KNTK - NASDAQ

Hello, everyone, and welcome to the Kinetik Fourth Quarter 2022 Results. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions]. I will now hand over to your host, Maddie Wagner, Director of Investor Relations to begin. Maddie, please go ahead.

Thank you. Good morning, and welcome to Kinetik's Fourth Quarter 2022 Earnings Conference Call. Here with me is our President and Chief Executive Officer, Jamie Welch, as well as Matt Wall, our Chief Operating Officer; Steve Stellato, our Chief Accounting and Administrative Officer; Todd Carpenter, our General Counsel; Trevor Howard, our Vice President of Finance; and Chris Kendrick and Tyler Milam, our Vice Presidents of Commercial. The press release we issued yesterday, the slide presentation and access to the webcast for today's call are available at www.kinetik.com. Before we begin, I would like to remind all listeners that our remarks, including the question-and-answer section will provide forward-looking statements, and actual results could differ from what is described in these statements. These statements are not guarantees of future performance and involve a number of risks and assumptions. We may also provide certain performance measures that do not conform to U.S. GAAP. We've provided schedules that reconcile these non-GAAP measures as part of our earnings press release. And after our prepared remarks, we will open the call to Q&A. With that, I will turn the call over to Jamie.

Thank you, Maddie. Good morning, everyone, and thank you for joining us today. We reported our full year 2022 results yesterday afternoon as well as issued our 2023 guidance. Last week, marked the 1-year anniversary of the merger, forming Kinetik and our team has done a tremendous job. So thank you to our employees for going above and beyond this past year. They have successfully integrated both assets and people following the merger, all while operating in a safe and reliable manner. And as always, I would like to thank you, our investors, for your continued support. Yesterday, we reported full year pro forma 2022 adjusted EBITDA of $822.2 million, which was within our revised guidance range provided in August and notably above our initial guidance from last February. This was despite weaker commodity prices in the fourth quarter, particularly in December, and the impacts of Winter Storm Elliott in late December. In addition to our results, we announced yesterday another highly strategic project expanding our gas gathering system into Lea County, New Mexico. This project is extremely important and candidly transformative for our company. This has long been part of our strategic vision to extend our operations further north and provide New Mexico producers access to Kinetik's best-in-class gathering and processing network. The system expansion is fully supported with a substantial minimum volume commitment under a long-term gathering and processing agreement with a large cap investment grade counterparty. This project will serve as an entry into a new market within the Delaware Basin. We will construct more than 20 miles of new large diameter, high-pressure pipeline north from the existing Kinetik gathering system in Loving County, Texas, into Lea County, New Mexico and [indiscernible] Kinetik's existing processing complexes. The project is estimated to be in service in early first quarter of 2024 and will position us for additional commercial opportunities with both new and existing customers in an area of the basin that continues to see significant development activity and growth potential. 2023 is an execution and transition year that sets Kinetik up to be the very best version of itself in 2024. Think of it as Kinetik Next. We have a number of strategic projects underway, which will be placed in service at the end of this year, including Delaware Link and the PHP expansion. And next year, with the expansion into New Mexico and front-end amine treating at all of our processing complexes that will result in impressive EBITDA growth in 2024. These projects are all mid-single-digit and materially change our cash flow profile in 2024. These projects will allow us to further improve our reliability while providing a differentiated service offering of both blending and treating for customers as well as enhanced residue egress to the Gulf Coast. We believe our overall product offering will become even more compelling for producers and customers in the capacity constrained areas of Southern New Mexico. We would be remiss to not discuss the 2023 commodity price outlook given that 2022 benefited from higher commodity prices. Last year, we saw geopolitical events, most notably the Russia-Ukraine conflict that reinforce the importance of U.S. natural resources, including crude oil, natural gas, and natural gas liquids products, 3 Permian to Gulf Coast residue gas pipeline projects reached FID last year in anticipation of the capacity constraints that we have already begun to experience. In the fourth quarter of 2022, we saw, in fact, how constrained and tight the market actually was when planned maintenance events resulted in depressed pricing at Waha. In 2023, we expect continued price volatility at Waha. The Whistler and PHP pipeline expansions will help in the latter part of this year. However, given the forecasted annual natural gas growth from the basin of 1.5 billion to 2 billion cubic feet per day throughout this decade, we will continue to face constraints and require new pipelines out of the Permian Basin. Permian residue gas will continue to provide the critical feedstock for global LNG demand, most notably on the Gulf Coast. As it pertains to Kinetik, commodity prices will not be as favorable in 2023 relative to 2022. However, we have been actively hedging our 2023 exposure to derisk this, which we will touch on momentarily. Additionally, once the PHP expansion capacity is placed in service, our exposure to Waha will be reduced to 0. Similar to our previous 2022 quarterly earnings results, many of the figures today will be reported on a pro forma basis, assuming the business combination between our predecessors, BCP and Altus closed on January 1, 2022. We believe it is more reflective of our actual results and helps to reconcile our 2022 full year guidance. Moving to our recent highlights on Page 3. We reported pro forma adjusted EBITDA of $822.2 million for the year, meeting our revised 2022 guidance presented in August. Despite lower commodity prices and winter weather events, we benefited from increased volumes across both the midstream logistics and pipeline transportation segments. As mentioned on our call last quarter, 3 large gas gathering and processing agreements commenced in the fourth quarter. As such, we processed record volumes in the quarter. Our core shareholders, Apache, Blackstone, I Squared and Management have agreed to continue to reinvest 100% of their dividends from their base shares as part of the DRIP in 2023. This will help preserve cash to fund our 2023 capital program, while working towards our 3.5x leverage target. In our press release, our 3 institutional core shareholders emphasize their continuing support of Kinetik and their conviction in our 2024 growth. I highly recommend reading their statements if you have not yet had the chance to do so. It is also worth noting management's actions. The management team believes in the company and its future and that the stock at its current price is very much undervalued. So the team has requested and the Board has approved to pay 2022 performance bonuses in Kinetik stock. The Board has also authorized a $100 million share repurchase program. Any stock acquired under the repurchase program is expected to be reissued under the DRIP. At current stock price levels, the repurchase program would represent over 25% of the stock expected to be issued under the DRIP for the year. We believe the repurchase program will afford us more control of our DRIP issuance price and allow us to potentially acquire shares at levels that do not reflect our earnings power in 2024 and beyond and opportunistically acquire stock from short-term investors while continuing to increase our partnership with longer-term investors and our core shareholders. I would now like to hand the call over to Matt Wall, our Chief Operating Officer, to provide an operational update.

Thanks, Jamie. In the fourth quarter, we achieved a new quarterly record for gas process volume at 1.2 billion cubic feet per day, representing a 9% increase year-over-year. Crude volumes gathered were flat year-over-year at 73,000 barrels per day and up 8% quarter-over-quarter. Water-gathered volumes were 146,000 barrels per day and up approximately 11% quarter-over-quarter as our largest customer completed their recycling efforts and resumed normal deliveries. The Diamond Cryo expansion of 120 million cubic feet per day of incremental capacity is currently under construction and on budget and is scheduled to start up in April of this year. In 2022, we replaced or avoided the addition of 32,000 horsepower of rental compression with 10 company-owned surplus compression units. Annualized, this translated to over $4 million of operating expense savings. We also completed the super system interconnect on time and on budget in June of last year. This project allows us to access the latent capacity at the Diamond Cryo complex and leverage the SRX technology, resulting in enhanced system recoveries. This is especially important in today's commodity price environment. We also achieved approximately $20 million of cost synergies through operating expenses, G&A and ad valorem tax reductions following the merger. In 2023, we expect to achieve an additional $20 million of integration cost synergies. We plan to replace or avoid adding an additional 30,000 horsepower of rental compression given the inflationary environment today, in particular, with respect to compression rental rates. The compression relocation projects represent more cost savings than originally anticipated at the time of the merger announcement. Front-end amine treating will also be placed in service at the East Toyah cryo complex later this year and at the Pecos and Pecos Bend complexes in 2024. The addition of treating to our processing complexes will result in margin expansion with our customers and allow us to receive gas that would have previously been considered off spec. For example, the addition of treating has allowed us to expand our operations into New Mexico, where the gas has higher CO2 and H2S content. Delaware Link, our wholly owned 1 billion cubic feet per day intra-basin residue gas pipeline is progressing as planned. Delaware Link will connect to the Pecos Bend and East Toyah cryo complexes directly to PHP. The project remains on track to be placed in service by November 1 of this year. The PHP 550 million cubic feet per day expansion also remains on track for a November 1 in service. This past year, we became the first and only midstream company to link 100% of our debt capital structure to sustainability-related initiatives, and we have made substantial progress towards our sustainability performance targets and ESG-related goals. 2 of 3 sustainability performance targets are linked to Scope 1 and Scope 2 greenhouse gas and methane emissions intensity reductions. Over the past year, we began implementing several strategies to progress our emissions reduction goals, including the application of new technology, heightened leak detection and repair practices and increased training. We will provide an update on our progress later this year. Our third sustainability performance target seeks to increase our female representation and corporate officer positions to 20% by 2026. Already in 2022, we increased our female representation in corporate officer positions to just over 17%, which is above our industry peer average. To reinforce our commitment to ESG initiatives, our 2022 compensation program tied 20% of all employees at risk pay to the achievement of specific ESG-related goals. In 2023, we will repeat the same approach. We will look to publish our 2022 ESG report midyear, providing additional context on our sustainability initiatives and 2022 achievements. With that, I would like to turn the call over to Trevor Howard to review our financial results and present our 2023 guidance.

Thanks, Matt. Staying on Page 5 we reported adjusted EBITDA of $211 million in the fourth quarter of 2022. We also generated an adjusted pro forma distributable cash flow of $142 million and free cash flow of $92 million. On January 17, we declared a $0.75 per share quarterly cash dividend, representing a pro forma dividend coverage ratio of 1.5x for the quarter. We exited the quarter with a 4x leverage ratio and remain confident in our ability to achieve our long-term leverage target of 3.5x. Total capital expenditures for the quarter were $68 million, $22 million of which was associated with the pipeline transportation segment and more specifically, funding for the PHP expansion and Delaware Link. Our Midstream Logistics segment generated a pro forma adjusted EBITDA of $133 million in the fourth quarter. Year-over-year, our segment adjusted EBITDA was up 2% despite a $12 million commodity headwind in the quarter. Additionally, Winter Storm Elliott affected gas and crude volumes on our system during the second half of December. However, despite the weaker commodity prices and winter weather, we met our full year 2022 revised guidance. Shifting to our Pipeline Transportation segment, we had another record quarter. We generated adjusted EBITDA of $79 million, up 8% year-over-year. For the full year 2022, we reported pro forma adjusted EBITDA of $822 million, million of distributable cash flow and $372 million of free cash flow. Our total capital expenditures for the year were $284 million, $116 million of which was associated with the Pipeline Transportation segment. And lastly, we realized approximately $30 million of integration cost synergies in 2022 through compression relocation Projects, system optimization and other cost reductions, all of which exceeded our 2022 EBITDA synergy target of $25 million. Now I would like to discuss our 2023 outlook and guidance which you can find on Pages 9 through 12. Our 2023 adjusted guidance is $800 million to $860 million. Our underlying business remains strong in 2023 with respect to volumes and operational performance. However, commodity prices are lower year-over-year. Within our Midstream Logistics segment, 2023 will benefit from the annualization of several contracts which commenced in the fourth quarter of 2022 as well as a number of new contracts that will begin this year. Additionally, we expect modest growth from our current customer contracts year-over-year. Taken together, the midpoint of our 2023 guidance is predicated on an almost 20% increase in processed gas volumes with a 15% increase in gas fee-based gross profit year-over-year. We expect to exit the year with approximately 1.5 billion cubic feet per day of processed gas volumes representing a 20% increase over fourth quarter 2022 process gas volumes. We expect to realize approximately $50 million of total EBITDA synergies this year through additional compression relocation projects, further system optimization and the installation of front-end amine treating. Within the Pipeline Transportation segment, Delaware Link and the PHP expansion will be placed in service at the end of this year. Almost all of the capital for these projects will be spent this year. However, we will not see a full year EBITDA benefit until 2024. As such, we estimate December 2023 annualized adjusted EBITDA to be approximately $900 million. In 2023, commodity price reductions are expected to offset fee-based earnings growth within our midstream logistics segment and the contributions from the pipeline transportation projects placed in service at the end of this year. On Page 11, we have detailed our full year 2023 commodity price exposure and price sensitivities to our guidance. Our 2023 guidance assumes market forward prices of approximately $76 per barrel for WTI, $2.07 per MMBtu for natural gas and approximately $0.69 per gallon for natural gas liquids. For comparison, 2022 actual prices were over $94 per barrel for WTI, greater than $5.20 per MMBtu for natural gas and approximately $0.96 per gallon for natural gas liquids. Note that is approximately a 20%, 60% and 30% year-over-year reduction in crude, gas and natural gas liquids prices. As discussed earlier by Matt, high gas transportation capacity utilization rates and continued Permian gas supply growth likely translates to a turbulent year for natural gas pricing at Waha until the new pipeline projects are placed in service later this year and in 2024. Staying in front of this dynamic, we layered on ethane and natural gas spread hedges in late 2022. This will result in us running several of our processing plants and recovery and reduce our equity natural gas exposure to effectively 0. And I would further note that with the in-service of the PHP expansion project, Kinetik customers and our equity volumes will be protected against Waha volatility given Gulf Coast pricing on PHP. Less than 10% of our 2023 total gross profit is exposed to commodity prices, and over 75% of this direct commodity price exposure is not influenced by natural gas prices. A 25% increase or decrease in commodity prices is expected to impact 2023 gross profit by 2.5%. We have been actively derisking our 2023 commodity exposure through our Board-approved hedging program and will continue to do so throughout the year. Capital expenditures guidance remains elevated as we fund the several strategic growth projects. Our 2023 guide is $490 million to $540 million. This includes $235 million to $265 million of midstream logistics capital and $255 million to $275 million of pipeline transportation capital. Our midstream logistics capital guidance includes $90 million of maintenance and growth projects, $115 million of high-pressure gathering capital and $45 million of our remaining integration capital. Following 2023, there will be no further integration capital spend. The $115 million of high-pressure gathering capital expenditures includes capital to support the New Mexico system expansion and remaining spend associated with the previously announced 2022 contracts. Pipeline transportation capital guidance includes the Delaware Link and the PHP expansion projects. Our 2023 capital expenditure guidance is in line with our previously communicated expectations when excluding the New Mexico expansion. In 2024, we expect to return to a capital program of less than $150 million, assuming no spend for new processing capacity nor the Shin Oak and GCX expansions. Turning to Page 13. As we previously announced, we made great strides in 2022 to clean up our balance sheet. First, we completed our comprehensive $3 billion sustainability link refinancing in June and fully redeemed the Series A preferred in July. Later in the year, we swapped 100% of our Term Loan A floating rate to fixed through April 2023 and swapped $1 billion of floating rate exposure to fixed through May 2025. As a result, Kinetik floating rate exposure as a percent of total current debt outstanding has been reduced to less than 15% through April and approximately 40% thereafter. We will continue to actively derisk our floating rate exposure through additional swaps and additional notes issuances. We remain committed to achieving a 3.5x leverage target and investment-grade credit ratings. We expect to maintain our $0.75 per share quarterly dividend in 2023, and we look to recommend a minimum 5% dividend increase once we have met our capital allocation priorities. And with that, I would like to open up the lines for Q&A.

[Operator Instructions]. And our first question today goes to Michael Cusimano of Pickering Energy Partners.

Interesting growth opportunities on the horizon. But I feel like funding has kind of come up a few times or it's a bit of a question mark. So we've seen the Permian gas pipes that you own got some pretty high multiples. Is that an option instead of debt or equity? Could you sell some interest in some of your long-haul gas pipelines?

So Michael, thanks for the question. It's Jamie. Look, I think you're right in the context of we always are presented with some interesting growth opportunities as evidenced by what we announced last night with New Mexico, which is obviously a big deal from our standpoint and probably the best means for us to make sure that we completely fill up our existing processing complexes. As we continue going forward and we look for opportunities, probably the easiest button we have is a GCX sale. Honestly, there's a marker out there done last year by Targa to a private equity firm. It's straight up, take-or-pay, nice duration of contracts. Obviously, the only question mark out there is whether it will actually get expanded or not. But I definitely think that is something that we've got -- we've been ruminating about. We're not acting on it at this point, but we're certainly thinking about it as far as what exists within our toolkit as we consider and contemplate more and different growth opportunities going forward.

And the next question goes to Jackie Koletas of Goldman Sachs.

First, I would just like to touch you've commented that you expect around 1.5 Bcf a day in gas processing. I was wondering if you could give a sense of what you're thinking for overall Permian Basin growth and how much you were baking in additional contracts for your open processing capacity there?

So Jackie, it's Jamie. I'll let Trevor answer part of this. But as far as what are we baking in as far as additional contracts, the answer is nothing. In fact, I think we probably risked more on our existing customers, and we're being, therefore, conservative. As far as overall Permian growth, I think as we intimated earlier, I think just on the residue side, we're obviously expecting a cross basin wide about 1.5 to 2 Bcf per day. I think we saw 2 Bcf a day as far as actual residue gas growth coming out of the Permian for last year. We think that we're still going to -- as we're seeing increasing GORs as we're seeing some of our customers start to experiment on some of the different benches in the hydrocarbon stack, we start -- we continue to believe and see that the overall gas growth will continue to be pretty robust. Trevor, anything to add.

Yes. Thanks for the question, Jackie. I think from our vantage point, we're going to continue to grow with our existing customers. And I think the genesis of your question is what sort of market share gains are we potentially baking in? And I think with the contracts that were announced in the middle of last year and the new project that was announced this morning or last night, extending into New Mexico, I think should be pretty representative of sort of the market share gains that we are achieving and expect to achieve not just in 2023 but as the New Mexico gathering expansion is completed and move forward into 2024.

Okay. Great. And just to have a quick follow-up. Given that gas prices are so low, how are you thinking about Apache's activity on Alpine High specifically?

So you will see that obviously, the Alpine High activity, which was contractually committed to as far as the development as a result of the proceeds from the sell-down last year, we've got a couple of wells for this first quarter, and most of the rest of the activity is at the end of the year. So it's really a 2024 phenomenon for Alpine High gas growth than it is 2023. We are seeing, obviously, a pickup in the context of overall gas as you look out towards the end of this year into next year. And obviously, we've been -- we've seen, obviously, gas prices being pretty burdened in this first part of the year. And as you saw in our overall commodity assumptions, we've got $2.07 our as far as gas price expectation. So we're -- more to come, I think, on the Apache side. Sorry, a long way of saying it, but I think a lot more to come end of the year, we'll start to really see what this outline high development looks like going forward.

And the next question goes to Spiro Dounis of Citi.

I wanted to go to the new agreement in Lea County, if we could. You guys mentioned, obviously, you're new entrant to the basin there. And so I'm just curious, as you think about the commercial strategy and winning business against the incumbents, how do you guys think you're going to be able to do that? And you also mentioned high levels of activity there as you look out to 2024 and you continue on this path, how much of any of that activity is sort of considered in that of CapEx you highlighted.

So let me start with the end and then I'll have Chris Kendrick who is our VP of Commercial, one of our VPs of Commercial talk about sort of the overall opportunities we see up there. But as far as -- so it is a portion of obviously the overall capital that we've got $115 million, I think it is, which is allocated this year in gross on the pipeline side. And the portion of that -- a significant portion of that is related to the high-pressure connection going up into New Mexico. But New Mexico by itself as far as a straw is one element, but you have to take it, Spiro, with treating. Once you have the straw and you have the capabilities to actually both blend so we see New Mexico some high H2S, higher CO2, some nitrogen. We've got -- we look and we have the ability in our system to actually blend that and obviously process that, which we have not, to this point, been able to do because we've been historically a system, but all that changes with the front-end amine treating at all of our processing complexes, which will have in place by the end of this year into next year across the footprint. So I think it's both working in tandem together. And as far as the opportunities that we see out there, Chris?

Spiro, this is Chris. Look, as Jamie mentioned before, this has been a strategic goal for Kinetik for a long time even when we've gone back to when we were at EagleClaw. And I think it's pretty exciting to what we've done over the last couple of years with the North and a lot of this is due to Matt's team and running a great operation and run time because that's #1 for the customer. As we think about New Mexico, for us, it's pretty exciting to be able to offer in New Mexico customer a solution for processing in Texas, effectively moving those residue gas molecules through our pipe to delink and ultimately to the Gulf Coast. That's a pretty compelling solution for some of these customers in New Mexico who are constrained. So we're excited to have these discussions and hope to be able to talk about some more growth here in the future.

Got it. And then moving to the $900 million of the run rate you guys pointed to for December '23. Curious how much of that reflects G&P volume behind the system waiting for PHP to come online. Some of the way once PHP does enter service in November, I don't expect you see those volumes kind of rush in at the back end of the system. Could we see sort of several quarters after the fact kind of ramp up on the G&P side?

I think that's probably a fair -- that's a fair perspective. We, ourselves, as a management team, have been really -- this is probably one of the elements that we've really agonized over, which is exactly what a turn-in-line forecast looks like, given depressed pricing that we're seeing. And obviously, we're seeing, obviously, the runway towards the back end of the year in November, December, in particular, where we start to see some of that relief. So I do think we'll start -- we will see more activity towards the back of the year, particularly when we've got Whistler and PHP expansion online. I think that will give the ability of the basin to actually breathe for a second and then sort of work out what the next steps will be.

Got it. Great. Last one, if I could just quickly sneak it in. Just looking out to 2024, it seems like the setup today is for a fairly nice inflection point in free cash flow. You've got CapEx coming down. You obviously have EBITDA projected to be a lot higher. So that does come up with few options as you think about capital allocation. And so I'm just curious, you've got several things going obviously, a lot of robust growth. You've some capital return this year and so maybe an expectation you sort of return to that next year. Then you're also trying to sort of deleverage and achieve investment grade. So I guess how are you thinking about those options in 2024 when you do have a little more free cash flow in front of you?

Look, I think our capital allocation priorities that we've laid out is committed to the 3.5x leverage target then -- raising the dividend. And obviously, that I think is front and center for us as far as our overall objectives are concerned.

[Operator Instructions]. And our next question goes to Robert Mosca of Mizuho Securities.

Just wondering, so now that, I guess, Grand Prix is off the table. I know you guys have identified that as a potential acquisition target. I'm just wondering how that affects your desire to increase the downstream connectivity of your system? Could we see that mindset shift to perhaps getting more involved on a fractionator asset or aligning more closely with the specific midstream providers such as EPD. Just curious to hear your thoughts there.

Look, I think we have been consistent to say we like having a vertically integrated business. I think in saying that we realize that we've got a significant capital spend for this year. We have obviously stacked hands with our core shareholders to make sure that it is funded in an appropriate and prudent manner from a balance sheet and credit standpoint. And I think it is important that we focus going forward in 2025 that we not literally expect the less than $150 million of capital to start to grow again. So I really do think -- our first -- the first order of business for us is New Mexico was critical. Treating was critical. PHP expansion was critical. Delaware length for Kinetik NGL, that was absolute core to our vision. Anything else is interesting and -- but it's not nowhere near that priority or importance. So I think right now, what we see going out '24 and longer is that we've got some pretty good tailwinds, particularly as we see overall growth from our producer set as well as our customer opportunities, whether they're in New Mexico or whether they're obviously in Central Reeves or .

Got it. That's helpful color, Jamie. And also wondering if you could expand a little bit on the outlook for GCX expansion. We've seen some contracts we signed with these other greenfield pipeline offerings. I'm just wondering, does that expansion look better now that gas prices are lower and presumably fuel prices are lower. Just wondering what's keeping a lid on that expansion from happening?

I would say, Robert, it's very interesting. I think there is -- and look, Chris Kendrick, in particular, who sits on the Board with me at PHP, we talk about this a lot. We really think there is an overwhelming emphasis by producers on new steel in the ground. They want new egress. Increasing percentage fuel on our existing pipeline, yes, if you are really in a pinch and you could do it quickly, that may make sense. But I think honestly, with what happened with GCX, I take my hat off to Whistler, I think they did a really good job. They were quick. They got that done. They obviously built the lateral into the Midland, so they were able to access incremental volumes. So I think they did a really good job. I think -- I just don't know where GCX fits. And I think it is more likely we'll probably -- you'll be hearing about the Warriors of the world, Warrior pipelines or other pipelines potentially getting done in the next 18 months and FID-ing at that point, then I do think GCX, I still don't think GCX is -- I mean you'd have to ask Kinder is, obviously, they've been mostly engaged and for us, it's a small percentage. But I'm just not sure GCX expansion is in the cards in the near term. Chris, do you agree?

Rob, this is Chris. And I agree with what Jamie said. Producers overwhelmingly want new steel in the ground versus these pipeline expansions. And also, since we did PHP expansion, the market softened a little bit in the fourth as well. You have Matterhorn coming on later in 2024. So it's just going to take more time to get a project done. With that being said, the Kinder team is still looking at it, and we'll see what happens.

Great. Great. And maybe just 1 quick last one. I just wanted to kind of confirm what I thought I heard in your prepared remarks. Just the function of that $100 million buyback program, absolutely just you could be more opportunistic when it comes to, I guess, the share price of these PIK shares are offered at and that's why you didn't just take down that 100% to 75%. Just you have some more, I guess, autonomy over the share price you're purchasing at.

Robert, exactly. I mean, we look at the price right now, and we think it is significantly undervalued. If we have the opportunity to, in fact, capitalize on something that the market doesn't seem to be fully appreciating, then we will do so, and that's what the Board has given us. That if that also means that we've got a -- as it relates to our ability to capitalize on a lower buyback price than our ultimate issuance price under the DRIP given the following quarters then that's great. So I think we just thought of it as a great self-help mechanism for us.

Thank you. We have no further questions. I'll hand back to Jamie Welch for any closing remarks.

Thank you, everyone, for your time this morning. We're excited for our 2023 execution year and year of transition, and we look forward to catching up with you all relatively shortly on the conference circuit. So thank you very much, and have a great day.