One moment for our next question. Our next question goes in the line of Theresa Chen from Barclays.

Theresa Chen -- Barclays -- Analyst

Good morning, and I wanted to touch on the near-term demand outlook for U.S. LPG exports a bit more. Going back to your comments about the Chinese PDH unit, what are you seeing in terms of the pace and ramp of them? And do you think there could be an incremental bid for U.S. cargos later on this year due to lower LPG exports from Saudi Arabian and Qatar?

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

I'm sorry, Theresa, what was the first part of that question?

Theresa Chen -- Barclays -- Analyst

Chinese PDH unit ramp.

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Yeah. I mean, so I think you're seeing quite a few PDHs come online this year. You'll see some next year and then obviously the year after. I don't know if the run rates are going to be sustainable in terms of what they're doing right now.

I think they're doing probably around 70%. There'll be some opportunities for LPG exports. I think the overall propane consumption is only going to increase. I just don't know if those run rates over there in China are going to be able to be maintained.

If you look at our opportunities, we have the availability of some spots. Those will probably get filled up, but it's not a ton. It's probably two or three spots a month, Tug, that we have available, right?

Jim Teague -- Director and Co-Chief Executive Officer

But, you know, we -- you know, it still goes back to the gas crude spread as to how much those PDHs run. And as we said in our script, we're still -- we can't make a bearish case medium to long term on crude prices. And we can't -- we're not constructive on natural gas. So, inherent net gas to crude spread ought to be more LPG and ethylene plants and PDH plants in Asia.

Theresa Chen -- Barclays -- Analyst

Thank you. And the second part of the question is related to U.S. LPG cargo is potentially getting a bid due to OPEC production cuts.

Jim Teague -- Director and Co-Chief Executive Officer

By definition, I think if they cut crude, they cut LPG, Tony?

Tony Chovanec -- Vice President, Fundamentals and Supply Appraisal

They do, but just, Theresa, they're not huge LPG exporters anyway. And they've been really outspoken that, at least for now, incremental barrels, whether they're up or down, will affect internal consumption. So, they're just another balancing item in a market where barrels are pricing to get consumed.

Theresa Chen -- Barclays -- Analyst

Got it.

Tony Chovanec -- Vice President, Fundamentals and Supply Appraisal

It's just not -- we don't see it as a big factor.

Theresa Chen -- Barclays -- Analyst

Understood. And, Brent, going back to your comments about infrastructure bottlenecks on the LPG export front down the line eventually, where do you think the export constraint will come about? Is it dock space? Is it refrig capacity? Is it tonnage? What does that look like?

Tony Chovanec -- Vice President, Fundamentals and Supply Appraisal

I mean, I think it's refrig capacity. That's where it starts to begin with. And I don't -- if you look at what the industry's doing right now, we're running at pretty high rates. You know, the dock piece is easily -- easier to solve.

But on the front end, I would probably say it's going to be refrig capacity.

Theresa Chen -- Barclays -- Analyst

Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Keith Stanley from Wolfe Research.

Keith Stanley -- Wolfe Research -- Analyst

Hi, good morning. Wanted to start with a follow-up on capex. So, you're at about $2.5 billion this year, I think potential spend for next year, 2 billion to 2.5 billion. A couple of years ago, I think the company talked to 1.5 billion to 2 billion as somewhat of a run rate for capex.

So, should we think of '23 and '24 as elevated capex years, or is the run rate now higher just as the company continues to grow?

Brent Secrest -- Executive Vice President, Chief Commercial Officer

I just -- yeah, the opportunities are there -- just good opportunities at the time. You know, what '26 and '27 looks like, we'll let when we get closer to that point. But right now, we just see a lot of good opportunities, both on the upstream side and the downstream side.

Jim Teague -- Director and Co-Chief Executive Officer

You know, we're bringing on $3.8 billion worth of major projects this year. It's like our PDH 2 plant, our fractionator, Acadian expansion, those will all be full on day one.

Keith Stanley -- Wolfe Research -- Analyst

Thanks for that. Second question just -- you rolled out the Project 9.3 last quarter. Any at a high level, any areas of the business that are going better than planned? Any lighter than planned? Just any high-level comments on progress toward that internal target.

Jim Teague -- Director and Co-Chief Executive Officer

We probably -- we have probably -- on petrochemicals, we're over-planned. So, other than -- I can't think of anything other than the Rockies, and I guess our Eagle Ford crude pipeline is as -- we're hustling that. So, other than that, Zach, you got anything going on?

Zach Strait -- Vice President, Unregulated NGL Commercial

No segments --

Jim Teague -- Director and Co-Chief Executive Officer

I didn't call on you Zach, but felt the need to call on you.

Zach Strait -- Vice President, Unregulated NGL Commercial

I think segment by segment we're pretty close to where we planned.

Keith Stanley -- Wolfe Research -- Analyst

OK. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Neal Dingmann from Truist.

Neal Dingmann -- Truist Securities -- Analyst

Good morning, gentlemen. Thanks for taking my questions. My first is on shareholder return. I'm just wondering, given how strong your financial position continues to be with over 4 billion of liquidity, I'm just wondering, you know, what factors go into the decision on the unit repurchase, you know, on a go forward?

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Yeah, Neal, good morning. And, yeah, Neal, it really, I guess we had had talked that the buyback program is still more in -- more of an opportunistic program right now. And I guess good news, bad news is frankly in the first quarter. We didn't see a lot of good opportunities.

When we -- in the month of March, I think around the Silicon Valley Bank failure, there was more volatility in the market. And the units were under pressure, and we saw good value and we came in and executed then. Just our window wasn't long enough. We would like to have bought more, but, you know, the units rallied pretty quickly on the heels of that.

Neal Dingmann -- Truist Securities -- Analyst

No, that's great to hear. And then, my second question, on petro-chem specifically, looks like the propylene side was slightly down, just largely, I think, more mostly just on the planned maintenance. I'm just wondering, can you remind me of any major plan maintenance for the remainder of the year, specifically for that propylene production facilities?

Jim Teague -- Director and Co-Chief Executive Officer

Graham, you got any?

Graham Bacon -- Executive Vice President, Chief Operating Officer

No, we've currently got a couple of splitters and down for a plant maintenance, but after that, it's --

Jim Teague -- Director and Co-Chief Executive Officer

Yeah, we got a couple splitters down right now for plant maintenance. But after that, I think we're done for the year.

Brent Secrest -- Executive Vice President, Chief Commercial Officer

And those splitter turnarounds, they're not going to -- they're not material to any financials.

Jim Teague -- Director and Co-Chief Executive Officer

I'm going to hold you to that.

Graham Bacon -- Executive Vice President, Chief Operating Officer

I'll hold him to that. Thanks, Brent.

Operator

Thank you. At this time there are no further questions. I would now like to turn the conference back over to Randy Burkhalter for closing remarks.

Randy Burkhalter -- Vice President, Investor Relations

Thank you, Gigi. That concludes our call today, everyone. And we'd like to thank our listeners for joining us today, and have a great rest of your day. And goodbye for now.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Randy Burkhalter -- Vice President, Investor Relations

Jim Teague -- Director and Co-Chief Executive Officer

Randy Fowler -- Director, Co-Chief Executive Officer, and Chief Financial Officer

Spiro Dounis -- Citi -- Analyst

Chris D'Anna -- Senior Vice President, Petrochemicals

Jean Salisbury -- AllianceBernstein -- Analyst

Tug Hanley -- Senior Vice President, Pipelines and Terminals

Brent Secrest -- Executive Vice President, Chief Commercial Officer

Brian Reynolds -- UBS -- Analyst

Michael Blum -- Wells Fargo Securities -- Analyst

Tristan Richardson -- Scotiabank -- Analyst

Bob Sanders -- Executive Vice President, Asset Optimization

Chase Mulvehill -- Bank of America Merrill Lynch -- Analyst

Natalie Gayden -- Senior Vice President, Natural Gas

Jeremy Tonet -- JPMorgan Chase and Company -- Analyst

Tony Chovanec -- Vice President, Fundamentals and Supply Appraisal

Colton Bean -- Tudor, Pickering, Holt and Company -- Analyst

Theresa Chen -- Barclays -- Analyst

Keith Stanley -- Wolfe Research -- Analyst

Zach Strait -- Vice President, Unregulated NGL Commercial

Neal Dingmann -- Truist Securities -- Analyst

Graham Bacon -- Executive Vice President, Chief Operating Officer

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