Enterprise Products Partners LP

NYSE:EPD

Earnings Call Analysis

Enterprise Products Partners Shows Strong Growth and Strategic Acquisitions

In Q3 2024, Enterprise Products Partners reported a solid adjusted EBITDA of $2.4 billion, up from $2.3 billion YoY. The company generated $2 billion in distributable cash flow, achieving a 1.7x coverage ratio. They increased their distribution by $0.05 to $0.525 per common unit. Recent acquisitions, including Piñon Midstream, enhance their processing footprint, supporting future growth amid rising natural gas demand. Capital expenditures are set at $3.5 to $3.75 billion for 2024 and $3.5 to $4 billion for 2025, reflecting ongoing investment in infrastructure development.

Strong Financial Performance in Q3 2024

Enterprise Products Partners delivered a robust financial performance in the third quarter of 2024, reporting an adjusted EBITDA of $2.4 billion—up from $2.3 billion in Q3 2023. This growth underscores the resilience of Enterprise's operating model, showcasing a strong return generation capacity. The distributable cash flow (DCF) for the quarter was $2 billion, providing a coverage ratio of 1.7x. The company's total retained DCF has reached $2.3 billion year-to-date, which strengthens its cash position for future investments and distributions.

Strategic Acquisitions and Infrastructure Developments

In a significant strategic move, Enterprise completed the acquisition of Piñon Midstream, which enhances its existing footprint in the Permian Basin. This acquisition is expected to facilitate new treating services, thus addressing current infrastructure limitations. The addition of Piñon is anticipated to boost Enterprise's NGL (Natural Gas Liquids) value chain, providing comprehensive services from the wellhead to the water. Moreover, the company is on track to complete multiple infrastructure projects including two processing plants in 2025, reinforcing its market position.

Capital Investment and Shareholder Returns

For Q3 2024, Enterprise's total capital investments were approximately $1.2 billion, comprising $1.1 billion for growth projects. The expected growth capital expenditures for the year remain unchanged at $3.5 billion to $3.75 billion. Additionally, assessing future expenditure plans, the forecast for 2025 has been updated to a range of $3.5 billion to $4 billion. The company returned approximately $4.8 billion to its investors over the past year through distributions and unit buybacks, achieving a payout ratio of 56% of its adjusted cash flow from operations.

Expanding Market Presence Amid Growing Demand

The executives highlighted an unprecedented interest from producer customers, particularly driven by an increase in natural gas demand from data centers and new gas-fired power plants in Texas. This boost in demand is set against a backdrop of five volumetric records established, including net natural gas processing volumes reaching 7.5 billion cubic feet per day, indicative of Enterprise's robust processing capabilities and its strategic positioning to cater to rising market needs.

Operational Resilience and Sustainability Initiatives

The company has successfully conducted comprehensive turnarounds at its facilities without any lost time accidents, laying a foundation for higher future utilization rates. Enterprise emphasizes its commitment to sustainability and efficiency, leveraging big data and analytics to optimize operations and reduce costs. This operational efficiency is increasingly being recognized as a vital asset in the highly competitive midstream sector.

Outlook and Guidance for Future Growth

Looking forward, Enterprise has expressed optimism about its growth trajectory. The projected growth in 2025 and beyond is anticipated to benefit from upcoming projects and heightened capital expenditures. Pending projects, including a CO2 pipeline contract with Oxy and the completion of new processing plants, are expected to drive future revenues. The company continues to maintain a net consolidated leverage ratio of 3.0x, within its target range of 2.75x to 3.25x, thereby allowing room for strategic investments while maintaining fiscal responsibility.

Navigating Industry Challenges and Market Volatility

While optimistic about growth, Enterprise acknowledged the challenging market conditions, including volatility in commodity prices and the evolving regulatory landscape. The executives noted the necessity to remain agile in navigating these challenges while focusing on long-term strategic initiatives that promote sustainability and enhance profitability.

Earnings Call Transcript 2024-Q3

[Operator]

Thank you for standing by, and welcome to Enterprise Products Partners L.P.'s Third Quarter 2024 Earnings Conference Call. [Operator Instructions].

I would now like to hand the call over to Libby Strait, Senior Director of Investor Relations. Please go ahead.

[Libby Strait, executive]

Good morning, and welcome to the Enterprise Products Partners conference call to discuss third quarter 2024 earnings. Our speakers today will be Co-Chief Executive Officers of Enterprise's General Partner, Jim Teague and Randall 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.

With that, I'll turn it over to Jim.

[A. Teague, executive]

Thank you, Libby. Today we reported adjusted EBITDA of $2.4 billion for the third quarter compared to $2.3 billion for last year third quarter. We generated $2 billion of distributable cash flow providing 1.7x coverage. In addition, we retained $808 million of DCF. Our retained DCF totals $2.3 billion year-to-date. Operationally, we set 5 volumetric records, including 7.5 billion cubic feet per day of net natural gas processing volumes and 12.8 million barrels a day of cell equivalent pipeline volumes. We renovated from contributions from the 3 new natural gas processing plants and wide natural gas price spreads between Waha and other market hubs.

We're on track to complete construction of 2 additional processing plants in the Permian, our Bahia pipeline, [ Frankford team ], Phase 1 of our Neches River NGL export terminal and the last phase of our Morgan's Point Terminal Flex expansion in 2025, and we have 1 additional process plant coming online in the Delaware in 2026. These projects for provides visibility to new sources of cash flow for our company and enhance and expand the NGL value chain at the core of our business.

We also announced yesterday that we completed the acquisition of Piñon Midstream. These assets are highly complementary to our Permian processing footprint by providing treating services to a prolific area of the basin that generally has been infrastructure limited to the lack of seller natural gas treating and acid gas injection capacity. The opinion assets are also a very strategic addition to our NGL value chain that touches everything from the wellhead to the water.

I'd be remiss if we didn't recognize the tireless efforts of over 200 of our employees of Mont Belvieu from our most comprehensive turnaround for the PDH [ 1 ] right into a turnaround for our PDH 2 plan. Our employees completed these 24/7 turnarounds with extreme diligence and without any lost time accidents. We believe this time and investment will result in higher utilization rates and performance for both of these facilities going forward, and we look forward to their contributions in 2025. We're excited about the number of inbounds that we're getting related to new natural gas demand in Texas from both data centers and the new gas-fired power plants that would be built under this energy front. We have a lot of people talking about exposure to data centers. It seems that it's a very sexy thing to say, and everybody does a piece of pipe and Texas is talking it up.

The reality is there is a very small list of companies with pipeline and store assets best positioned to benefit from this [ built out ] and enterprise is one of them. It is difficult to quantify the ultimate demand and timing at this point, not knowing which projects will go forward. That being said, it is one of the most promising signals we've seen in natural gas in a long time, and we're looking forward to serving this new influx of demand.

In Enterprise, we take pride in the fact that our organization is not siloed. Everyone is important, we all pull in the same direction every day. The dedication, commitment and creative of all our employees has always been a key to our success. We always strive to get better. We operate an integrated value chain, providing a wide range of services from the wellhead to the water. Our systems are highly automated and provide us with billions of data points. Each league in that chain presents an opportunity to provide a service, earn a fee or enhance profitability by enhancing our margins or reducing our costs.

Over the last 5 years, we have developed a very talented, big data and data science team that works closely with all areas of our company. We are now using the big data for everything from predictive maintenance to market analytics to asset optimization. One of the many examples is our pipeline controllers use real-time profit optimizer programs to help determine when and how they run compressors and pumps based on real-time power and fuel cost.

Data and the insights that can provide in many respects is the new currency, and our proprietary data will forever be an opportunity for enterprise. As we sit in the final quarter '24 and head into '25, our work is not done each year presents new opportunities and new headwinds. We've built a network of assets and a culture that delivers strong results throughout business cycles, administrations and market conditions. Our Company is built for the long run. As always, we have never been more excited for what the future will bring for our company.

With that, Randy?

[W. Fowler, executive]

Thank you, Jim, and good morning. Starting with in-segment items, net income attributable to common unitholders was $1.4 billion or $0.65 per unit for the third quarter of 2024. This is an 8% increase over the third quarter of 2023. Our adjusted cash flow from operations, which is cash flow from operating activities before changes in working capital, increased 4% to $2.1 billion for the third quarter of 2024 compared to $2 billion for the third quarter of last year. We declared a distribution of $0.525 per common unit for the third quarter of 2024, which is a $0.05 increase over the distribution declared for the third quarter of last year. This distribution will be paid November 14 to common unitholders of record as close of the business on October 31.

In the third quarter, the partner shares -- approximately 2.6 million common units off the open market for $76 million. Total repurchases for the trailing 12 months were $252 million or approximately 9.1 million enterprise common units, bringing total purchases under our buyback program to approximately $1.1 billion. In addition to buybacks, our distribution reinvestment plan and employee unit purchase plan purchased a combined 6.5 million common units on the open market for $181 million during the last 12 months, and this includes 1.6 million common units on the open market for $47 million during the third quarter of 2024. Of note, 48% of our employees participate in the unit purchase plan. At Enterprise, we really do eat our own cooking.

For the 12 months ending September 30, 2024, Enterprise paid out approximately $4.5 billion in distributions to limited partners combined with the $252 million of common unit repurchases over the same period. Our total capital return was $4.8 billion resulting in a payout ratio of adjusted cash flow from operations of 56%. We returned roughly $1 billion more than our growth capital expenditures were for the same period.

Total capital investments in the third quarter of 2024 were $1.2 billion, which included $1.1 billion for growth capital projects and $129 million of sustaining capital expenditures. Our expected range of growth capital expenditures for 2024 remains unchanged at $3.5 billion to $3.75 billion. We have received overwhelming interest from our producer customers following our recent acquisition opinion Midstream. As Jim noted, these assets not only hands our processing footprint but allow us to attract more acreage in the Delaware Basin. Additionally, yesterday, we announced a contract with Oxy to potentially build a CO2 pipeline that would serve the Houston Industrial Corridor.

We are updating our 2025 estimated growth capital expenditure range to $3.5 billion to $4 billion to encompass potential growth opportunities in connection with these announcements. Sustaining capital expenditures are expected to be approximately $640 million in 2024, which is higher than our original estimates, primarily due to costs associated with the turnaround of the 2 PDH facilities. As of September 30, 2024, our total debt principal outstanding was approximately $32.2 billion, assuming the final maturity of our hybrids, the weighted average life of our portfolio was approximately 19 years. Our weighted average cost of debt is 4.7%, and approximately 98% of our debt was fixed rate. Our consolidated liquidity was approximately $5.6 billion at the end of the quarter. This includes availability under our credit facilities and unrestricted cash flow.

Our adjusted EBITDA was $2.4 million for the third quarter and $9.8 billion for the 12 months ended September 30, 2024. As of that date, our consolidated leverage ratio is 3.0x on a net basis when adjusted for the partial equity treatment of our hybrids and reduced by the partnership's unrestricted cash on hand. Our leverage target remains our range -- remains 2.75% to 3.25% and at 3.0x, we're in the middle of that range.

Libby, with that, we can open it up for questions.

[Libby Strait, executive]

Thank you, Randy. Operator, we are ready to open the call for questions.

[Operator]

[Operator Instructions]. Our first question comes from the line of Theresa Chen of Barclays. Theresa?

[Theresa Chen, analyst]

I wanted to follow up on Jim's statement about the data center and power demand theme. Just how do you see enterprise participating in this? And if you have any color or details on commercial discussions to date?

[Natalie Gayden, executive]

Theresa, this is Natalie. As Jim said, we've been undated with data center demand infrastructure players that have likely exceeded the Bcf a day of demand in the next several years. And I think that's probably a couple of different reasons. Some of them have shared with us that no longer bringing power to data centers, rather data centers going to power sources. And as you know, we've got several pipelines in the Dallas, Fort Worth area and San Antonio.

And just a couple of facts that I think are interesting. If you think about it, Dallas area data centers rank 4 to power today, but they're second the most plant power. And then San Antonio is even more impressive at 17th in power, but not in most plant power. So if you think about it that way, there are some regions that are probably losing market share to [ $20 million ], and we stand in a good spot to be able to serve those finish.

[Theresa Chen, analyst]

And then related to the recent Piñon acquisition, can you provide some details on how you plan integrated across your NGL assets and the ability you have to roll out treating services beyond the immediate midstream acreage and just the long-term value creation you see from these assets, please?

[A. Teague, executive]

Natalie, you're still up.

[Natalie Gayden, executive]

Yes. I think you can think of it this way. We won't treat Piñon any differently than our integrated G&P assets. There won't be many treating deals behind opinion that don't come with processing deals to serve the integrated value chain.

[A. Teague, executive]

It leads to more organic growth through the processing.

[Operator]

Our next question comes from the line of Jean Ann Salisbury of BofA.

[Jean Ann Salisbury, analyst]

Ethane storage is full. There's no new demand until you and ET's export facilities come online next year. Can you kind of talk about how you see this resolving? Do you see a big step down in ethane recovery. Would that change your growth rate in the next few quarters? And is there kind of a positive offset to that for enterprise in your portfolio?

[Tug Hanley, executive]

Hi, Jean. This is Tug Hanley. Yes. As far as recoveries and rejection, that will balance the market. Regionally, there's other places other than the Permian Basin where the gas basin, it doesn't make sense to recover necessary further to transport to market. As far as opportunity set for us, it's going to lead to some positive storage opportunities on collecting contango.

[Jean Ann Salisbury, analyst]

Okay. That makes sense. And then my follow-up is about the TW products line. Is this the final state of the TW product system? I think you said in the release that it's 20,000 barrels a day of truck loading capacity in Utah. Can the pipe do more than that if you add truckloading capacity? Or should we think about this as being the end state of the system?

[Justin Kleiderer, executive]

Hi, Jean Ann. It's Justin. No, we have more capability to add truck lacs. In fact, we're doing that right now in our Permian terminal as our terminal is full. So as we identify additional demand and our demand further up system continues to ramp, we'll look for those debottlenecking opportunities to take advantage of it.

[Operator]

Our next question comes from the line of Spiro Dounis of Citi.

[Spiro Dounis, analyst]

I want to go back to Piñon really quickly. Maybe just walk us through your decision to buy versus build there. Just curious if that was in any way reflective of some sort of bottleneck on the treating side of the basin?

[A. Teague, executive]

I guess I'll start. First of all, we had to built greenfield. We're looking at 3 years if I'm not mistaken. We've missed some opportunities because we didn't have this service. So we didn't get the platform and it was the easiest quickest way to get it. That answer is there.

[Spiro Dounis, analyst]

I appreciate that. Second question, just maybe sticking with New Mexico, I guess last week, there was some news headlines just around a new setback rule that could come into play. I know this can pop up from time to time. And it sounds like, at least for now, there's not much to do it. But just curious maybe to get your a view on how you think about the potential impact there, if something like that comes into play.

[A. Teague, executive]

I don't know -- I didn't hear the question, Tony, did you...

[Natalie Gayden, executive]

On New Mexico.

[Tony Chovanec, executive]

Yes, setbacks in New Mexico. I'll speak for myself from a fundamental standpoint and then Natalie will address it. I think the industry is very firm and as always said, tell us what the rules are, and we'll figure out how to adjust to them. Natalie, I haven't heard, and maybe you have or have not anybody say that they're doing anything other than studying this rules. It's certainly from the meetings I've been hasn't changed people's plans at this point.

I think the other thing to add to that is remember that we drill horizontally laterals that may be 3 or 4 miles. So I'm confident from a fundamental standpoint that the industry is going to be able to adjust once they know what the rules are. Are you hearing anything different?

[Natalie Gayden, executive]

Nothing different -- that to speculate on what impacts it will have and nothing more than commentary from New Mexico producers.

[Operator]

Thank you. Our next question comes from the line of Jeremy Tonet of JPMorgan.

[Jeremy Tonet, analyst]

Just wanted to touch base with Tony here on, I guess, more on the macro outlook. And I guess, producer customer conversations as well as what the macro team sees as far as production trends at this point in time, given the volatility we've seen in commodity prices?

[Tony Chovanec, executive]

Yes, this is Tony. I'll start with it. I think as long as we've been publishing forecast, this is maybe the second or third time that we've actually republished midyear. And that's because what we're seeing both in traditional benches and new targets to gassier benches.

When you look at EIA numbers, I'll kind of go ahead now that I understand that's a very hard thing to set your watch to that's not what we use. They're trying to get better at it, they're making slow progress. What we said in the Permian Basin, there's been a lot of noise also relative to weather in the Bakken and in the Gulf of Mexico relative to [ outages ]. So let's go to what's stable and what's the large thing that moves the number, and that's the Permian Basin.

We said that over a 3-year period, just looking at black oil that we would have about 1.5 million barrels a day of growth over that 3-year period. For 2023, we're at about 750,000 barrels. We think that, that number for 2024 will be 350,000 to 400,000 barrels. And from we're seeing as far as turn in line from our producers, it's likely that when it's all said and that number is going to be very, very heavily weighted towards the second half of the year. So it's not a long put. As a matter of fact, as what we expected that we will sell the Permian will meet that goal of, call it, 1.5 million barrels. That said, you can look at our forecast and the 1 thing that is changing and likely to change these commitments that producers are making to gassier basins and Natalie, I'll let you take it from there.

[Natalie Gayden, executive]

I agree. I think we see it in our production plans from our producers and they either PDP isn't coming off as expected or let's just say, some of the declines are holding a little bit longer. But definitely gassier, even if on the order of 10%, sometimes they miss it that order of magnitude, we see it time and time again. not large numbers, but something to keep up with.

[Jeremy Tonet, analyst]

Got it. That's helpful there. And maybe shifting gears a little bit here with Bahia. It looks like the time line shifted a little bit there. So just wondering if you could update us on project development there. And also just current thoughts on in NGL pipeline eco, how do you see that shift?

[Justin Kleiderer, executive]

Jeremy, this is Justin Kleiderer. So just minor delays in our expected timing on permit to construct causing the delay from the first half in the third quarter. On the commercial development front, I would say, as you saw in our latest debt, Tony's updated NGL forecasts paint a different picture for overall industry utilization. So I think by 2028 now, the updated supply numbers have us upwards of 90% utilized as an industry. So we're still working the same playbook as we talked about in prior quarters around how we're developing commercially there. But it really just comes down to how that incremental supply gets contracted, whether that be a combination of additional G&P assets that Natalie alluded to earlier or continuing to pursue third-party NGLs.

[Operator]

Our next question comes from the line of Michael Blum of Wells Fargo. Your line is open, Michael.

[Michael Blum, analyst]

I wanted to ask about the announcement yesterday on the CO2 pipeline project with Oxy. I wanted to just confirm this is new pipe, you're not repurposing and get a sense for how many miles of pipe are we talking about? And would you expect to get your kind of typical midstream contract structure and typical midstream return on a project like this?

[Unknown Executive]

Michael, this is Bob Sanders. So the contract with 1.5 is a fairly straightforward transportation agreement. When 1.5 goes to FID, they will tell us what emitters to connect to, so we know what the design for. It is new pipe because it is anti-900 pipe. It's a high-pressure pipeline system. We expect 1.5 to FID sometime in the first half of 2025. And at that point, we'll know what the capital is and the fee will be set accordingly.

[Michael Blum, analyst]

Great. Great. And then I just wanted to ask about LPG export spot rate dynamics. I guess the rates have increased in recent months. I wanted to get a sense how full of the docs and your docs specifically from that perspective? Are you able to capture any of these higher spot rates? Are you basically fully contracted?

[Douglas Kiste, executive]

Yes, this is Doug. So we've talked about it in the prior earnings call that we did a debottlenecking project at the chip channel that's provided as higher capacity. So right now, we're having here between 2 to 3 spot cargoes per month, and we are capturing those higher values, call it, mid-$0.20 per gallon.

[Operator]

Our next question comes from the line of Neal Dingmann of Truist.

[Neal Dingmann, analyst]

My first question is on your petrochem specifically. Are you all continuing to expand the ethylene and propylene systems. And I'm just wondering you guys, do you continue to believe more export capacity will be needed there?

[F. D'Anna, executive]

Hi, Neal, it's Chris D'Anna. We are continuing to grow, particularly our ethylene pipeline system. So if you remember that pipeline system didn't exist before 2019. And we've built a pretty substantial system, and we plan to continue to grow that. And then in terms of our exports, we have an expansion underway. It's our Morgan's Point dock, and that will come online. The first phase of that will be online at the end of this year.

[A. Teague, executive]

Talk about what you're seeing in Europe what do you think that creates for us.

[F. D'Anna, executive]

Yes. And I think one of the growth opportunities that we see for ethylene exports in particular, is Europe with the economics that those crackers have one, they're quite a bit smaller, so they don't have the economies of scale that we have here in the U.S. And then secondly, just the overall feedstock, it's a whole ethane versus or natural gas versus crude kind of fundamentals there. So we expect to see and we've heard from a lot of the chemical companies that they're doing strategic reviews of the European assets. So we expect to see some closes, and we expect that to lead to additional ethylene exports going that way.

[Neal Dingmann, analyst]

Great details. And then my second is just on marketing specifically. It seems like Waha continues to be quite volatile. So I'm just wondering, based on that, can we assume the marketing business continues to remain strong for you all?

[Brent Secrest, executive]

Yes. We have roughly 370 million a day open on that West East Waha spreads. So we do expect that to continue to contribute.

[Operator]

Our next question comes from the line of Keith Stanley of Wolfe Research.

[Keith Stanley, analyst]

First, just curious for an update on commercial conversations on the spot project. I think there was a quote a week or 2 ago from a conference of trying to get a first customer to sign up for that project? Just an update on any momentum you're having there.

[James Bany, executive]

Hi, Keith. This is Jay Bany. Yes, just related around commercial conversations. They're quite extensive and then various degrees of conversation anywhere ranging from we're working through definitive agreements, changing term sheets. I'd say a large portion of our customer base are currently just evaluating the cost related to ship-to-ship transfers and how that affects their business, both their, call it, netback as American producer expenses or ultimately delivered price for international customers. And so we expect to hear some of that feedback here, call it, the end of this quarter, early first quarter.

[Keith Stanley, analyst]

Second question, admittedly, I'm not sure there's a great answer to this necessarily, but the valuation get between the C corps in the space and the MLPs is at a record high above anything I can recall. Are there any potential ways the company could capitalize on that I don't know if it's selling assets at higher valuations or other ways to respond to the market seemingly valuing C corps much more highly than MLP these days?

[W. Fowler, executive]

Keith, this is Randy. I don't think there's any quick solution or answer there. I think coming in and trying to play the game of selling assets at a higher valuation is somewhat shortsighted, especially when you come in and you look at the depreciation we capture that comes and it gets pushed down to all your limited partner, all it becomes a tax event for your limited partners, and I don't know what actually you've accomplished. So we've seen 2 or 3 years ago, I think it was near these levels and we saw the 2 compressed. But generally, when there's this big of a difference in asset classes, normally, the market solves it one way or the other.

[Operator]

Our next question comes on the line of John Mackay of Goldman Sachs.

[John Mackay, analyst]

I just want to maybe do 2 quick clarifications. First one is Randy, this is for you. I guess, just on that last comment, is the up C corp idea still out there? Or is there any reason you guys have kind of permanently put that to the side at this point?

[W. Fowler, executive]

I appreciate the thoughts there. Again, I think that's another sort of the devil is in the details there. Number one, now you've got -- you would have 2 securities outstanding. You need to build liquidity up and that second security and oh, by the way, then what do you do with use of proceeds. So I think and if I come in and look over time, there's not really been -- and there's been examples whether it's the UP Cs or whether it's been the -- as the high units that were done way back 20 years ago and you really never saw that much differentiation whether it was the institute, the high units, the institutional class units of partnership that was more institutional investor friendly or whether it was the UP C and the underlying MLP. So to us, that adds a lot of complexity and really you don't get that much value for your book.

[John Mackay, analyst]

That's clear. I appreciate that. Second quick follow-up. I appreciate the comments on all the work done on the PDHs. I just want to clarify, are both up and running fully now? Is this like a fourth quarter run rate going forward? Is this a first quarter '25? And then maybe if you could just remind us maybe what those 2 assets in aggregate could add from an ongoing cash flow basis, that would be great.

[A. Teague, executive]

They're up and running both of them. running at full rates, if not higher. And Chris I'd say it's in the neighborhood of $200 million.

[Operator]

Our next question comes from the line of A.J. O'Donnell of TPH.

[Andrew John O'Donnell, analyst]

Just a quick one on Matterhorn with that pipeline now running about 1 Bcf or over 1 Bcf a day. Curious if you guys have seen a jump in flush production into your system in Q4? Or if majority of the pipeline volumes are just flow shifting around the basin or redirected gas?

[A. Teague, executive]

I don't think we've seen a flush production yet, have we, Natalie?

[Natalie Gayden, executive]

Yes.

[Andrew John O'Donnell, analyst]

Okay. Maybe just going back to the capital budget then. Just trying to understand on the increase in the budget. I was hoping maybe you could provide just a little bit of color on the types of the projects. you're seeing with Piñon. And I'm just curious if there's any more of that to potentially be announced in the '25 budget? Or does that seem a little bit further off?

[A. Teague, executive]

Projects next year?

[Natalie Gayden, executive]

Yes, we definitely well.

[A. Teague, executive]

Natalie says yes.

[Operator]

Our next question comes from the line of Manav Gupta of UBS.

[Manav Gupta, analyst]

You guys did a very good job of explaining some of the 2025 growth projects. Help us understand the product pipeline is pretty strong, whether it's met on West or each other. How should we think about the key growth projects for 2026 at this stage?

[W. Fowler, executive]

Yes. Manav, thanks for the question. I think we're still at the point where -- and we try to point this out in our supplemental slides for earnings when you come in and you look at the projects that have been FID-ed. I want to say that the runoff in 2026, what we have remaining to spend on currently FID projects, there's probably about $1 billion, $1.2 billion. So if you would, in 2026, we have room that we put in there that we think will probably be in the range of $2 billion, maybe it's upward to $2.5 million, but we have room for development of other growth-oriented projects between now and then. And that's where we think 2024 and 2025 is really a period of elevated CapEx and that we'll come back and more on longer-term basis, see that come back down to around 2%, 2.5%.

And you saw this -- and again, I'll come back in, I'm sorry. you sort of saw the same thing in 2018, 2019. In those years, we were about $4 billion in growth CapEx. And again, those had some large projects and step changes in capacity. And then you saw our growth CapEx moderate back down. And we think the same thing will happen once you get out to 2026.

[Manav Gupta, analyst]

Perfect. My quick follow-up is there was a little bit of a step-up in buybacks in 3Q versus 2Q. And again, as you're going through this build-out, how should we think about shareholder returns for the rest of the 2024 or even 2025?

[W. Fowler, executive]

I think again, with 2024 and 2025 CapEx being elevated levels, you'll probably continue to see buybacks in that $200 million to $300 million range. I think once we get out to 2026, we'll need to reassess what the opportunities are at that time, and we'll go from there.

[Operator]

Thank you. I would now like to turn the conference back to Libby Strait for closing remarks. Madame?

[Libby Strait, executive]

Thank you, and thank you to our participants for joining us today. That concludes our remarks. Have a good day.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.